<PAGE>
As filed with the Securities and Exchange Commission on November 20, 1997
Registration No. 333- 36059
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
AMENDMENT NO. 1
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to
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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NEWCOURT RECEIVABLES ASSET TRUST 1997-1
(Issuer with respect to the Securities)
NEWCOURT RECEIVABLES CORPORATION II
(Depositor of the Trust described herein)
Exact name of Registrant as specified in its charter
Delaware 6799 35-2010710
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
NEWCOURT RECEIVABLES CORPORATION II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Scott Moore, Esq.
NEWCOURT RECEIVABLES CORPORATION II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
(317) 229-3406
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
M. David Galainena, Esq. Stephan J. Feder, Esq.
Winston & Strawn Simpson Thacher & Bartlett
35 West Wacker Drive 425 Lexington Avenue
Chicago, Illinois 60601 New York, New York 10017
(312) 558-5600 (212) 455-2000
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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. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount to Be Proposed Maximum Offering Proposed Maximum Amount of
Securities Registered(1) Price Per Unit (2) Aggregate Offering Price (2) Registration Fee(3)
to Be Registered
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<S> <C> <C> <C> <C>
Class A-1 $127,067,000 100% $127,067,000 $38,505.15
Receivable-Backed
Notes
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Class A-2 $88,278,000 100% $88,278,000 $26,750.91
Receivable-Backed
Notes
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Class A-3 $107,004,000 100% $107,004,000 $32,425.45
Receivable Backed
Notes
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Class A-4 $167,194,000 100% $167,194,000 $50,664.85
Receivable Backed
Notes
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Class B $18,726,000 100% $18,726,000 $5,674.55
Receivable-Backed
Notes
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</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
Class C $10,700,000 100% $10,700,000 $3,242.42
Receivable-Backed
Notes
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</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).
(3) $1,212.12 previously paid.
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.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT HAS
BECOME EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, dated November ___, 1997
PRELIMINARY PROSPECTUS
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
$127,067,000 _____ % CLASS A-1 RECEIVABLE-BACKED NOTES, SERIES 1997-1
$ 88,278,000 _____% CLASS A-2 RECEIVABLE-BACKED NOTES, SERIES 1997-1
$107,004,000 _____% CLASS A-3 RECEIVABLE-BACKED NOTES, SERIES 1997-1
$167,194,000 _____% CLASS A-4 RECEIVABLE-BACKED NOTES, SERIES 1997-1
$ 18,726,000 _____% CLASS B RECEIVABLE-BACKED NOTES, SERIES 1997-1
$10,700,000_____% CLASS C RECEIVABLE-BACKED NOTES, SERIES 1997-1
NEWCOURT RECEIVABLES CORPORATION II,
Trust Depositor
NEWCOURT FINANCIAL USA INC.
Servicer
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The Newcourt Receivables Asset Trust 1997-1 (the "TRUST" or the "ISSUER"),
a limited purpose Delaware business trust, was formed pursuant to a Trust
Agreement, dated as of November 1, 1997, between Newcourt Receivables
Corporation II ("NRC II"), as Trust Depositor (in such capacity, the "TRUST
DEPOSITOR"), and Chase Manhattan Bank Delaware, as Owner Trustee (the "OWNER
TRUSTEE"). The Trust Depositor is a wholly-owned, limited purpose, bankruptcy
remote subsidiary of Newcourt Credit Group USA Inc.; Newcourt Credit Group USA
Inc. is a wholly-owned subsidiary of Newcourt Credit Group Inc. ("NEWCOURT").
The Trust will issue $_________ aggregate principal amount of _____% Class
A-1 Receivable-Backed Notes, Series 1997-1 (the "CLASS A-1 NOTES"), $ _________
aggregate principal amount of ______% Class A-2 Receivable-Backed Notes, Series
1997-1 (the "CLASS A-2 NOTES" ), $________ aggregate principal amount of
_____% Class A-3 Receivable-Backed Notes, Series 1997-1 (the "CLASS A-3
NOTES"), $ __________ aggregate principal amount of _____% Class A-4
Receivable-Backed Notes, Series 1997-1 (the "CLASS A-4 NOTES"; AND TOGETHER WITH
THE CLASS A-1 NOTES, THE CLASS A-2 NOTES AND THE CLASS A-3 NOTES, THE "CLASS A
NOTES"), $__________ aggregate principal amount of ______% Class B
Receivable-Backed Notes, Series 1997-1 (the "CLASS B NOTES") and $_________
aggregate principal amount of ______% Class C Receivable-Backed Notes, Series
1997-1 (the "CLASS C NOTES"; and together with the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class B Notes, the
"NOTES"). The Notes will represent debt obligations of the Trust, and will be
issued pursuant to and secured by an Indenture dated as of November 1, 1997 (the
"INDENTURE") to be entered into between the Trust and Manufacturers and Traders
Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE"). The Trust will
concurrently issue
(COVER CONTINUED ON NEXT PAGE)
----------------------
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE 21 OF THIS PROSPECTUS.
THE NOTES ARE SECURED BY THE ASSETS OF THE TRUST. THE PROCEEDS OF THE
ASSETS OF THE TRUST AND AMOUNTS ON DEPOSIT IN THE RESERVE FUND ARE THE ONLY
SOURCES OF PAYMENTS ON THE NOTES. THE NOTES WILL REPRESENT OBLIGATIONS OF THE
TRUST ONLY AND WILL NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT
GUARANTEED OR INSURED BY, THE TRUST DEPOSITOR, THE OWNER TRUSTEE, NEWCOURT USA,
NEWCOURT OR ANY OF THEIR RESPECTIVE AFFILIATES, OR ANY GOVERNMENTAL AGENCY.
-----------------------
THESE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
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<TABLE>
<CAPTION>
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Price to Public Underwriting Discounts and Proceeds to Issuer (2)
Commissions (1)
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<S> <C> <C> <C>
Per Class A-1 Note % % %
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Per Class A-2 Note % % %
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Per Class A-3 Note % % %
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Per Class A-4 Note % % %
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Per Class B Note % % %
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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Price to Public Underwriting Discounts and Proceeds to Issuer (2)
Commissions (1)
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<S> <C> <C> <C>
Per Class C Note % % %
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Total % % %
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</TABLE>
(1) The Issuer, Newcourt and Newcourt Financial USA Inc. have agreed to
indemnify the Underwriters against certain liabilities, including under the
Securities Act of 1933.
(2) Before deducting expenses of this Offering estimated to be $_________.
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if issued to and accepted by them and subject to their right to reject any
order in whole or in part or to withdraw, cancel or modify any order without
notice. It is expected that delivery of the Notes will be made in book-entry
form only through the Same Day Funds Settlement System of The Depository Trust
Company, or through Cedel Bank, S.A. or the Euroclear System, on or about
_____________, 1997.
UNDERWRITERS OF THE CLASS A NOTES
FIRST UNION CAPITAL MARKETS CORP.
DEUTSCHE MORGAN GRENFELL
LEHMAN BROTHERS
BANCAMERICA ROBERTSON STEPHENS
UNDERWRITER OF THE CLASS B NOTES AND CLASS C NOTES
FIRST UNION CAPITAL MARKETS CORP.
The date of this Prospectus is November __, 1997.
<PAGE>
(COVER PAGE CONTINUED)
$16,051,000 aggregate principal amount of _____% Class D Receivable-Backed
Notes, Series 1997-1 (the "SUBORDINATED NOTES"), as well as the Class E
Receivable-Backed Certificate, Series 1997-1 (the "CERTIFICATE"). The
Certificate will not bear interest and have certain rights to the monies in the
Reserve Fund (as defined in "SUMMARY OF TERMS - RESERVE FUND") and certain other
excess funds after the payment of all principal and interest on the Notes and
Subordinated Notes (the Certificate, together with the Subordinated Notes, being
collectively the "SUBORDINATED SECURITIES"). The Subordinated Notes will be
issued pursuant to the Indenture and the Certificate will represent fractional
undivided beneficial equity interests in the Trust and will be issued pursuant
to the Trust Agreement. The Subordinated Securities are not being offered
pursuant to this Prospectus.
The property of the Trust (the "TRUST ASSETS") will include (a) a pool of
contracts originated or acquired by Newcourt Financial USA Inc. ("NEWCOURT USA",
a wholly-owned subsidiary of Newcourt Credit Group USA Inc.) as described herein
(inclusive of any Additional Contracts or Substitute Contracts added to the
Trust from time to time as defined in "SUMMARY OF TERMS -TRUST ASSETS - THE
CONTRACTS", collectively, the "CONTRACTS") consisting of (i) conditional sale
agreements, promissory notes with related security agreements, operating and
finance leases, installment payment agreements, and similar types of financing
agreements with end-users (each, an "END-USER") of the Equipment, Software and
Services described below (such Contracts, "END-USER CONTRACTS") and meeting
certain eligibility criteria specified herein, relating to a wide variety of new
and used information technology equipment (such as mainframe and mini computers,
computer work stations, personal computers, data storage devices and other
computer related peripheral equipment), communications equipment (such as
telephone switching and networking systems), commercial business and industrial
equipment (such as printing presses, machine tools and other manufacturing
equipment, photocopiers, facsimile machines and other office equipment, energy
savings and control equipment, automotive diagnostic and automated testing
equipment), medical equipment (such as diagnostic and therapeutic examination
equipment for radiology, nuclear medicine and ultrasound and laboratory analysis
equipment), resources equipment (such as feller-bunchers and grapplers), and
transportation and construction equipment (such as heavy and medium duty trucks
and highway trailers, school buses, bulldozers, loaders, graters, excavators,
forklifts and other materials handling equipment, golf carts and other road and
off-road machinery) (collectively, the "EQUIPMENT"), certain computer software
(the "SOFTWARE") and related support and consulting services (the "SERVICES";
together with Equipment and Software, the "FINANCED ITEMS"), together with
certain rights of Newcourt USA under finance program agreements and assignments
with Vendors (as defined in "SUMMARY OF TERMS - TRUST ASSETS - VENDOR
AGREEMENTS") of the Financed Items, as well as the Equipment or a security
interest in the Equipment, as more fully described herein, and (ii) limited
recourse contractual payment obligations (which may take the form of promissory
notes) payable by Vendors (such payment obligations, "VENDOR LOANS") and secured
by the Vendor's interest in End-User Contracts originated by such Vendor
(End-User Contracts securing Vendor Loans being collectively referred to as
"SECONDARY CONTRACTS"), and by the Equipment related to such End-User Contracts,
(b) collections on such Contracts due or received on and after October 31, 1997
(the "CUTOFF DATE") or, in the case of Additional Contracts or Substitute
Contracts, their applicable Cutoff Dates as defined in "SUMMARY OF TERMS -CUTOFF
DATES", excluding collections relating to Scheduled Payments due prior to the
related Cutoff Date, and (c) monies, to the extent available, in the Reserve
Fund. The Contracts and related interests will be conveyed by Newcourt USA (in
such capacity, the "SELLER") to the Trust Depositor pursuant to a Transfer and
Sale Agreement dated as of November 1, 1997 (the "TRANSFER AND SALE AGREEMENT")
by and between Newcourt USA and the Trust Depositor. The Trust Depositor will
concurrently convey such assets to the Trust pursuant to the Sale and Servicing
Agreement, dated as of November 1, 1997 (the "SALE AND SERVICING AGREEMENT"),
among the Trust Depositor, the Trust, the Indenture Trustee (as defined in
"SUMMARY OF TERMS -INDENTURE TRUSTEE") and Newcourt USA in its capacity as
Servicer thereunder (Newcourt USA being, in such capacity, the "SERVICER").
Interest on the Notes and Subordinated Notes will be payable monthly in
arrears on the twentieth (20th) day of the month (or, if such day is not a
Business Day the next succeeding Business Day) beginning on December 22, 1997
(each, a "DISTRIBUTION DATE") with respect to the period from and including the
immediately preceding Distribution Date (or, with respect to the initial
Distribution Date, the date of issuance of the Notes and Subordinated Notes) to
the period to and excluding such Distribution Date to holders of record as of
the last day of the prior Collection Period (the "RECORD DATE"). The
Certificate does not bear interest. Principal payments with respect to the
Notes and Subordinated Notes will be payable on each Distribution Date to the
holders thereof as of the related Record Date as described herein. The stated
maturity date with respect to the Class A-1 Notes is the December 1998
Distribution Date and with respect to all other Notes and Subordinated
Securities is the May 2005 Distribution Date. The actual payment in full,
however, of the Notes or Subordinated
2
<PAGE>
Securities could and is expected to occur earlier than such stated maturity
dates. See "SUMMARY OF TERMS--TERMS OF THE NOTES--B. PRINCIPAL" and
"C.--OPTIONAL REDEMPTION" herein.
The Notes and the Subordinated Securities will be payable primarily from
collections of payments due under the Contracts (including payments from Vendors
pursuant to certain recourse arrangements, where applicable, and as further
described below), certain amounts received upon the prepayment or purchase of
Contracts or liquidation of the Contracts and disposition of the related
Equipment upon defaults thereunder, and the proceeds of Servicer Advances (as
defined in "SUMMARY OF TERMS--SERVICING; SERVICING FEE; SERVICER ADVANCES"), if
any.
Payments of interest due on the Notes and the Subordinated Notes on any
given Distribution Date will be made prior to making any payments of principal
on any of the Notes or the Subordinated Notes. Payments of interest due on the
Subordinated Notes will be subordinated in priority to payments of interest due
on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4
Notes, the Class B Notes and the Class C Notes. Payments of interest due on
Class C Notes will be subordinated in priority to payments of interest on the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes
and the Class B Notes. Payments of interest due on the Class B Notes will be
subordinated in priority to payments of interest due on the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes. Payments of
interest due on the Class A-4 Notes will be subordinated in priority to payments
of interest due on the Class A-3 Notes, the Class A-2 Notes and the Class A-1
Notes, subject to the limitation described in the second succeeding sentence.
Payments of interest due on the Class A-3 Notes, will be subordinated in
priority to payments of interest due on the Class A-2 Notes and the Class A-1
Notes, subject to the limitation described in the next succeeding sentence.
Payments of interest due on the Class A-2 Notes will be subordinated in priority
to payments of interest due on the Class A-1 Notes; PROVIDED, HOWEVER, after the
occurrence and during the continuance of a Restricting Event or the occurrence
of an Event of Default payments of interest due on the Class A-4 Notes, the
Class A-3 Notes, the Class A-2 Notes and the Class A-1 Notes, will be made PRO
RATA. Payments of principal on the Subordinated Notes will be subordinated in
priority to payments of principal on the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class B Notes and the Class C
Notes. Payments of principal on the Class C Notes will be subordinated in
priority to payments of principal on the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes and the Class B Notes. Payments of
principal on the Class B Notes will be subordinated in priority to payments of
principal on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes. Payments of principal on the Class A-4 Notes will be
subordinated in priority to payments of principal on the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes. Payments of principal on the Class A-3
Notes will be subordinated in priority to payments of principal on the Class A-1
Notes and the Class A-2 Notes. Payments of principal on the Class A-2 Notes
will be subordinated in priority to payments of principal on the Class A-1
Notes. See "SUMMARY OF TERMS--TERMS OF THE NOTES", as well as "DESCRIPTION OF
THE NOTES--ALLOCATIONS" herein.
The Notes are being offered pursuant to this Prospectus. Sales of the
Notes may not be consummated unless the purchaser has received this Prospectus.
The Subordinated Securities are not being offered hereby.
The Issuer does 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.
There currently is no secondary market for the Notes and there is no
assurance that one will develop, or if one does develop, that it will continue
or provide sufficient liquidity.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO NOTEHOLDERS
During such time as the Notes remain in book-entry form, periodic and
annual unaudited reports, containing information concerning the Trust, the
Contracts, the Notes and the Certificates, will be prepared by the Servicer and
sent on behalf of the Trust to Cede & Co. ("CEDE"), as nominee of The Depository
Trust Company ("DTC"), and the Euroclear System ("EUROCLEAR") or Cedel Bank,
S.A. ("CEDEL") as registered holders of the Notes. Such reports will be made
available by DTC, Euroclear or CEDEL and its participants to holders of
3
<PAGE>
interests in the Notes in accordance with the rules, regulations and procedures
creating and affecting DTC, Euroclear and CEDEL, respectively. See "DESCRIPTION
OF THE NOTES--BOOK ENTRY REGISTRATION" and "--REPORTS" below. Such 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, such reports will be
sent to each registered Noteholder.
AVAILABLE INFORMATION
The Trust Depositor, as originator of the Trust, has filed with the
Securities and Exchange Commission (the "COMMISSION") a Registration Statement
(together with all amendments and exhibits thereto, the "REGISTRATION
STATEMENT") under the Securities Act of 1933, as amended (the "SECURITIES ACT"),
with respect to the Notes offered pursuant to this Prospectus and described
herein. For further information, reference is made to the Registration
Statement which may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549; Citicorp Center, 500 West Madison, Suite 1400, Chicago, Illinois
60661 and Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of the Registration Statement may be obtained from the Public Reference
Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a public access site on the
Internet through the World Wide Web at which site reports, information
statements and other information, including all electronic filings, regarding
the Trust Depositor and the Trust may be viewed. The Internet address of such
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 Commission such periodic
reports as are required under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") and the rules and regulations of the Commission thereunder.
Copies of such reports can be obtained as described above.
UPON RECEIPT OF A REQUEST BY AN INVESTOR, OR HIS OR HER REPRESENTATIVE,
WITHIN THE PERIOD DURING WHICH THERE IS AN OBLIGATION TO DELIVER A PROSPECTUS,
THE UNDERWRITERS WILL PROMPTLY DELIVER, OR CAUSE TO BE DELIVERED, WITHOUT CHARGE
AND IN ADDITION TO ANY SUCH DELIVERY REQUIREMENTS, A PAPER COPY OF THIS
PROSPECTUS AND A PROSPECTUS ENCODED IN AN ELECTRONIC FORMAT.
4
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus. Certain capitalized terms
used in this summary are defined elsewhere in this Prospectus on the pages
indicated in the "INDEX OF TERMS" on page 101.
There are material risks associated with an investment in the Notes. See "RISK
FACTORS" on page 21 for a discussion of certain factors that investors should
consider before making an investment in the Notes.
Issuer . . . . . . . . . . . Newcourt Receivables Asset Trust 1997-1 (the
"ISSUER" or the "TRUST"), a Delaware business
trust formed by the Trust Depositor and the
Owner Trustee pursuant to the Trust Agreement
dated as of November 1, 1997 (the "TRUST
AGREEMENT") between the Trust Depositor and
the Owner Trustee. The principal executive
offices of the Trust are in Wilmington,
Delaware, in care of the Owner Trustee, at
the address of the Owner Trustee specified
below.
Trust Depositor. . . . . . . Newcourt Receivables Corporation II, a
Delaware corporation (the "TRUST DEPOSITOR")
and a wholly-owned, limited purpose
subsidiary of Newcourt Credit Group USA Inc.
The Trust Depositor's principal executive
offices are located at 2700 Bank One Tower,
111 Monument Circle, Suite 300, Indianapolis,
Indiana 46204 and its telephone number is
(317) 229-3406.
Seller/Servicer. . . . . . . Newcourt Financial USA Inc., a Delaware
corporation ("NEWCOURT USA"; or, in its
separate capacities as a Seller under the
Transfer and Sale Agreement, the "SELLER", or
as Servicer under the Sale and Servicing
Agreement described herein, the "SERVICER"),
which is a wholly-owned subsidiary of
Newcourt Credit Group USA Inc. which, in turn
is a wholly owed subsidiary of Newcourt
Credit Group Inc. ("NEWCOURT"). Newcourt
USA's offices are located at 2700 Bank One
Tower, 111 Monument Tower Circle, Suite 2700
Indianapolis, Indiana 46204 and its telephone
number is (317) 767-0077. The servicing
obligations of Newcourt USA under the Sale
and Servicing Agreement will be guaranteed by
Newcourt.
Indenture Trustee. . . . . . Manufacturers and Traders Trust Company, as
indenture trustee under the Indenture
described herein (the "INDENTURE TRUSTEE").
The Indenture Trustee's offices are located
at 1 M&T Plaza, Buffalo, New York 14203.
Owner Trustee. . . . . . . . Chase Manhattan Bank Delaware, as owner
trustee under the Trust Agreement (the "OWNER
TRUSTEE"). The Owner Trustee's offices are
located at 1201 Market Street, Wilmington,
Delaware, 19801.
Cutoff Dates . . . . . . . . With respect to the Contracts transferred to
the Trust on the Closing Date, October 31,
1997, and with respect to any Additional
Contract or Substitute Contract (see "SUMMARY
OF TERMS--A. THE CONTRACTS") transferred to
the Trust thereafter, the close of business
on the first day of the calendar month in
which such transfer occurs (each of such
dates a "CUTOFF DATE", an "ADDITIONAL
CONTRACT CUTOFF DATE", or a "SUBSTITUTE
CONTRACT CUTOFF DATE", respectively). The
term "CUTOFF DATE", when used herein in the
context of general references to the pool of
Contracts held by the Trust, should be deemed
to include a reference to the Additional
Contract Cutoff Date and Substitute Contract
Cutoff Date of any Additional Contract or
Substitute Contract contained within such
pool of Contracts, unless otherwise specified
or unless the context otherwise clearly
requires.
Closing Date . . . . . . . . On or about November 25, 1997 (the "CLOSING
DATE").
5
<PAGE>
Collection Periods,. . . . . A Collection Period is the period from and
Calculation Dates, including the first day of each calendar
Distribution Dates month to and including the last day of the
and Record Dates . . . . . . calendar month (such first day, the
"CALCULATION DATE" and each such period, a
"COLLECTION PERIOD"). A Distribution Date is
the twentieth (20th) day (or if any such
date is not a "BUSINESS DAY", I.E., a day
other than a Saturday, a Sunday or a day on
which banking institutions in Indianapolis,
Indiana, Toronto, Ontario, Canada or New
York, New York are authorized or obligated by
any law or regulation to be closed, then on
the next succeeding Business Day) of each
calendar month (each, a "DISTRIBUTION DATE")
commencing December 22, 1997. The
Collection Period relating to any particular
Distribution Date shall be the Collection
Period occurring during the calendar month
preceding the month in which such
Distribution Date occurs.
With respect to any Distribution Date and the
Notes, the "RECORD DATE" is the calendar day
immediately preceding each Distribution Date
(or, with respect to any Definitive Note as
defined in "DESCRIPTION OF THE
NOTES--DEFINITIVE NOTES", the last calendar
day of the month preceding the month in which
such Distribution Date occurs).
The Notes. . . . . . . . . . $127,067,000 aggregate principal amount (the
"INITIAL CLASS A-1 NOTE PRINCIPAL BALANCE")
of ______% Class A-1 Receivable-Backed Notes,
Series 1997-1 (the "CLASS A-1 NOTES");
$88,278,000 aggregate principal amount (the
"INITIAL CLASS A-2 NOTE PRINCIPAL BALANCE")
of _______% Class A-2 Receivable-Backed
Notes, Series 1997-1 (the "CLASS A-2 NOTES");
$107,004,000 aggregate principal amount (the
"INITIAL CLASS A-3 NOTE PRINCIPAL BALANCE")
of ______% Class A-3 Receivable-Backed Notes,
Series 1997-1 (the "CLASS A-3 NOTES");
$167,194,000 aggregate principal amount (the
"INITIAL CLASS A-4 NOTE PRINCIPAL BALANCE")
of _______% Class A-4 Receivable-Backed
Notes, Series 1997-1 (the "CLASS A-4 NOTES";
AND TOGETHER WITH THE CLASS A-1 NOTES, CLASS
A-2 NOTES AND CLASS A-3 NOTES, THE "CLASS A
NOTES"); $18,726,000 aggregate principal
amount (the "INITIAL CLASS B NOTE PRINCIPAL
BALANCE") of _____% Class B
Receivable-Backed Notes, Series 1997-1 (the
"CLASS B NOTES"); and $10,700,000 aggregate
principal amount (the "INITIAL CLASS C NOTE
PRINCIPAL BALANCE") of _____ % Class C
Receivable-Backed Notes, Series 1997-1 (the
"CLASS C NOTES"; and together with the Class
A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes and the Class B
Notes, the "NOTES"). The Initial Class A-1
Note Principal Balance is equal to
approximately 23.75% of the initial Aggregate
Discounted Contract Balance (as defined
herein) of the Contracts, the Initial Class
A-2 Note Principal Balance is equal to
approximately 16.50% of the initial Aggregate
Discounted Contract Balance, the Initial
Class A-3 Note Principal Balance is equal to
approximately 20.00% of the initial Aggregate
Discounted Contract Balance of the Contracts,
the Initial Class A-4 Note Principal Balance
is equal to approximately 31.25% of the
initial Aggregate Discounted Contract Balance
of the Contracts, the Initial Class B Note
Principal Balance is equal to approximately
3.50% of the initial Aggregate Discounted
Contract Balance of the Contracts, and the
Initial Class C Note Principal Balance is
equal to approximately 2.00% of the initial
Aggregate Discounted Contract Balance of the
Contracts.
The Notes will be issued by the Trust
pursuant to an Indenture to be dated as of
November 1, 1997 (the "INDENTURE"), between
the Trust and the Indenture Trustee. The
Notes will be secured by the assets of the
Trust. The Notes will be available for
purchase in book-entry form only in minimum
denominations of $1,000 and integral
multiples thereof (except for one Note of
each Class which, for rounding purposes, may
be less than an integral multiple thereof).
The holders of beneficial interests in the
Notes held in book-entry form ("NOTE OWNERS")
will not be entitled to receive Definitive
Notes except in the limited
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<PAGE>
circumstances described herein. See
"DESCRIPTION OF THE NOTES--GENERAL" and
"--DEFINITIVE NOTES" and "--BOOK-ENTRY
REGISTRATION" herein. The Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the
Class B Notes, the Class C Notes and the
Subordinated Securities will be subordinated
to the Class A-1 Notes to the extent
described herein; the Class A-3 Notes, the
Class A-4 Notes, the Class B Notes, the
Class C Notes and the Subordinated Securities
will be subordinated to the Class A-2 Notes
to the extent described herein; the Class A-4
Notes, the Class B Notes, the Class C Notes
and the Subordinated Securities will be
subordinated to the Class A-3 Notes to the
extent described herein; the Class B Notes,
the Class C Notes and the Subordinated
Securities will be subordinated to the Class
A-4 Notes to the extent described herein; the
Class C Notes and the Subordinated Securities
will be subordinated to the Class B Notes to
the extent described herein; and the
Subordinated Securities will be subordinated
to the Class C Notes to the extent described
herein. See "DESCRIPTION OF THE NOTES --
ALLOCATIONS" herein.
The Subordinated Securities. On the Closing Date, the Trust will also
issue ______% Class D Receivables-Backed
Notes (the "SUBORDINATED NOTES" ) with an
aggregate principal balance of $16,051,000
(the "INITIAL CLASS D NOTE PRINCIPAL
BALANCE"), as well as the Class E Certificate
(the "CERTIFICATE", and, together with the
Subordinated Notes, the "SUBORDINATED
SECURITIES") with an initial certificate
balance of $8,025,000; the Certificate will
not bear interest. The rights of the holders
of the Subordinated Securities to receive
distributions will be subordinated to the
rights of the Noteholders to receive
distributions with respect to the Notes to
the extent described herein. See
"DESCRIPTION OF THE NOTES - ALLOCATIONS"
herein.
A. Class D Notes. . . . . . The Initial Class D Note Principal
Balance is equal to approximately 3.00%
of the initial Aggregate Discounted
Contract Balance and will be issued
pursuant to the Indenture. The
Subordinated Notes are not being offered
and sold hereby and are expected to be
sold concurrently with the Notes in a
private placement.
B. Class E Certificate. . . The Certificate will represent
fractional undivided beneficial equity
interests in the Trust, including the
residual interest in amounts in the
Reserve Fund (after the payment of all
outstanding interest and principal on
the Notes and the Subordinated Notes),
and will be issued pursuant to the Trust
Agreement. The Certificates are not
being offered and sold hereby. The
Trust Depositor is expected initially to
retain the Certificate, although the
Certificate could be subsequently
conveyed in a separate transaction
subject to certain restrictions to
ensure the Trust is not treated as a
taxable entity for federal income tax
purposes.
The Trust. . . . . . . . . . The Trust is a business trust established
under the laws of the State of Delaware
pursuant to the Trust Agreement. The
activities of the Trust are limited by the
terms of the Trust Agreement to acquiring,
owning and managing the Contracts and related
assets, issuing and making payments on the
Notes and the Subordinated Securities and
other activities related thereto.
Trust Assets . . . . . . . . The property of the Trust (the "TRUST
ASSETS") will include (i) the Contracts
transferred to the Trust on the Closing Date
with an Aggregate Discounted Contract Balance
of $535,019,738 as of the Cutoff Date
(together with Additional Contracts and/or
Substitute Contracts that may be transferred
to the Trust from time to time as described
herein), (ii) all monies at any time paid or
payable thereunder or in respect thereof from
and after the Cutoff Date applicable to such
Contracts, in the form of (A) Scheduled
Payments (as defined herein) inclusive of
such payments received through Vendor
recourse or support arrangements, but
excluding the Excluded Amounts,
(B) Prepayments (as defined herein), and
(C) Recoveries (including any derived from
the disposition of related Equipment)
received with respect to Defaulted Contracts
(in each case
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<PAGE>
as such terms are defined in this "SUMMARY OF
TERMS"), (iii) the related Equipment (or a
security interest therein), (iv) with respect
to Contracts which are Vendor Loans, the
Applicable Security related thereto, (v) such
amounts as from time to time may be held in
the Collection Account or any related account
or subaccount under the Sale and Servicing
Agreement or the Indenture, together with
earnings on funds therein, (vi) the rights of
the Trust Depositor under the Transfer and
Sale Agreement, (vii) any amounts received
with respect to the Guaranteed Residual
Investments, (viii) any late charges relating
to a Contract which were included in the
Contract's terms as of the Cutoff Date ("LATE
CHARGES"), (ix) amounts available, if any, in
the Reserve Fund, together with earnings on
the funds therein, up to the Reserve Fund
Amount and (x) proceeds of any of the
foregoing.
A. Contracts. . . . . . . . All of the Contracts to be included in the
Trust (sometimes referred to herein,
collectively, as the "CONTRACTS POOL" or the
"TRANSFERRED CONTRACTS") consist of
conditional sale agreements (each, a "CSA"),
promissory notes with related security
agreements (each, a "SECURED NOTE"),
operating and finance leases (each, a
"LEASE"), installment payment agreements
(each, an "IPA") or other similar types of
financing agreements (each, a "FINANCING
AGREEMENT") covering Financed Items (which
may or may not be secured by such Financed
Items) or, in the case of Vendor Loans,
secured by End-User Contracts which, in turn,
cover Financed Items.
With respect to the Contracts, the Seller
will make certain representations and
warranties in the Transfer and Sale
Agreement, including that: (i) the
information with respect to the Contracts,
Secondary Contracts and Equipment securing
such Contracts is true and correct in all
material respects; (ii) immediately prior to
the transfer of each Contract and the
interest in any related Equipment to the
Trust Depositor, such Contract was owned by
the Seller free and clear of any adverse
claim other than Permitted Liens; (iii) each
Contract did not have any delinquent payment
thereon where such payment was delinquent for
more than 60 days and the Contract is not
otherwise in default; (iv) each Contract is a
valid and binding payment obligation of the
obligor and is enforceable in accordance with
its terms other than for a discharge in the
bankruptcy of the Obligor; and (v) no adverse
selection procedure was used in selecting the
Contracts for transfer (I.E. the Contracts
sold, assigned and transferred to the Trust
were not intentionally chosen by the Seller
to be of lesser credit quality or
characteristics as those Contracts retained
by the Seller and not conveyed to the Trust).
With respect to Leases, the Seller will
represent in the Transfer and Sale Agreement
(i) that such Leases are "NET LEASES" and
contain "HELL OR HIGH WATER" provisions in
favor of the Seller, which obligates each
applicable lessee at various levels (each, a
"LESSEE") to make all payments scheduled
under its Lease, without setoff (to the
extent a Lease is not a "NET LEASE" which
contains a "HELL OR HIGH WATER" provision, in
which such instance, such Lease will receive
the benefit of a Vendor Guarantee (See "THE
CONTRACTS--PROGRAM AGREEMENTS WITH
VENDORS")), or (ii) with respect to Leases
with Lessees that are governmental entities
or municipalities, if such Lease is cancelled
in accordance with its terms, either (x) the
Vendor (as defined in this "SUMMARY OF
TERMS") which assigned such Lease to the
Seller is unconditionally obligated to
repurchase such Lease from the Seller 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 (y)
pursuant to the Transfer and Sale Agreement,
the Seller has indemnified the Trust
Depositor (and any assignee thereof) against
such cancellation in an amount 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 (x). See "THE CONTRACTS GENERALLY"
and "THE TRANSFER AND SALE AGREEMENT AND SALE
AND SERVICING AGREEMENT
GENERALLY--REPRESENTATIONS AND WARRANTIES"
herein.
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<PAGE>
The Transferred Contracts have been selected
by the Seller from its portfolio of CSAs,
Secured Notes, Leases, IPAs, Financing
Agreements and Vendor Loans, have the
characteristics specified in the Transfer and
Sale Agreement and Sale and Servicing
Agreement and described herein, and (except
for Additional Contracts or Substitute
Contracts as defined in this "SUMMARY OF
TERMS") will be purchased by the Trust
Depositor from the Seller on the Closing Date
pursuant to the Transfer and Sale Agreement.
See "THE TRANSFER AND SALE AGREEMENT AND SALE
AND SERVICING AGREEMENT
GENERALLY--REPRESENTATIONS AND WARRANTIES",
"USE OF PROCEEDS" and "THE CONTRACTS POOL"
herein.
As of the Cutoff Date, the Contract Pool had
the following characteristics (unless
otherwise noted, percentages are calculated
by reference to Discounted Contract Balances
of the related Contracts as a percentage of
the Aggregate Discounted Contract Balance of
the Contract Pool. The Discounted Contract
Balances and the Aggregate Discounted
Contract Balance utilized in clauses (i)
through (vii) below were calculated utilizing
the Statistical Discount Rate (as defined in
this section):
(i) there were 12,326 Contracts in
the Contract Pool;
(ii) the Aggregate Discounted Contract
Balance, or ADCB (as defined in this "SUMMARY
OF TERMS") of the Transferred Contracts was
$535,019,738;
(iii) the final scheduled payment date
of the Transferred Contract with the latest
maturity or expiration as of the Cutoff Date
was October 31, 2004;
(iv) the average Discounted Contract
Balance was approximately $43,406;
(v) all of the Contracts had (A)
original terms to maturity of not less than 2
months and not more than 96 months, with a
weighted average original term to maturity of
approximately 50.32 months, and (B) a
remaining term to maturity of not less than 1
month and not more than 83 months, with a
weighted average remaining term to maturity
of approximately 43.78 months;
(vi) of such Contracts, approximately
3.66% were Vendor Loans; and
(vii) the Obligors (as defined in this
"SUMMARY OF TERMS") on approximately 11.98%
of the Contracts were located in the State
of Texas; approximately 6.70% were located
in the State of California; approximately
6.45% were located in the State of New York;
and in no other state represented more
than 5.00% of the Contracts.
See "THE TRANSFER AND SALE AGREEMENT AND THE
SALE AND SERVICING AGREEMENT
GENERALLY--CONCENTRATION AMOUNTS" herein.
For the twelve-month periods ended December
31, 1996 and ending December 31, 1995, the
Seller has recognized (i) delinquencies of
4.54% and 5.22%, respectively with respect to
its portfolio and (ii) net losses of 0.32%
and 0.00% with respect to its portfolio. See
"THE CONTRACTS POOL -- DELINQUENCY AND LOAN
LOSS INFORMATION".
The Statistical Discount Rate is equal to
6.878% (the "STATISTICAL DISCOUNT RATE").
Although the Discounted Contract Balances and
the Aggregate Discounted Contract Balance
calculated at the Discount Rate will vary
somewhat from the Discounted Contract
Balances and Aggregate Discounted Contract
Balance calculated at the Statistical
Discount Rate, such variance will not be
material.
9
<PAGE>
For further information regarding the
Transferred Contracts, see "THE CONTRACTS
POOL" and "THE CONTRACTS GENERALLY", as well
as "THE TRANSFER AND SALE AGREEMENT AND SALE
AND SECURITY AGREEMENT
GENERALLY--REPRESENTATIONS AND WARRANTIES"
and "--CONCENTRATION AMOUNTS" herein.
Between the Cutoff Date and the Closing Date
some amortization of the pool is expected to
occur. In addition, certain Contracts
included in the pool as of the Cutoff Date
may be determined not to meet the eligibility
requirements for the final pool, and may not
be included in the final pool. To the extent
a Contract is determined not to meet the
eligibility requirements for the pool, the
Seller, through the Trust Depositor, may
pursue one of two options: (1) substitute a
new Contract for the ineligible Contract or
(2) repurchase the ineligible Contract. To
the extent, the Seller, through the Trust
Depositor, replaces an ineligible Contract,
the replacement Contract must meet the terms
and conditions of a Substitute Contract, (see
"THE TRANSFER AND SALE AGREEMENT AND SALE AND
SERVICE AGREEMENT GENERALLY - REPRESENTATIONS
AND WARRANTIES"). While the statistical
distribution of the characteristics as of the
Closing Date for the initial Contracts Pool
will vary somewhat from the statistical
distribution of such characteristics as of
the Cutoff Date as presented in this
Prospectus, such variance will not be
material.
Generally, the Contracts not constituting
Leases are prepayable by their terms by the
Obligors thereon; in many (but not all)
instances, such terms require a prepayment
penalty. The Contracts constituting Leases
generally will be non-cancelable by the
Obligors. The Seller may, under the terms of
the Sale and Servicing Agreement, permit or
agree to the early termination or full
prepayment of any such Contract included in
the Contract Pool in certain circumstances,
and on the terms and subject to the
conditions more fully specified in the Sale
and Servicing Agreement (any prepayment of a
Contract, whether pursuant to its terms or in
the Servicer's discretion being an "EARLY
TERMINATION", with the Contract related
thereto being an "EARLY TERMINATION CONTRACT"
or "PREPAID CONTRACT"). Such circumstances
may include, without limitation, a full or
partial buyout of the Equipment which is the
subject of the Contract, or an equipment
upgrade.
In the event of an Early Termination which
has been prepaid in full, the Trust Depositor
will have the option to cause the Trust to
reinvest the proceeds of such Early
Termination in one or more Contracts having
similar characteristics to such terminated
Contract (each, an "ADDITIONAL CONTRACT").
In addition, the Seller will have the option
under the Transfer and Sale Agreement to
cause the Trust Depositor, pursuant to the
terms of the Sale and Servicing Agreement, to
substitute into the Trust one or more
Contracts having similar characteristics
(each, a "SUBSTITUTE CONTRACT") for Defaulted
Contracts (as defined in "DESCRIPTION OF
NOTES--DEFAULTED CONTRACTS"), and Contracts
following a material modification to or
adjustment of the terms of such Contract
which modification or adjustment would not
otherwise be permissible under the Sale and
Servicing Agreement (unless the Contract was
to be prepaid in full to the Trust and
refinanced by the Seller with a new, modified
Contract outside the Trust) (each, an
"ADJUSTED CONTRACT"). The Aggregate
Discounted Contract Balance (as defined
herein) of the Defaulted Contracts and
Adjusted Contracts for which the Seller may
cause the substitution of Substitute
Contracts is limited to an amount not in
excess of 10% of the Aggregate Discounted
Contract Balance of the Contracts as of the
initial Cutoff Date. The Seller will also be
permitted to substitute a Substitute Contract
for a Contract which the Seller would
otherwise be required to repurchase due to
certain representations or warranties
relating thereto proving to have been
incorrect (a "WARRANTY CONTRACT") or an Early
Termination Contract, without regard to the
10% limitation described above. With respect
to replacing either a Defaulted Contract
10
<PAGE>
or an Adjusted Contract with a Substitute
Contract (which substitution is not an
obligation of the Seller but is in its sole
and absolute discretion), such Substitute
Contract must meet the Contracts Pool
concentration limitation as described in "THE
TRANSFER AND SALE AGREEMENT AND SALE AND
SERVICING AGREEMENT GENERALLY" as well as the
other substitution requirements described
herein. See "THE TRANSFER AND SALE AGREEMENT
AND THE SALE AND SERVICING AGREEMENT
GENERALLY--REPRESENTATIONS AND WARRANTIES"
herein.
The terms of a Contract may be subjected to
material modifications or adjustments for
administrative reasons or at the request of
the Obligor or related Vendor for such
Contract due to a variety of circumstances.
Such material modifications may result in
adjustments to the Contract commencement
date, the stated periodic payment date for
payments due, the amount of the periodic
payment or the equipment subject to the
Contract. With respect to a Contract which
has been materially modified or adjusted,
such Contract will either be prepaid by the
Obligor or shall be substituted for by the
Seller consistent with the conditions
described in the preceding paragraph. There
may also occasionally be non-material
adjustments or modifications in Contract
terms which may be effected by the Servicer
on behalf of the Trust without Noteholder
consent and without affecting the Contract's
status as part of the Trust.
Additional Contracts and Substitute Contracts
will be originated and added to the Trust
using the same credit criteria and
eligibility standards as the Contracts in the
Contracts Pool on the Closing Date.
Information with respect to such Additional
Contracts or Substitute Contracts, to the
extent deemed material, will be included in
periodic reports under the Exchange Act filed
by the Servicer with the Commission on behalf
of the Trust as are required under the
Exchange Act.
In no event will the aggregate scheduled
payments of the Contracts, after the
inclusion in the Trust of the Substitute
Contracts and reinvestment in Additional
Contracts, be materially less than the
aggregate scheduled payments of the Contracts
prior to such substitution or reinvestment.
In addition, either the final scheduled
payment on such Substitute Contract or
Additional Contract will be on or prior to
the November 2004 Distribution Date or, to
the extent the final payment on such Contract
is due after the November 2004 Distribution
Date, only scheduled payments due on or prior
to such date may be included in the
Discounted Contract Balance of such Contract
for purpose of making any calculation under
the Indenture or the Sale and Servicing
Agreement.
The Servicer is not authorized to permit an
Early Termination, without the addition to
the Trust of a related Additional 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 Seller/Servicer) on such terminated
Contract is equal at least to the then
Discounted Contract Balance of the Contract,
plus any delinquent payments (inclusive of
interest) thereon.
The Seller defines Contract delinquency as a
payment which is not made consistent with the
Contract terms and a Defaulted Contract as a
Contract for which (i) the Obligor thereunder
is subject to an Insolvency Event, or (ii) a
full contractual payment has not been
received from the Obligor (or the Vendor if
Vendor recourse is applicable) for 120 days
or such shorter period as the Seller may
determine consistent with its collection
policy. (See "NEWCOURT CREDIT GROUP INC. AND
NEWCOURT FINANCIAL USA INC.--CONTRACT
COLLECTIONS."
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<PAGE>
B. Equipment and Other. . . All of the Seller's right, title and interest
Financed Items (which may be limited to a security interest)
in the Equipment, if any, subject to each
Lease and the security interest of the Seller
in the Equipment, if any, subject to each
CSA, Secured Note, IPA, Financing Agreement
and Vendor Obligation included in the
Contract Pool will be transferred to the
Trust. Equipment will include, but shall not
be limited to, a wide variety of new and used
information technology equipment (such as
mainframe and mini computers, computer work
stations, personal computers, data storage
devices and other computer related peripheral
equipment), communications equipment (such as
telephone switching and networking systems),
commercial business and industrial equipment
(such as printing presses, machine tools and
other manufacturing equipment, photocopiers,
facsimile machines and other office
equipment, energy savings and control
equipment, automotive diagnostic and
automated testing equipment), medical
equipment (such as diagnostic and therapeutic
examination equipment for radiology, nuclear
medicine and ultrasound and laboratory
analysis equipment), resources equipment
(such as feller-bunchers and grapplers), and
transportation and construction equipment
(such as heavy and medium duty trucks and
highway trailers, school buses, bulldozers,
loaders, graters, excavators, forklifts and
other materials handling equipment, golf
carts and other road and off-road machinery).
See "THE CONTRACTS GENERALLY--EQUIPMENT" and
"THE CONTRACTS POOL" herein. In the event
the party obligated to make payments under
any Contract (as to a Contract, the
"OBLIGOR") defaults in such payments, the
Servicer will follow its customary and usual
collection procedures, which may include the
repossession and sale of any related
Equipment on behalf of the Trust. Any
Recoveries (as defined herein) from such sale
shall constitute Available Amounts (as
defined in "DESCRIPTION OF THE
NOTES--ALLOCATIONS") "THE CONTRACTS
GENERALLY--EQUIPMENT", and "DESCRIPTION OF
THE NOTES--DEFAULTED CONTRACTS" herein.
Certain End-User Contracts cover Financed
Items other than Equipment, including
computer software ("SOFTWARE") and related
support and consulting services
(collectively, "SERVICES") and will represent
approximately 11.54% of the ADCB of the
Contracts Pool on the Closing Date. The
Trust will not have title to or a security
interest in such Software licensed under or
securing a Contract or the proceeds thereof
nor will it own such Services, and may not be
able to realize any value therefrom under a
related Contract upon a default by the
Obligor. See "THE CONTRACTS
GENERALLY--SOFTWARE AND SERVICES" herein.
C. Collection Account . . . A trust account will be established by the
Servicer in the name of and maintained by the
Indenture Trustee (the "COLLECTION ACCOUNT")
into which all amounts that will be
collected for the Trust will be deposited in
accordance with the Indenture and the Sale
and Servicing Agreement. See "DESCRIPTION OF
THE NOTES--COLLECTION ACCOUNT" herein.
D. Vendor Agreements. . . . Each of the Seller's Vendor finance program
agreements (each, a "PROGRAM AGREEMENT") are
agreements with equipment manufacturers,
dealers and distributors or computer software
licensors or distributors as well as finance
companies which extend credit to such parties
("VENDORS") which, in each case, provide the
Seller with the opportunity to finance
transactions relating to the acquisition or
use by an End-User of a Vendor's Equipment,
Software, Services or other products. Some
of these Program Agreements take the form of
a referral relationship, which may or may not
include credit support from the Vendor. All
rights (but not obligations) of the Seller
under the Program Agreements with respect to
the Contracts are generally assignable and
will be so assigned by the Seller to the
Trust Depositor and in turn conveyed by the
Trust Depositor to the Trust. Such rights
may include various forms of support to the
Seller under such Program Agreements
including representations and warranties by
the Vendor in respect of the End-User
Contracts assigned by the Vendor to the
Seller and related Equipment, Software or
Services, credit support with respect to
defaults by End-Users and equipment
repurchase and
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<PAGE>
remarketing arrangements upon early
termination of End-User Contracts upon a
default by the End-User. See "THE CONTRACTS
GENERALLY--VENDOR AGREEMENTS" herein.
In addition to the foregoing, the Seller may
enter into assignment agreements (each a
"VENDOR ASSIGNMENT"; collectively, with the
Program Agreements, "VENDOR AGREEMENTS") from
time to time with Vendors pursuant to which
individual End-User Contracts originated by
Vendors are assigned to the Seller, rather
than pursuant to a Program Agreement. Each
Vendor Assignment will be made either with or
without recourse against the Vendor for
End-User defaults and will generally contain
many, if not all, of the representations,
warranties and covenants typically contained
in Program Agreements, as well as a Vendor
repurchase requirement in the event of a
breach by the Vendor of such representations,
warranties or covenants. Vendor Assignments
may or may not provide for any Vendor
remarketing support in the event of an
End-User default.
E. Reserve Fund . . . . . . A trust account has been established by the
Trust Depositor in the name of, and
maintained by, the Indenture Trustee (the
"RESERVE FUND"). On the Closing Date the
Trust Depositor will deposit $8,025,000 in
the Reserve Fund which is equal to 1.50% of
the ADCB of the Contracts Pool as of the
initial Cutoff Date (the "RESERVE FUND
AMOUNT"). Amounts in the Reserve Fund may be
released to the Certificateholder in the
event amounts therein exceed the then
outstanding Principal Amounts of the Notes
and the Subordinated Notes. Additionally,
amounts on deposit in the Reserve Fund in
excess of the Reserve Fund Amount will be
paid to the Certificateholder. On each
Distribution Date, amounts on deposit in the
Reserve Fund will be applied as described
under "DESCRIPTION OF THE NOTES--ALLOCATIONS"
and "--RESERVE FUND."
Terms of the Notes . . . . . The principal terms of the Notes will be as
described below:
A. Interest . . . . . . . . The Class A-1 Notes will bear interest at the
rate of ______% per annum (the "CLASS A-1
INTEREST RATE"), the Class A-2 Notes will
bear interest at the rate of _____% per
annum (the "CLASS A-2 INTEREST RATE"), the
Class A-3 Notes will bear interest at the
rate of _____% per annum (the "CLASS A-3
INTEREST RATE"), the Class A-4 Notes will
bear interest at the rate of _____% per annum
(the "CLASS A-4 INTEREST RATE"), the Class B
Notes will bear interest at the rate of %
per annum (the "CLASS B INTEREST RATE"), the
Class C Notes will bear interest at the rate
of ______% per annum (the "CLASS C INTEREST
RATE") and the Subordinated Notes will bear
interest at the rate of _____% per annum (the
"SUBORDINATED NOTE INTEREST RATE" or "CLASS D
INTEREST RATE"). Interest with respect to
the Class A-1 Notes will be calculated on the
basis of actual days elapsed over a year of
360 days; interest with respect to all other
Notes and the Subordinated Notes will be
calculated on the basis of a year of 360 days
consisting of twelve 30 day months.
Interest on the outstanding principal amount
of the Notes will accrue from and including
the most recent Distribution Date on which
interest has been paid (or, in the case of
the initial Distribution Date, from and
including the Closing Date) but excluding the
following Distribution Date (each period for
which interest accrues on the Notes, an
"ACCRUAL PERIOD"). Interest on the Notes
will be payable on each Distribution Date,
commencing December 22, 1997, to the holders
of record of the Class A-1 Notes (the "CLASS
A-1 NOTEHOLDERS"), the holders of record of
the Class A-2 Notes (the "CLASS A-2
NOTEHOLDERS"), the holders of record of the
Class A-3 Notes (the "CLASS A-3
NOTEHOLDERS"), the holders of record of the
Class A-4 Notes (the "CLASS A-4
NOTEHOLDERS"), the holders of record of the
Class B Notes (the "CLASS B NOTEHOLDERS") and
the holders of record of the Class C Notes
(the "CLASS C NOTEHOLDERS"; together with
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<PAGE>
the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders, the
Class A-4 Noteholders and Class B
Noteholders, the "NOTEHOLDERS") as of the
related Record Date. See "DESCRIPTION OF THE
NOTES--GENERAL" and "THE INDENTURE--PAYMENTS
OF PRINCIPAL AND INTEREST" herein.
Interest on the Class A-1 Notes is payable on
a Distribution Date from Available Amounts
available on such date (after application of
such Available Amounts to repay any
outstanding Servicer Advances as defined
herein, and to pay the Servicing Fee, each
as defined in this "SUMMARY OF TERMS"). Such
Available Amounts represent primarily
collections of payments due under the
Contracts (including realization of amounts
from Vendor recourse, if applicable and any
amounts realized from Guaranteed Residual
Investments), Late Charges, certain amounts
received upon the prepayment or purchase of
Contracts or liquidation of the Contracts and
disposition of the related Equipment upon
defaults thereunder, and proceeds of Servicer
Advances (as defined herein), if any, amounts
available in the Reserve Fund, if any, (up to
the Reserve Fund Amount) as well as earnings
on amounts held in the Collection Account and
the Reserve Fund. Interest on the Class A-2
Notes is payable on a Distribution Date from
the Available Amounts available on such date,
(after application of such Available Amounts
to repay any outstanding Servicer Advances,
to pay the Servicing Fee and to pay interest
on the Class A-1 Notes) subject to the
proviso in the second succeeding sentence.
Interest on the Class A-3 Notes is payable on
a Distribution Date from the Available
Amounts on such date, (after application of
such Available Amounts to repay any
outstanding Servicer Advances, to pay the
Servicing Fee, to pay interest on the Class
A-1 Notes and the Class A-2 Notes) subject to
the proviso in the succeeding sentence.
Interest on the Class A-4 Notes is payable on
a Distribution Date from the Available
Amounts on such date, (after application of
such Available Amounts to repay any
outstanding Servicer Advances, to pay the
Servicing Fee, to pay interest on the Class
A-1 Notes, the Class A-2 Notes and the Class
A-3 Notes); PROVIDED, HOWEVER, in the event a
Restricting Event has occurred and is
continuing or an Event of Default has
occurred, interest on the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes (to the extent Available
Amounts are insufficient to pay the entire
amount of accrued interest on the Class A-1
Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes) will be paid
from Available Amounts PRO RATA based on the
then outstanding Principal Amounts of such
Class A-1 Notes Class A-2 Notes, Class A-3
Notes and Class A-4 Notes. Interest on the
Class B Notes is payable on a Distribution
Date from the Available Amounts available on
such date, (after application of such
Available Amounts to repay any outstanding
Servicer Advances, to pay the Servicing Fee,
and to pay interest on the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes). Interest on the Class C Notes is
payable on a Distribution Date from Available
Amounts available on such date, (after
application of such Available Amounts to
repay any outstanding Servicer Advances, to
pay the Servicing Fee, and to pay interest on
the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes and the Class B
Notes). Interest on the Subordinated Notes
is payable on a Distribution Date from
Available Amounts available on such date,
(after application of such Available Amounts
to repay any outstanding Servicer Advances,
to pay the Servicing Fee, and to pay interest
on the Class A-1 Notes, Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the
Class B Notes and the Class C Notes). See
"DESCRIPTION OF THE NOTES--ALLOCATIONS"
herein.
B. Principal
General. . . . . . . . . Principal of the Class A-1 Notes will be
payable on each Distribution Date in an
amount equal to the Class A-1 Principal
Payment Amount (as defined in "DESCRIPTION OF
THE NOTES") for such Distribution Date, to
the extent Available
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<PAGE>
Amounts are available therefor, but after
payment of unpaid Servicer Advances, the
Servicing Fee, interest payments on the Notes
and the Subordinated Notes.
Principal of the Class A-2 Notes will be
payable on each Distribution Date in an
amount equal to the Class A-2 Principal
Payment Amount (as defined in "DESCRIPTION OF
THE NOTES") for such Distribution Date, to
the extent Available Amounts are available
therefor, but after payment of unpaid
Servicer Advances, the Servicing Fee,
interest payments on the Notes and
Subordinated Notes and the Class A-1
Principal Payment Amount.
Principal of the Class A-3 Notes will be
payable on each Distribution Date in an
amount equal to the Class A-3 Principal
Payment Amount (as defined in "DESCRIPTION OF
THE NOTES") for such Distribution Date, to
the extent Available Amounts are available
therefor, but after payment of unpaid
Servicer Advances, the Servicing Fee,
interest payments on the Notes and
Subordinated Notes, the Class A-1 Principal
Payment Amount and the Class A-2 Principal
Payment Amount.
Principal of the Class A-4 Notes will be
payable on each Distribution Date in an
amount equal to the Class A-4 Principal
Payment Amount (as defined in "DESCRIPTION OF
THE NOTES") for such Distribution Date, to
the extent Available Amounts are available
therefor, but after payment of unpaid
Servicer Advances, the Servicing Fee,
interest payments on the Notes and
Subordinated Notes, the Class A-1 Principal
Payment Amount, the Class A-2 Principal
Payment Amount and the Class A-3 Principal
Payment Amount.
Principal of the Class B Notes will be
payable on each Distribution Date in an
amount equal to the Class B Principal Payment
Amount (as defined in "DESCRIPTION OF NOTES")
for such Distribution Date, to the extent
Available Amounts are available therefor, but
after payment of unpaid Servicer Advances,
the Servicing Fee, interest payments on the
Notes and the Subordinated Notes, and the
payment of the Class A-1 Principal Payment
Amount, the Class A-2 Principal Payment
Amount, the Class A-3 Principal Payment
Amount and the Class A-4 Principal Payment
Amount.
Principal of the Class C Notes will be
payable on each Distribution Date in an
amount equal to the Class C Principal Payment
Amount (as defined herein) for such
Distribution Date, to the extent Available
Amounts are available therefor, but after
payment of unpaid Servicer Advances, the
Servicing Fee, interest payments on the Notes
and the Subordinated Notes, and the payment
of 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 and the Class B
Principal Payment Amount. See "DESCRIPTION
OF THE NOTES--ALLOCATIONS" herein.
Principal of the Subordinated Notes will be
payable on each Distribution Date in an
amount equal to the Class D Principal Payment
Amount (as defined in the "DESCRIPTION OF THE
NOTES") for such Distribution Date, to the
extent Available Amounts are available
therefor, but after payment of unpaid
Servicer Advances, the Servicing Fee,
interest payments on the Notes and the
Subordinated Notes, and the payment of 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 and the Class C
Principal Payment Amount. See "DESCRIPTION
OF THE NOTES --ALLOCATIONS" herein.
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
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<PAGE>
Payment Amount, the Class B Principal Payment
Amount, the Class C Principal Payment Amount
and the Class D Principal Payment Amount
represent, in each case, a calculation of the
amount to be payable from otherwise Available
Amounts on a Distribution Date in respect of
principal on 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 or the Subordinated Notes. Such amount
generally is calculated, for the Subordinated
Notes and each Class of Notes other than the
Class A-1 Notes, as a fractional percentage
of the amount that the ADCB of the Contract
Pool has declined or been deemed to decline
(whether through payment, prepayment, default
and writeoff, determination of ineligibility
or other mechanism as described further
herein) during the most recent Collection
Period (I.E., full calendar month), with the
fractional percentage for each Class
determined based on the proportion that the
Initial Principal Balance of such Class
(treating, for purposes of this calculation
only, Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes as one Class) bore to Initial
Principal Balance of all Classes of Notes
(excluding the Class A-1 Notes) and the
Subordinated Notes as of the Cutoff Date;
PROVIDED, HOWEVER, the Class A-1 Notes will
receive 100% of Available Amounts with
respect to their principal prior to the
payment of any principal on the Class A-2
Notes, the Class A-3 Notes, the Class A-4
Notes, the Class B Notes, the Class C Notes
and Subordinated Notes. Assuming payment in
full of the Class A-1 Notes, (as of the
Cutoff Date) such percentages are: (i) 88.85%
for the Class A-2 Notes, the Class A-3 Notes,
and the Class A-4 Notes; (ii) 4.59% for the
Class B Notes until the outstanding principal
of the Class A Notes (as defined in
"DESCRIPTION OF THE NOTES") has been paid in
full and 41.18% thereafter; (iii) 2.62% for
the Class C Notes until the outstanding
principal of the Class A Notes has been paid
in full, 23.53% until the outstanding
principal of the Class B Notes has been paid
in full and 40.00% thereafter; and (iv) 3.93%
for Subordinated Notes until the outstanding
principal amount of the Class A Notes has
been paid in full, 35.29% until the
outstanding principal amount of the Class B
Notes has been paid in full, 60.00% until
the outstanding principal amount of the Class
C Notes have been paid in full and 100%
thereafter. Accordingly, if sufficient
Available Amounts exist, a proportionate
amount of principal would be repaid on any
given Distribution Date on each of the Class
A-2 Notes, the Class A-3 Notes, the Class A-4
Notes, the Class B Notes and the Class C
Notes (as well as the Subordinated Notes)
after payment of the Class A-1 Principal
Payment Amount. Upon the occurrence of an
Event of Default, or upon the occurrence and
during the continuance of a Restricting Event
(each as defined in "DESCRIPTION OF THE
NOTES"), however, the formula for determining
such principal payment amount, after payment
in full of the Class A-1 Notes, will change
with the result that, for any Distribution
Date occurring after such adverse event,
principal on the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B
Notes and the Class C Notes (and also the
Subordinated Notes) will be accelerated and
paid sequentially, I.E., no principal will be
paid on the Class A-3 Notes, the Class A-4
Notes, the Class B Notes, the Class C Notes
or the Subordinated Notes, until the Class
A-2 Notes have been paid in full; no
principal will be paid on the Class A-4
Notes, the Class B Notes, the Class C Notes
or the Subordinated Notes, until the Class
A-3 Notes have been repaid in full; no
principal will be paid on the Class B Notes,
Class C Notes or the Subordinated Notes until
the Class A-4 Notes have been paid in full;
no principal will be paid on the Class C
Notes or the Subordinated Notes, until the
Class B Notes have been paid in full; and no
principal will be paid on the Subordinated
Notes until the Class C Notes have been
repaid in full. See "DESCRIPTION OF THE
NOTES--ALLOCATIONS" herein.
Stated Maturity Date . . . . The stated maturity date of the Class A-1
Notes (the "CLASS A-1 NOTES MATURITY DATE")
is the December 1998 Distribution Date and
the stated maturity
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<PAGE>
date (the "MATURITY DATE") for the other
Notes and the Subordinated Securities is the
May 2005 Distribution Date.
Expected Amortization. . . . The expected amortization schedule for the
Schedule Notes is set forth herein under "DESCRIPTION
OF THE NOTES--PAYMENTS OF PRINCIPAL".
Although the Maturity Date for the Notes is
May 20, 2005, the expected final payment date
for the Notes is June 20, 2001, assuming a
CPR of 11% and that the Trust Depositor
redeems the Notes upon satisfaction of the
Cleanup Call Condition.
C. Optional Redemption. . . 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 (as defined herein) of the
Contract Pool at such time is less than 10%
of the initial ADCB of the Contract Pool as
of the Cutoff Date (the "CLEANUP CALL
CONDITION"). The redemption price for such
outstanding Notes to be redeemed in such
event (the "REDEMPTION PRICE") will be equal
to the unpaid principal amount of the Notes
and Subordinated Notes plus accrued and
unpaid interest thereon through the date of
redemption. The Trust Depositor will fund
such redemption through concurrent receipt of
a payment from the Seller pursuant to the
Seller's right under the Transfer and Sale
Agreement to repurchase from the Trust
Depositor for the Redemption Price, and
concurrently cause the Trust Depositor to
redeem and repurchase from the Trust, the
remaining Contracts held in the Trust when
the Cleanup Call Condition has been
satisfied.
Aggregate Discounted . . . . The "AGGREGATE DISCOUNTED CONTRACT BALANCE"
Contract Balance or "ADCB" with respect to the Contracts means
the sum of the Discounted Contract Balances
of each Contract included in the group of
Contracts for which an ADCB determination is
being made.
"DISCOUNTED CONTRACT BALANCE" means with
respect to any Contract, (A) 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, and (B) as of any other date
of determination, the sum of (1) the present
value of all of the remaining Scheduled
Payments becoming due under such Contract on
or after such date of determination
discounted monthly at the Discount Rate, and
(2) 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 Defaulted
Contracts and Early Termination Contracts)
that have not then been received by the
Servicer.
The Discounted Contract Balance for each
Contract shall be calculated assuming:
(a) All payments due in any
Collection Period are due
on the last day of the
Collection Period;
(b) Payments are discounted
on a monthly basis using
a 30 day month and a 360
day year; and
(c) 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.
"DISCOUNT RATE" means, at any date of
determination, ____% which is equal to the
sum of (i) the weighted average of the Class
A-1 Interest Rate, Class A-2 Interest Rate,
Class A-3 Interest Rate, Class A-4 Interest
Rate, Class B Interest Rate, Class C Interest
Rate and Class D Interest
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<PAGE>
Rate, each weighted by (x) the Initial Class
A-1 Note Principal Balance, Initial Class A-2
Note Principal Balance, Initial Class A-3
Note Principal Balance, Initial Class A-4
Note Principal Balance, Initial Class B Note
Principal Balance, Initial Class C Note
Principal Balance or Initial Class D Note
Principal Balance, as applicable, and (y) the
expected weighted average life of each Class
of Notes or the Subordinated Notes, as
applicable, assuming a CPR of 11%, and
(ii) the Servicing Fee Percentage. The
Statistical Discount Rate is equal to 6.878%.
See "THE CONTRACTS POOL".
"SCHEDULED PAYMENTS" means, with respect to
any Contract, the monthly, quarterly,
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 as defined
herein or payments with respect to Residual
Investments other than Guaranteed Residual
Investments as defined herein).
Subordination. . . . . . . . The Class A-1 Notes will be senior in right
of payment to the Class A-2 Notes, Class A-3
Notes, Class A-4 Notes (except as described
herein; see --"TERMS OF THE NOTES A.
INTEREST" above), Class B Notes, Class C
Notes and the Subordinated Securities; the
Class A-2 Notes will be senior in right of
payment to the Class A-3 Notes, the Class A-4
Notes, the Class B Notes, the Class C Notes
and the Subordinated Securities. The Class
A-3 Notes will be senior in right of payment
to the Class A-4 Notes, the Class B Notes,
the Class C Notes and the Subordinated
Securities; the Class A-4 Notes will be
senior in right of payment of the Class B
Notes, the Class C Notes and the Subordinated
Securities. The Class B Notes will be senior
in right of payment to the Class C Notes and
the Subordinated Securities; and the Class C
Notes will be senior in right of payment to
the Subordinated Securities; in each case to
the extent described herein. See
"DESCRIPTION OF THE NOTES--ALLOCATIONS" and
"THE INDENTURE--PAYMENTS OF PRINCIPAL AND
INTEREST" herein.
Servicing; Servicing Fee;. . The Servicer will be responsible for
Servicer Advances servicing, managing and administering the
Transferred Contracts and related interests,
and enforcing and receiving collections on
the Contracts. The Servicer will be required
to exercise the degree of skill and care in
performing these functions that it
customarily exercises with respect to similar
property owned or serviced by the Servicer in
its individual capacity. The Seller has in
some cases delegated servicing and collection
functions to an applicable Vendor (or, in
certain limited instances, to a subservicer
acceptable to the Seller) with respect to
End-User Contracts originated through such
Vendor, but in such instances the Servicer
(on behalf of the Trust, in the Trust's
capacity as assignee of the Seller through
the Trust Depositor) retains ultimate
contractual control and responsibility over
the servicing and collection functions
through provisions in the applicable Vendor
Agreements (or agreement with such
subservicer) giving the Seller (and hence the
Servicer, on behalf of the Trust as assignee)
the right to determine or veto certain
servicing decisions and/or to replace or take
over servicing and collection functions from
the Vendor in the event of the Vendor's
default or non-compliance with its servicing
or other obligations.
The Servicer will be entitled to receive (a)
a monthly fee (the "SERVICING FEE") equal to
the product of (i) one-twelfth of .60% (the
"SERVICING FEE RATE") and (ii) the Aggregate
Discounted Contract Balance of all Contracts
as of the beginning of the immediately
preceding Collection Period, payable out of
(a) the Collection Account and (b) certain
other fees paid by the Contract Obligors
("SERVICING CHARGES"), as compensation for
acting as Servicer.
Under certain limited circumstances, the
Servicer may resign or be removed, in which
event either the Indenture Trustee or a third
party meeting the
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<PAGE>
requirements set forth in the Sale and
Servicing Agreement will be appointed as
successor Servicer. See "THE TRANSFER AND
SALE AGREEMENT AND THE SALE AND SERVICING
AGREEMENT GENERALLY--CERTAIN OTHER MATTERS
REGARDING THE SERVICER" and "--SERVICER
DEFAULT" herein.
The Servicer will be required to cause
amounts collected on the Contracts on behalf
of the Trust to be deposited to the
Collection Account maintained by the
Indenture Trustee no later than two Business
Days following the Servicer's determination
that such amounts relate to the Contracts or
the Financed Items. The Servicer may also,
at its option, make advances (each, a
"SERVICER ADVANCE") for delinquent Scheduled
Payments, to the extent it determines in its
sole discretion that such advances will be
recoverable in future periods. Such Servicer
Advances are reimbursable from Available
Amounts as described herein. See "THE
TRANSFER AND SALE AGREEMENT AND THE SALE AND
SERVICING AGREEMENT GENERALLY--COLLECTION AND
OTHER SERVICING PROCEDURES" herein.
Repurchase for Certain . . . The Trust Depositor under the Sale and
Breaches Of Representations Servicing Agreement and the Seller under
And Warranties the Transfer and Sale Agreement will be
obligated to accept the reconveyance of a
Contract and the interest in the related
Equipment from the Indenture Trustee and the
Trust, and to deposit the corresponding
Transfer Deposit Amount (as defined in "THE
TRANSFER AND SALE AGREEMENT AND SALE AND
SERVICING AGREEMENT GENERALLY"), if the
interest of the Trust in any of the related
Equipment, the related Contract, or the
related Contract File (as defined in the "THE
TRANSFER AND SALE AGREEMENT AND SALE AND
SERVICING AGREEMENT GENERALLY") is materially
adversely affected by a breach of a
representation or warranty made by such party
with respect to such Contract and if such
breach has not been cured within thirty (30)
days of discovery of such breach. See also
"SUMMARY OF TERMS--PREPAYMENT CONSIDERATIONS"
below. In the alternative, and at the Trust
Depositor's and Seller's option, the affected
Contract may be replaced with a Substitute
Contract of similar characteristics under the
standards applicable generally to Substitute
Contracts as described herein.
Maturity and Prepayment. . . As noted above, non-Lease Contracts are
Conditions generally prepayable by their terms, and the
Servicer will be authorized to accept
prepayments on Leases in certain
circumstances. Each prepayment on a
Contract, if such Contract is not replaced by
the Trust's reinvestment in a comparable
Additional Contract as described herein, will
shorten the weighted average remaining term
of the Contracts and the weighted average
life of the Notes. Such prepayments of
principal will be included in the Available
Amounts and will be payable to Noteholders on
the Distribution Date following the
Collection Period in which such prepayment
was received, as set forth herein. The rate
of prepayments on the Contracts will also be
affected under certain circumstances relating
to breaches of representations, warranties or
covenants with respect to the Contracts,
since the Trust Depositor will be obligated
to repurchase materially adversely affected
Contracts from the Trust (to be funded
through a corresponding obligation of the
Seller to repurchase such Contracts from the
Trust Depositor) unless the Seller provides a
Substitute Contract for the Contract related
to the breached representation or warranty.
Additionally, the rate of payments on the
Contracts will also be affected by the timing
of Recoveries on Defaulted Contracts unless
the Seller, through the Trust Depositor,
provides a Substitute Contract for the
Defaulted Contract, which substitution is in
the sole and absolute discretion of the
Seller. A higher than anticipated rate of
prepayments will reduce the ADCB of the
Contracts more quickly than expected and
thereby reduce anticipated aggregate interest
payments on the Notes. Any reinvestment
risks resulting from a faster or slower
incidence of prepayment of Contracts will be
borne entirely by the Noteholders and the
holders of the Subordinated Securities. Such
reinvestment risks include the risk that
interest rates may be lower at the time such
holders received payments from the Trust than
interest rates would otherwise have been had
such prepayments not been made or had such
prepayments been made at a different time.
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<PAGE>
Risk Factors . . . . . . . . See "RISK FACTORS" for a discussion of
certain material risks that should be
considered in connection with an investment
in the Notes offered hereby, including
certain legal risks.
Federal Income Tax . . . . . In the opinion of Winston & Strawn, federal
Considerations tax counsel to the Trust Depositor, for
federal income tax purposes, the Notes will
be characterized as debt, and the Trust will
not be characterized as an association (or a
publicly traded partnership) taxable as a
corporation. Each Noteholder, by the
acceptance of a Note, will agree to treat the
Notes as indebtedness. See "CERTAIN FEDERAL
INCOME TAX CONSIDERATIONS" herein.
ERISA Considerations . . . . Subject to the considerations discussed under
"ERISA CONSIDERATIONS" herein, the Notes will
be eligible for purchase by employee benefit
plans. Any benefit plan fiduciary
considering purchase of the Notes should,
however, consult with its counsel regarding
the consequences of such purchase under ERISA
and the Code. See "ERISA CONSIDERATIONS"
herein.
20
<PAGE>
Rating . . . . . . . . . . . It is a condition to the issuance of the
Notes offered hereunder that the Class A-1
Notes be rated at least "A-1+" and "P-1",
that the Class A-2 Notes be rated at least
"AAA" and "AAA", the Class A-3 Notes be rated
at least "AAA" and "AAA", that the Class A-4
Notes be rated at least "AAA" and "AAA" ,
that the Class B Notes be rated at least "A"
and "A1", and that the Class C Notes be rated
at least "BBB" and "Baa3" by Standard &
Poor's and Moody's Investors Service,
respectively (collectively, the "RATING
AGENCIES"). A rating is not a recommendation
to purchase, hold or sell Notes inasmuch as
such rating does not comment as to market
price or suitability for a particular
investor. Ratings address the likelihood of
timely payment of interest and the ultimate
payment of principal on the Notes pursuant to
their terms. Ratings will not address the
likelihood of an early return of invested
principal. There can be no assurance that
any rating will remain for a given period of
time or that a rating will not be lowered or
withdrawn entirely if, in the judgment of any
Rating Agency, circumstances in the future so
warrant. See "RATING OF THE NOTES" herein.
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<PAGE>
RISK FACTORS
Prospective investors should carefully consider the following risk
factors before investing in the Notes.
ABSENCE OF PUBLIC MARKET; LIMITED LIQUIDITY
There is currently no public market for the Notes and there is no
assurance that one will develop. The Underwriters expect, but are not
obligated, to make a market in the Notes. There is no assurance that any such
market will be created or, if so created, will continue. If no public market
develops, the Noteholders may not be able to liquidate their investment in the
Notes prior to maturity.
PREPAYMENTS ON THE CONTRACTS AFFECT THE YIELD OF THE NOTES
Because the rate of payment of principal on the Notes will depend,
among other things, on the rate of payment on the Contracts, the rate of payment
of principal on the Notes cannot be assured. Payments on the Contracts will
include Scheduled Payments as well as partial and full prepayments (including
any Scheduled Payment (or portion thereof) which the Servicer has received, and
expressly permitted the related Obligor to make, in advance of its scheduled due
date and which will be applied on such due date) (any such prepayment of a
Scheduled Payment, an "OPTIONAL PREPAYMENT"), 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), payments upon the liquidation
of Defaulted Contracts, payments upon repurchases by the Seller through the
Trust Depositor as a result of the breach of certain representations and
warranties or covenants in the Transfer and Sale Agreement and the Sale and
Servicing Agreement, and payments upon an optional termination of the Trust (any
such voluntary or involuntary prepayment, purchase or termination, a
"PREPAYMENT"). The occurrence of an Event of Default or a Restricting Event (as
defined herein) may also result in the receipt by Noteholders of principal
payments on the Notes on a Distribution Date in excess of the expected
principal payment amount for such Distribution Date and result in earlier than
anticipated repayment of the Notes. Noteholders may not be able to reinvest
distributions of principal at yields equivalent to the yield on the Notes. SEE
"DESCRIPTION OF THE NOTES--PRINCIPAL", "--ADDITIONS OF TRUST ASSETS" and
"--RESTRICTING EVENTS" herein. 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 financed by the
Noteholders (together with accrued interest thereon) so long as the Trust is
paid for any such insufficiency by the Vendor or the Seller. See "DESCRIPTION
OF THE NOTES--PREPAID CONTRACTS".
The rate of early terminations of Contracts due to Prepayments
(including Prepayments caused by defaults on Contracts) 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. Many Prepayments occur at the request of customers, whose
motivations may not be known to the Seller. No assurance can be given that
Prepayments (including Optional Prepayments) on the Contracts will conform to
any historical experience, and no prediction can be made as to the actual rate
of Prepayments which will be experienced on the Contracts. Noteholders will
bear all reinvestment risk resulting from the rate of Prepayments on the
Contracts. See "PREPAYMENT AND YIELD CONSIDERATIONS."
NO ASSURANCES GIVEN AS TO CHANGES IN THE RATINGS OF THE NOTES
A rating is not a recommendation to purchase, hold or sell Notes
inasmuch as such rating does not comment as to market price or suitability for a
particular investor. Ratings of Notes will address the likelihood of timely
payment of interest and the ultimate payment of principal on the Notes pursuant
to their terms. The ratings of Notes will not address the likelihood of an
early return of invested principal. In addition, any such rating will not
address the possibility of the occurrence of an Event of Default or Restricting
Event. There can be no assurance that a rating will remain for a given period
of time or that a rating will not be lowered or withdrawn entirely by a Rating
Agency if in its judgment circumstances (i.e., such as the performance of the
Contracts or the Servicer) in the future so warrant. In the event that the
rating initially assigned to any Note is subsequently lowered for any reason, no
person or entity is obligated to provide any additional credit support therefor.
For more detailed information regarding the ratings assigned to any Class of the
Notes, see "RATING OF THE NOTES."
SUBORDINATION OF THE CLASS A-4 NOTES, THE CLASS A-3 NOTES, THE CLASS A-2 NOTES,
THE CLASS B NOTES, THE CLASS C NOTES AND THE SUBORDINATED SECURITIES
To the extent described herein under "DESCRIPTION OF THE
NOTES--ALLOCATIONS", (i) payments of interest and principal on the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C
Notes and the Subordinated Securities will be subordinated in priority of
payment to interest and principal, respectively on the Class A-1 Notes, (ii)
payments of interest and principal on the Class A-3 Notes, the Class A-4 Notes,
the Class B Notes, the Class C Notes and the Subordinated Securities will be
subordinated in priority of payment to interest and
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principal, respectively, on the Class A-2 Notes, (iii) payments of interest and
principal on the Class A-4 Notes, the Class B Notes, the Class C Notes and the
Subordinated Securities, will be subordinated in priority of payment to interest
and principal, respectively, on the Class A-3 Notes, (iv) payments of interest
and principal on the Class B Notes, the Class C Notes and the Subordinated
Securities will be subordinated in priority of payment to interest and
principal, respectively on the Class A-4 Notes, (v) payments of interest and
principal on the Class C Notes and the Subordinated Securities will be
subordinated in priority of payment to interest and principal, respectively, on
the Class B Notes, and (vi) payments of interest and principal on the
Subordinated Securities will be subordinated in priority of payment to interest
and principal, respectively, on the Class C Notes. The Subordinated Notes
initially will represent the right to receive principal in an amount equal to
3.00% of the initial ADCB, but such amount will be reduced as a result of
principal payments made on the Subordinated Notes prior to an Event of Default
or Restricting Event (see "DESCRIPTION OF THE NOTES--PRINCIPAL"), which will
reduce the benefit to the Notes of the subordination of the Subordinated Notes.
Delinquencies and defaults on the Contracts could eliminate the
protection afforded the Noteholders by the subordination of the Subordinated
Notes and the Reserve Fund, and the Class C Noteholders could incur losses on
their investment as a result. Further delinquencies and defaults on the
Contracts could eliminate the protection offered to the Class B Noteholders by
the subordination of the Class C Notes, the Subordinated Notes and the Reserve
Fund, and such Noteholders could also incur losses on their investment as a
result. Additionally, delinquencies and defaults on the Contracts could
eliminate the protection offered the Class A-2 Noteholders, Class A-3
Noteholders and Class A-4 Noteholders by the subordination of the Class B Notes,
the Class C Notes, the Subordinated Notes and the Reserve Fund, and such
Noteholders could also incur losses on their interest as a result. Similarly,
delinquencies and defaults on the Contracts could eliminate the protection
offered the Class A-3 Noteholders by the subordination of the Class A-4 Notes,
the Class B Notes, the Class C Notes, the Subordinated Notes and the Reserve
Fund, and such Noteholders could incur losses on their interest as a result.
Delinquencies and defaults on the Contracts could eliminate the protection
offered the Class A-4 Noteholders by the subordination of the Class B Notes, the
Class C Notes, the Subordinated Notes and the Reserve Fund, and such Noteholders
could incur losses on their interest as a result. Furthermore, delinquencies
and defaults on the Contracts could eliminate the protection offered to the
Class A-1 Noteholders by the subordination of the Class A-2 Notes, the Class B
Notes, the Class C Notes, the Subordinated Notes and the Reserve Fund and such
Noteholders could also incur losses on their interest as a result.
CERTAIN RISKS ASSOCIATED WITH GEOGRAPHIC CONCENTRATIONS OF CONTRACTS
The Contracts constituting the initial Contract Pool reflect
concentrations of Obligors thereon located in the States of Texas, California
and New York in excess of 11.98%, 6.70% and 6.45%, respectively, of the ADCB of
the Contract Pool as of the Cutoff Date. No other state accounts for more than
5.00% of the Contract Pool. To the extent adverse events or economic conditions
were particularly severe in such geographic region or in the event an Obligor
under a large amount of Contracts within such region were to experience
financial difficulties, the delinquency and default experience of the Contract
Pool could be adversely impacted with corresponding negative implications for
the timing and amount of collections on the Contracts and possible delays or
insufficiencies in payments due to Noteholders. The Trust Depositor, however,
is unable to determine and has no basis to predict, with respect to any state or
region, whether any such events have occurred or may occur, or to what extent
any such events may affect the Contracts or the payment of the Notes.
CERTAIN RISKS ASSOCIATED WITH CONCENTRATION OF CONTRACTS RELATING TO THE
TRANSPORTATION INDUSTRY
Contracts constituting approximately 40.24% of the Contract Pool's
ADCB as of the Closing Date relate to Equipment used in the transportation
industry. No other industry accounts for more than 13.73% of the Contract Pool.
To the extent the transportation industry were to experience adverse events or
economic conditions, the delinquency and default experience of the Contract Pool
could be adversely impacted and accordingly, the timing and amount of
collections on the Contracts may be adversely effected and thus result in delays
or reduced payments to the Noteholders.
RATE AT WHICH EQUIPMENT OR SOFTWARE BECOMES OBSOLETE AFFECTS PREPAYMENT RATE OF
THE CONTRACTS AND THE NOTES; REINVESTMENT RISK
Technological change could affect the Noteholders. For example, to
the extent that technological change results in increased prepayment activity,
it may increase Prepayments of the Contracts. Such Prepayments may result in
distributions to Noteholders of amounts which would otherwise have been
distributed over the remaining term of the Contracts and such distributions may
require the Noteholders to reinvest such Prepayments in a less attractive
interest
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rate environment. See "--PREPAYMENTS ON THE CONTRACTS AFFECT THE YIELD OF THE
NOTES" and "THE CONTRACTS GENERALLY--EQUIPMENT", "--LEASES" and "--INSTALLMENT
PAYMENT AGREEMENTS AND FINANCING AGREEMENTS".
DECLINES IN MARKET VALUE OF EQUIPMENT OR SOFTWARE; SHORTFALLS WITH RESPECT TO
AVAILABLE AMOUNTS TO PAY THE NOTES
In the event a Contract becomes a Defaulted Contract, the only source
of payment for amounts expected to be paid on such Contract will be the income
and proceeds from the disposition of any related Equipment and a deficiency
judgment, if any, against the Obligor under the Defaulted Contract. 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. Typically, the Trust will
have no interest in any software and may therefore only have a deficiency claim
against the Obligor. To the extent such deficiencies deplete the Reserve Fund
and the protection afforded by the Subordinated Notes, such deficiencies may
create a shortfall with respect to payments on the Notes.
CERTAIN LEGAL RISKS
LEGAL RISKS ASSOCIATED WITH SERVICER'S OR VENDOR'S RETENTION OF
CONTRACT FILES. To facilitate servicing and reduce administrative costs, the
Contract Files (as defined herein) will be retained in the possession of the
Servicer and not be deposited with the Indenture Trustee or any other agent or
custodian for the benefit of the Noteholders (except for a limited number of
End-User Contracts evidenced by, in addition to a related Financing Agreement,
"INSTRUMENTS" not constituting chattel paper within the meaning of the Uniform
Commercial Code ("UCC"), which instruments will be delivered to the custody and
possession of the Indenture Trustee as pledgee of the Trust). The Servicer
will, however, physically segregate the Contract Files from other similar
documents that are in the Servicer's possession, and will notate on the
appropriate electronic records the transfer of the Contracts to the Trust.
Also, UCC financing statements will be filed reflecting the sale and assignment
of the Contracts and related interests (the "TRANSFERRED PROPERTY") by the
Seller, to the Trust Depositor, and by the Trust Depositor to the Trust, and the
Servicer's accounting records and computer files will be marked to reflect such
sales and assignments. Because the Contract Files will remain in the Servicer's
possession, if a subsequent purchaser were able to take physical possession of
the Contract Files without knowledge of such assignment, the Indenture Trustee's
priority interest in the Contracts (as assignee of the Seller's, Trust
Depositor's and the Trust's interest) could be defeated. In the event that the
Trust must rely upon repossession and sale of the related Equipment and other
assets securing Defaulted Contracts to recover principal and interest due
thereon, the Trust's ability to realize upon such assets may be limited due to
the existence of a senior security interest in the Contracts. In such event,
distributions to Noteholders could be adversely affected.
Similarly, with respect to Secondary Contracts securing Vendor Loans,
in some instances the Vendor will retain the original contract files associated
with the related End-User Contracts which are Secondary Contracts securing such
Vendor Loan. Although UCC financing statements generally are filed reflecting
the pledge of such Contracts to the Seller as security for the Vendor Loans,
because these contract files will remain in the Vendor's possession, if a
subsequent purchaser were able to take physical possession of such contract
files without knowledge of the pledge to the Seller, the Indenture Trustee's
priority security interest in the such Secondary Contracts (as assignee of the
Seller's, Trust Depositor's and the Trust's interest) could be defeated. In
such event, distributions to Noteholders could be adversely affected. Each
Vendor represents, warrants and covenants in the applicable agreement evidencing
a Vendor Loan, however, that it has not and will not sell, pledge or otherwise
assign or convey to any other party (other than the Seller) any interest in the
Secondary Contracts securing such Vendor Loan, and agrees that it will maintain
possession of the related contract files as custodian for the benefit of the
Seller as secured party with respect to such Secondary Contracts.
LEGAL RISKS ASSOCIATED WITH TRANSFERS OF INTERESTS IN FINANCED
EQUIPMENT. In connection with the conveyance of the Contracts to the Trust,
security interests in the related financed Equipment securing such Contracts
(or, in connection with Leases that are operating leases, the Seller's ownership
interest in or title to such Equipment) will be assigned by the Seller to the
Trust Depositor and by the Trust Depositor to the Trust. It has been the
general policy of the Seller to file or cause to be filed UCC financing
statements with respect to Equipment relating to the Contracts; PROVIDED,
HOWEVER, the Seller may not file UCC financing statements (i) with respect to
Equipment relating to a single Obligor in a single jurisdiction with an
aggregate value less than $15,000, (ii) with respect to Equipment relating to
Contracts originated by a specific division of Newcourt USA to a single Obligor
in a single jurisdiction with a value of less than $25,000 or (iii) with
respect to Equipment relating to a single Obligor in a single jurisdiction which
relates to Contracts purchased from third parties the individual value of which
is less than $35,000. 5,575 Contracts in the Contract Pool aggregating 6.13% of
the ADCB are represented by the Contracts described in clauses (i), (ii) and
(iii) of the preceding sentence. Additionally, due to the administrative
burden and expense associated with amending many filings in numerous states
where Equipment is located, no assignments of the UCC financing statements
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evidencing the security interest of the Seller in the Equipment will be filed
to reflect the Trust Depositor's, the Trust's or the Indenture Trustee's
interests therein. While failure to file such assignments does not affect the
Trust's interest in the Contracts (including the related Seller's security
interest in the related Equipment) or perfection of the Indenture Trustee's
interest in such Contracts and related Equipment, it does expose the Trust (and
thus Noteholders) to the risk that the Servicer could inadvertently release its
security interest in the Equipment of record, and it could complicate the
Trust's enforcement, as assignee, of the Seller's security interest in the
Equipment. While these risks should not affect the perfection or priority of
the interest of the Indenture Trustee in the Contracts or rights to payment
thereunder, they may adversely affect the right of the Indenture Trustee to
receive proceeds of a disposition of the Equipment related to a Defaulted
Contract. Additionally, statutory liens for repairs or unpaid taxes and other
liens arising by operation of law may have priority even over prior perfected
security interests in the Equipment assigned to the Indenture Trustee.
Also, the transfer to the Trust Depositor of the Seller's security
interest in motor vehicles ("VEHICLES") securing certain Contracts, or its
ownership interest in Vehicles subject to Leases, Loans or CSA's, and the
transfer of the same as well as interests by the Trust Depositor to the Trust,
is subject to state vehicle registration laws in the case of the Vehicles. Due
to the significant administrative burden and expense associated with
re-registering transfers of titles and of security interests with respect to the
Vehicles, the certificates of title or similar instruments or registrations of
title with respect to the Vehicles securing Contracts, and to Vehicles subject
to Leases, will not identify the Trust as secured party or owner, as the case
may be, of such Equipment. There exists a risk in not so identifying the Trust
as the new secured party or owner that, through fraud or negligence, a third
party could acquire an interest in the Vehicles superior to that of the Trust.
In addition, statutory liens for repairs or unpaid taxes may have priority even
over a perfected security interest in the Vehicles. The Seller will represent
that as of the Cutoff Date, in the Seller's reasonable judgment, the Discounted
Contract Balance of End-User Contracts in the Contract Pool that are secured by
Vehicles, does not exceed 46.17% of the ADCB of the Contract Pool.
In addition, some of the Equipment related to the Contracts may
constitute "FIXTURES" under the real estate or UCC provisions of the
jurisdiction in which such Equipment is located. In order to perfect a security
interest in such Equipment, the holder of the security interest must file either
a "FIXTURE FILING" under the provisions of the UCC or a real estate mortgage
under the real estate laws of the state where the Equipment is located. These
filings must be made in the real estate records office of the county in which
such Equipment is located. So long as the Obligor does not permanently attach
the Equipment to the real estate, a security interest in the Equipment will be
governed by the UCC, and the filing of a UCC-1 financing statement will be
effective to maintain the priority of the Seller's security interest in such
Equipment. Except for a small portion of such Equipment, the Trust Depositor
does not believe that any of the Equipment will be permanently affixed to the
related real estate. If, however, any Equipment is permanently attached to the
real estate in which it is located, other parties could obtain an interest in
the Equipment which is prior to the security interest originally obtained by the
Seller and transferred to the Trust Depositor. Based on the representation of
the Seller, the Trust Depositor, however, believes that with respect to the
Equipment which constitutes a "FIXTURE", it has obtained a perfected first
priority security interest, through assignment of such security interest by the
Seller, by virtue of the Seller's proper filing of UCC-2 financing statements
naming the Seller as secured party in the real estate records office of the
county in which the Equipment is located or by obtaining waivers from landlords
or mortgagees. Also, the Seller will represent that as of the Cutoff Date, in
the Seller's reasonable judgment, the Discounted Contract Balance of End-User
Contracts in the Contract Pool that are secured by fixtures, does not exceed
1.80% of the ADCB of the Contract Pool.
The Trust Depositor will be obligated to reacquire any Contract
transferred to the Trust (subject to the Seller's reacquisition thereof) in the
event it is determined that a first priority perfected security interest, or
ownership interest in the case of Leases, in the name of the Trustee in the
Equipment related to such Contract did not exist as of the date such Contract
was conveyed to the Trust, if (i) such breach shall materially adversely affect
such Contract and (ii) such failure or breach shall not have been cured by the
last day of the second (or, if the Trust Depositor elects, the first) month
following the discovery by or notice to the Trust Depositor of such breach, and
the Seller will be obligated to reacquire such Contract from the Trust Depositor
contemporaneously with the Trust Depositor's reacquisition from the Trust. If
there is any Equipment as to which the Seller failed to perfect its security
interest, the Seller's security interest, and the security interests of the
Trust Depositor and the Trust (and the Indenture Trustee as assignee), would be
subordinated to, among others, subsequent purchasers of the Equipment and
holders of perfected security interests with respect thereto. To the extent the
security interest of the Seller in the related Equipment is perfected, subject
to the exceptions set forth in the following sentence, the Trust will have a
prior claim over subsequent purchasers from the Obligor of such Equipment and
holders of subsequently perfected security interests granted by Obligors.
However, as against mechanics' liens or liens for taxes and other non-consensual
liens unpaid by an Obligor under a Contract, or in the event of fraud or
negligence of the Seller or Servicer, the Trust could lose the priority of its
interest or its interest in such Equipment following the conveyance of such
Contract to the Trust. See "CERTAIN LEGAL ASPECTS OF THE CONTRACTS" herein.
Neither the Trust Depositor nor the Servicer nor the Seller will have any
obligation to reacquire a Contract if any of the occurrences described in the
foregoing sentence (other than fraud or negligence of the Seller) result in the
Trust's losing
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the priority of its security interest or its security interest in such Equipment
after the date such Contract is conveyed to the Trust.
LEGAL RISKS ASSOCIATED WITH TRANSFER OF CONTRACTS. There are certain
limited circumstances under the UCC and applicable federal law in which prior or
subsequent transferees of Contracts or Secondary Contracts could have an
interest in such contracts with priority over the Trust's interest. See
"CERTAIN LEGAL ASPECTS OF THE CONTRACTS--TRANSFER OF CONTRACTS." Under each
Vendor Agreement, the Vendor (i) has or will warrant to the Seller that the
Contracts transferred to the Seller thereunder will be transferred free and
clear of the lien of any third party and that the interests in Secondary
Contracts transferred thereunder will be transferred free and clear of the lien
of any third party and (ii) has or will also covenant that it will not sell,
pledge, assign, transfer or grant any lien on any Contract (or Secondary
Contract) transferred thereunder to the Seller. Under the Transfer and Sale
Agreement, the Seller will warrant to the Trust Depositor and, under the Sale
and Servicing Agreement, the Trust Depositor will warrant to the Trust, that the
Contracts and security interests in Secondary Contracts transferred thereunder
will be transferred free and clear of the lien of any third party. Also, under
the Transfer and Sale Agreement, the Seller will covenant to the Trust Depositor
and, under the Sale and Servicing Agreement, the Trust Depositor will also
covenant to the Trust, that it will not sell, pledge, assign, transfer or grant
any lien on any Contract or Secondary Contract transferred to the Trust
Depositor or the Trust.
RISK OF INEFFECTIVE SALE IN VENDOR BANKRUPTCY. The Seller will either
(i) originate Contracts or (ii) acquire End-User Contracts from a Vendor, which
Contracts will be transferred to the Trust Depositor. If the acquisition of an
End-User Contract by a Seller is treated as a sale of such Contract from the
applicable Vendor to the Seller, except in certain limited circumstances, such
Contract would not be part of such Vendor's bankruptcy estate and would not be
available to such Vendor's creditors. If a Vendor became a debtor in a
bankruptcy case and, in the case of End-User Contracts acquired as described in
clause (ii) above, if an unpaid creditor of such Vendor or a representative of
creditors of such Vendor, such as a trustee in bankruptcy, or such Vendor acting
as a debtor-in-possession, were to take the position that the sale of such
Contracts to a Seller was ineffective to remove such Contracts from such
Vendor's estate (for instance, that such sale should be recharacterized as a
pledge of Contracts to secure borrowings of such Vendor), then delays in
payments under the Contracts to the Trust could occur or, should the court rule
in favor of such creditor, representative or Vendor, reductions in the amount of
such payments could result. If the transfer of End-User Contracts to a Seller
as described in clause (ii) above is recharacterized as a pledge, a tax or
government lien on the property of the pledging Vendor arising before the
Contracts came into existence may have priority over such Seller's (and hence
the Trust Depositor's, the Trust's and the Indenture Trustee's) interest in the
Contracts. No law firm will, in connection with the offering of the Notes,
express any opinion as to the issues discussed in this paragraph. See "CERTAIN
LEGAL ASPECTS OF THE CONTRACTS--CERTAIN MATTERS RELATING TO BANKRUPTCY".
RISK OF INEFFECTIVE SALE IN SELLER BANKRUPTCY. In the Transfer and
Sale Agreement, the Seller will warrant to the Trust Depositor that the
conveyance of the Contracts to the Trust Depositor thereunder is a valid sale
and transfer of such Contracts to the Trust Depositor. In addition, the Seller
and the Trust Depositor have covenanted that they will each treat the
transactions described herein as a sale of the Contracts to the Trust Depositor,
and the Seller will take all actions that are required under applicable law to
perfect the Trust Depositor's ownership interest in the Contracts sold by the
Seller and the Trust Depositor's security interest (as assignee of the Seller's
security interest) in the Secondary Contracts securing Vendor Loans sold by the
Seller. See "CERTAIN LEGAL ASPECTS OF THE CONTRACTS--TRANSFER OF CONTRACTS".
Moreover, Winston & Strawn, special counsel to the Seller and the Trust
Depositor, will render a reasoned opinion to the effect that in the event the
Seller became a debtor under the United States Bankruptcy Code, the transfer of
the Contracts from the Seller to the Trust Depositor in accordance with the
Transfer and Sale Agreement would be treated as a sale and not as a pledge to
secure borrowings.
If, however, the transfer of the Contracts from the Seller to the
Trust Depositor were treated as a pledge to secure borrowings by the Seller, the
distribution of proceeds of the Contracts to the Trust might be subject to the
automatic stay provisions of the United States Bankruptcy Code, which would
delay the distribution of such proceeds for an uncertain period of time. In
addition, a bankruptcy trustee would have the power to sell the Contracts if the
proceeds of such sale could satisfy the amount of the debt deemed owed by the
Seller, or the bankruptcy trustee could substitute other collateral in lieu of
the Contracts to secure such debt, or such debt could be subject to adjustment
by the bankruptcy court if the Seller were to file for reorganization under
Chapter 11 of the United States Bankruptcy Code. A case decided by the United
States Court of Appeals for the Tenth Circuit contains language to the effect
that accounts sold by a debtor under Article 9 of the UCC would remain property
of the debtor's bankruptcy estate. If, following a bankruptcy of the Seller, a
court were to follow the reasoning of the Tenth Circuit and apply such reasoning
to chattel paper, then similar reductions or delays in payments of collections
on or in respect of the Contracts could occur. Additionally, because the Seller
has purchased Contracts from Vendors located in the Tenth Circuit which could
become debtors in a bankruptcy proceeding, the rationale of such case could be
applicable to such Vendors' sales of End User Contracts to the Seller and the
corresponding negative implications for receipt of payments with respect to such
Contracts may occur.
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RISK OF REJECTION OF "TRUE LEASES". A bankruptcy trustee or debtor in
possession under the United States Bankruptcy Code (Title 11 U.S.C. 101 et
seq.) (the "BANKRUPTCY CODE") has the right to elect to assume or reject any
executory contract or unexpired lease which is considered to be a "TRUE LEASE"
(and not a financing) under applicable law. Any rejection of such a contract or
lease would constitute a breach of such contract or lease, as applicable, as of
the day preceding the commencement of the applicable bankruptcy case, entitling
the nonbreaching party to a pre-petition claim for damages.
Certain End-User Contracts will be "TRUE LEASES" and thus subject to
rejection by the lessor under the Bankruptcy Code. Any such End-User Contract
originated by the Seller or acquired by the Seller in a transaction whereby the
Seller is the "LESSOR" thereunder, will be subject to rejection by the Seller,
as debtor in possession, or by the Seller's bankruptcy trustee. Upon any such
rejection, Scheduled Payments under such rejected End-User Contract may
terminate and the Noteholders may be subject to losses if proceeds realizable
from security interests in the related Equipment are insufficient to cover the
losses. In addition, any End-User Contract which is a "TRUE LEASE" originated
by a Vendor and transferred to the Seller in a transaction whereby such Vendor
continues to be the "LESSOR" thereunder (such as a transfer by a Vendor to the
Seller of a security interest in such End-User Contract or a transfer by a
Vendor to the Seller of an interest in the right to payments only under any such
End-User Contract), will be subject to rejection by such Vendor, as debtor in
possession, or by such Vendor's bankruptcy trustee. Upon any such rejection,
Scheduled Payments under such rejected End-User Contract may terminate and the
Noteholders may be subject to losses if the proceeds realizable from security
interests in the related Equipment are insufficient to cover the losses.
The Seller will represent as of the Cutoff Date that, in the Seller's
reasonable judgment, the Discounted Contract Balance of End-User Contracts in
the Contract Pool that are "TRUE LEASES" does not exceed 7.70% of the ADCB of
the Contract Pool as of such date.
RISKS ASSOCIATED WITH INSOLVENCY OF THE TRUST DEPOSITOR OR THE TRUST.
Certain restrictions have been imposed on the Trust Depositor and the Trust and
certain other parties to the transactions described herein which are intended to
reduce the risk of an insolvency proceeding involving the Trust Depositor or the
Trust. These restrictions include incorporating the Trust Depositor as a
separate, special purpose corporation pursuant to a certificate of incorporation
containing certain restrictions on the nature and scope of its business.
Additionally, the Trust Depositor may commence a voluntary case or proceeding
under any bankruptcy or insolvency law, or cause the Trust to commence a
voluntary case or proceeding under any bankruptcy or insolvency law, only upon
the affirmative vote of all its directors, including its independent directors,
as long as the Trust Depositor is solvent and does not reasonably foresee
becoming insolvent. The Trust Depositor's certificate of incorporation requires
that the Trust Depositor have at all times at least two independent directors.
However, no assurance can be given that insolvency proceedings involving either
the Trust Depositor or the Trust will not occur. In the event the Trust
Depositor becomes subject to insolvency proceedings, the Trust, the Trust's
interest in the Trust Assets and the Trust's obligation to make payments on the
Notes might also become subject to such insolvency proceedings. In the event of
insolvency proceedings involving the Trust, the Trust's interest in the Trust
Assets and the Trust's obligation to make payments on the Notes would become
subject to such insolvency proceedings. No assurance can be given that
insolvency proceedings involving the Seller would not lead to insolvency
proceedings of either, or both, of the Trust Depositor or the Trust. In either
such event, or if an attempt were made to litigate any of the foregoing issues,
delays of distributions on the Notes, possible reductions in the amount of
payment of principal of and interest on the Notes and limitations (including a
stay) on the exercise of remedies under the Indenture and the Sale and Servicing
Agreement could occur, although the Noteholders would continue to have the
benefit of the Indenture Trustee's security interest in the Trust Assets under
the Indenture.
The right of the Indenture Trustee, as a secured party under the
Indenture for the benefit of the Noteholders, to foreclose upon and sell the
Trust Assets is likely to be significantly impaired by applicable bankruptcy
laws, including the automatic stay pursuant to Section 362 of the Bankruptcy
Code, if a bankruptcy proceeding were to be commenced by or against the Trust,
and possibly the Trust Depositor, before or possibly even after the Indenture
Trustee has foreclosed upon and sold the Trust Assets. Under the bankruptcy
laws, payments on debts are not made and secured creditors are prohibited from
repossessing their security from a debtor in a bankruptcy case or from disposing
of security repossessed from such a debtor, without bankruptcy court approval.
Moreover, the bankruptcy laws generally permit the debtor to continue to retain
and to use collateral even though the debtor is in default under the applicable
debt instruments, provided generally that the secured creditor has the right to
seek "ADEQUATE PROTECTION". The meaning of the term "ADEQUATE PROTECTION" may
vary according to circumstances, but it is intended in general to protect the
value of the security from any diminution in the value of the collateral as a
result of the use of the collateral by the debtor during the pendency of the
bankruptcy case. In view of the lack of a precise definition of the term
"ADEQUATE PROTECTION" and the broad discretionary powers of a bankruptcy court,
it is impossible to predict whether or to what extent the holders of the Notes
would be compensated for any diminution in value of the Trust Assets.
Furthermore, in the event a bankruptcy court determines that the value of the
Trust Assets is not sufficient to repay all amounts due on the Notes, the
Noteholders would hold secured claims only to the extent of the value of the
Trust Assets to which the holders are entitled, and unsecured claims with
respect to such shortfall. The bankruptcy laws do not permit the payment or
accrual
27
<PAGE>
of post-petition interest, costs and attorneys' fees during a debtor's
bankruptcy case unless, and then only to the extent, the claims are oversecured.
RISKS ASSOCIATED WITH INSOLVENCY OF THE VENDORS. In the event a
Vendor under a Vendor Loan becomes subject to insolvency proceedings, the
Secondary Contracts and other Applicable Security for such Vendor Loan as well
as such Vendor's obligation to make payments thereon would also become subject
to such insolvency proceedings. In such event, delays of distributions on the
Notes, possible reductions in the amount of payment of principal of and interest
on the Notes and limitations (including a stay) on the exercise of remedies
under the Indenture and the Sale and Servicing Agreement could occur, although
the Noteholders would continue to have the benefit of the Indenture Trustee's
security interest in the Vendor Loans and Applicable Security therefor under the
Indenture.
The right of the Indenture Trustee, as secured party under the
Indenture for the benefit of the Noteholders, to foreclose upon and sell any
Secondary Contracts or Applicable Security is likely to be significantly
impaired by applicable bankruptcy laws, including the automatic stay pursuant to
Section 362 of the Bankruptcy Code, if a bankruptcy proceeding were to be
commenced by or against a Vendor obligated on a Vendor Loan, before or possibly
even after the Indenture Trustee has foreclosed upon and sold such Secondary
Contracts or Applicable Security for the reasons described above in the second
preceding paragraph.
Certain Vendor Assignments and certain assignments executed under
various Program Agreements (each, a "PROGRAM ASSIGNMENT") provide that the
Seller has recourse to the related Vendor for all or a portion of the losses the
Seller may incur as a result of a default under the End-User Contracts sold
under such Vendor Assignment or Program Assignment. 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 the Seller pursuant to such
Vendor Assignments or Program Assignments as loans to the Vendor from the Seller
secured by the Contracts sold thereunder. If such an attempt is successful, such
Vendor Assignment or Program Assignment would be subject to the risks described
herein for Vendor Loans. In such case, the Contracts sold under such Vendor
Assignment or Program Assignment would constitute Secondary Contracts under the
recharacterized Vendor Assignment or Program Assignment.
RISKS ASSOCIATED WITH REQUIRED SALE OF CONTRACTS RESULTING FROM TRUST
DEPOSITOR BANKRUPTCY. If a conservator, receiver or liquidator of the Trust
Depositor was appointed or if certain other events relating to the bankruptcy,
insolvency or receivership of the Trust Depositor were to occur (an "INSOLVENCY
EVENT"), then an Event of Default would occur with respect to the Notes and,
pursuant to the terms of the Indenture and the Sale and Servicing Agreement, and
assuming the Trust was not then a debtor in a bankruptcy case, the Indenture
Trustee, at the direction of the Required Holders (as defined in "DESCRIPTION OF
THE NOTES -- EVENTS OF DEFAULT"), will be required to sell the Contracts,
thereby causing early termination of the Trust and a possible loss to the
Noteholders if the sum of (i) the proceeds of the sale allocable to the
Noteholders and (ii) the proceeds of any collections on the Contracts in the
Collection Account allocable to the Noteholders, is insufficient to pay the
Noteholders in full. See "CERTAIN LEGAL ASPECTS OF THE CONTRACTS--TRANSFER OF
CONTRACTS" and "--CERTAIN MATTERS RELATING TO BANKRUPTCY".
RISK OF LOSS ASSOCIATED WITH END-USER AND VENDOR BANKRUPTCY.
Application of federal and state bankruptcy and insolvency laws in the event of
bankruptcy of End-Users could affect the interests of the Noteholders in the
Contracts and Secondary Contracts if such laws result in any such contracts
being written off as uncollectible or result in delay in payments due on any
Contracts. See "DESCRIPTION OF THE NOTES--DEFAULTED CONTRACTS" and "CERTAIN
LEGAL ASPECTS OF THE CONTRACTS--CERTAIN MATTERS RELATING TO BANKRUPTCY". In
addition, application of federal and state bankruptcy and insolvency laws in the
event of bankruptcy of Vendors could affect the interests of the Noteholders in
the Vendor Loans and Secondary Contracts if such laws result in any such Vendor
Loans or Secondary Contracts being written off as uncollectible or result in
delay in payments due on any such Vendor Loans or Secondary Contracts. See
"--INSOLVENCY OF THE VENDORS". State laws impose requirements and restrictions
relating to foreclosure sales and obtaining deficiency judgments following such
sales. In the event that the Noteholders must rely on repossession and
disposition of Equipment to recover amounts due on Defaulted Contracts, such
amounts may not be realized because of the application of these requirements and
restrictions. Other factors that may affect the ability of the Noteholders to
realize the full amount due on a Contract or a Secondary Contract include the
failure to file financing statements to perfect the Seller's, Trust Depositor's,
Trust's or the Indenture Trustee's security interest, as applicable, in the
Equipment or other Applicable Security and the depreciation, obsolescence,
damage or loss of any item of Equipment. As a result, the Noteholders may be
subject to delays in receiving payments and losses if the over collateralization
represented by each Class of Notes that is subordinated thereto, the
Subordinated Securities or the Reserve Fund is insufficient to absorb such
losses.
CERTAIN STATES MAY LIMIT THE ENFORCEABILITY OF CERTAIN LEASE
PROVISIONS. Certain states have adopted a version of Article 2A of the UCC
("ARTICLE 2A"), which purports to codify many provisions of existing common law.
Although there is little precedent regarding how Article 2A will be interpreted,
it may, among other things, limit enforceability of any
28
<PAGE>
"UNCONSCIONABLE" lease or "UNCONSCIONABLE" provision in a lease, provide a
lessee with remedies, including the right to cancel the lease contract, for
certain lessor breaches or defaults, and may add to or modify the terms of
"CONSUMER LEASES" and leases in which the lessee is a "MERCHANT LESSEE".
However, in the Transfer and Sale Agreement, the Seller will represent that (I)
no End-User Contract is a "CONSUMER LEASE" as defined in Section 2A-103(1)(e) of
the UCC; and (ii) to the best of the Seller's knowledge, each End-User has
accepted the Equipment leased to it and, after reasonable opportunity to inspect
and test, has not notified the Seller of any defects therein. Article 2A,
moreover, recognizes typical commercial lease "HELL OR HIGH WATER" rental
payment clauses (which clauses unconditionally obligate the lessee to make all
scheduled payments, without setoff) and validates reasonable liquidated damages
provisions in the event of lessor or lessee defaults. Article 2A also
recognizes the concept of freedom of contract and permits the parties in a
commercial context a wide degree of latitude to vary from the provisions of the
law.
RISK OF STATE TAXES. Because of the inclusion of "TRUE LEASES" in
the Trust, a risk exists that certain states may attempt to impose taxes on the
Trust.
CERTAIN CONTRACTS RELATING TO SOFTWARE OR SERVICES ARE NOT SECURED BY SUCH
SOFTWARE OR SERVICES
Certain Contracts will relate not to Equipment but rather to Software
or Services that are not owned by the Seller (the Vendor or a licensor
traditionally owns the same) and in which no related interest will be
transferred to the Trust (I.E. the Trust owns solely the associated Contracts'
cash flow). It is a condition to the issuance of the Notes that as of the
Closing Date that the ADCB of all Contracts which finance, lease or are related
to Software does not exceed 11.54% of the ADCB of the Contracts Pool. See "THE
CONTRACTS GENERALLY". Accordingly, if any such Contract becomes a Defaulted
Contract, the Trust will not realize any proceeds from the related Software or
Services from which to satisfy any related outstanding Scheduled Payments.
Furthermore, because Software is generally eligible for protection under the
Federal copyright laws, a security interest in Software generally cannot be
perfected without a filing at the U.S. Copyright Office. Some legal authority
indicates that this filing requirement also extends to a sale or grant of a
security interest in software licenses and the proceeds thereof, while some
other legal authority suggests that where there is an outright assignment of
certain payments (such as royalties) associated with copyrightable materials,
the rights to receive such payments constitute property separate from the
copyrightable material and that no filing in the U.S. Copyright Office is
required in connection with such assignment.
RISKS ASSOCIATED WITH NON-RECOURSE NATURE OF THE OFFERED NOTES - NO RECOURSE TO
THE SELLER, SERVICER OR ITS AFFILIATES; LIMITED VENDOR RECOURSE
Neither the Seller, the Servicer nor any of their affiliates is
generally obligated to make any payments in respect of the Notes or the
Contracts. However, in connection with the sale of Contracts by the Seller to
the Trust Depositor, and the concurrent conveyance of such Contracts by the
Trust Depositor to the Trust, the Seller will make representations and
warranties with respect to the characteristics of such Contracts and, in certain
circumstances, the Seller may be required to repurchase Contracts from the Trust
Depositor (and the Trust Depositor concurrently from the Trust) with respect to
which such representations and warranties have been breached. See "THE TRANSFER
AND SALE AGREEMENT AND THE SALE AND SERVICING AGREEMENT
GENERALLY--REPRESENTATIONS AND WARRANTIES" herein. Because the Trust is a
limited purpose trust with limited assets, the Noteholders must rely solely upon
the Contracts, the Equipment and related security described herein as well as
amounts in the Reserve Fund, to the extent available, for payment of principal
and interest on the Notes. Moreover, in respect of Vendor Loans, the
Noteholders must generally rely solely upon the Secondary Contracts securing
such Vendor Loans (together with the Equipment and related security securing
such Secondary Contracts, should the End-User default in its obligation to pay
such Secondary Contracts), since Vendor Loans are generally non-recourse to the
Vendors (I.E., the holder of such Vendor Loan is limited to recovering amounts
solely from the Secondary Contracts and related security therefor) except for
certain Vendor Loans which are covered by a UNL Pool (as defined herein). If
payments made or realized from the Contracts (including Secondary Contracts
securing Vendor Loans) and the disposition proceeds of the Equipment are
insufficient to make payments on the Notes, no other assets will be available
for the payment of the deficiency.
BOOK-ENTRY REGISTRATION-NOTEHOLDERS LIMITED TO EXERCISING THEIR RIGHTS THROUGH
DTC, EUROCLEAR OR CEDEL
The Notes offered hereby initially will be represented by one or more
Notes registered in the name of Cede & Co. and will not be registered in the
names of the beneficial owners or their nominees. As a result of this, unless
and until Definitive Notes are issued, beneficial owners will not be recognized
by the Issuer or the Indenture Trustee as Noteholders, as that term is used in
the Indenture. Hence, until such time, beneficial owners will only be able to
exercise the rights of Noteholders indirectly, through DTC, Euroclear or CEDEL
and their respective participating organizations, and will receive reports and
other information provided for under the Indenture only if, when and to the
extent provided by DTC, Euroclear or CEDEL, as the case may be, and its
participating organizations. See "DESCRIPTION OF THE NOTES--BOOK-ENTRY
REGISTRATION."
29
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes and the Subordinated
Securities will be paid to the Trust Depositor in consideration of the transfer
to the Trust of the Contracts. Such proceeds will be applied by the Trust
Depositor to the purchase price of the Contracts to be sold to the Trust
Depositor pursuant to the Transfer and Sale Agreement by the Seller as well as
for other general corporate purposes. The Seller has previously sold certain
lease and finance contracts to the Trust Depositor which has resold them (or
interests therein) to Variable Funding Capital Corporation ("VFCC"). It is
expected that these contracts will be repurchased from VFCC by the Trust
Depositor and from the Trust Depositor by the Seller simultaneously with (and
with the proceeds of) the issuance of the Notes and the Subordinated Securities
contemplated hereby and that certain of such contracts will be included in the
Contract Portfolio. VFCC is a special purpose company the business of which is
limited, generally, to the purchase of, or the making of loans against
receivables or interests in financial assets. First Union Capital Markets Corp.
is the Administrator of VFCC, an entity which is not affiliated with First Union
Corporation, First Union Capital Markets Corporation or any of their respective
affiliates.
THE TRUST
The Notes offered hereby will be issued by the Trust which has been
established by the Trust Depositor pursuant to the Trust Agreement. The
Contract Pool will be formed and transferred to the Trust pursuant to the Sale
and Servicing Agreement and pledged to the Indenture Trustee pursuant to the
Indenture.
The Trust was organized as a business trust formed in accordance with
the laws of the State of Delaware, pursuant to the Trust Agreement, solely for
the purpose of effectuating the transactions described herein. Prior to
formation, the Trust will have had no assets or obligations and no operating
history. The Trust will not engage in any business activity other than (a)
acquiring, managing and holding the Contracts and related interests described
herein, (b) issuing the Notes and the Subordinated Securities, (c) making
distributions and payments thereon and (d) engaging in those activities,
including entering into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith.
As a consequence, the Trust is not expected to have any source of capital
resources other than the Trust Assets. As of the date of this Prospectus,
neither the Trust Depositor nor the Trust is subject to any legal proceedings.
THE CONTRACTS POOL
THE TRANSFERRED CONTRACTS. The Transferred Contracts will consist of
Contracts purchased from the Seller by the Trust Depositor on the Closing Date
(and as of the Cutoff Date) under the Transfer and Sale Agreement dated as of
November 1, 1997 (the "TRANSFER AND SALE AGREEMENT"), as well as any Additional
Contracts or Substitute Contracts conveyed thereunder as described herein as of
their applicable Cutoff Dates. The Transferred Contracts have been and will be
selected by the Seller from its portfolio of Contracts based on the criteria
specified in the Transfer and Sale Agreement and the Sale and Servicing
Agreement. See "THE SALE AND SERVICING AGREEMENT GENERALLY--REPRESENTATIONS AND
WARRANTIES" and "--CONCENTRATION AMOUNTS" herein which specifically describe the
criteria for eligibility in the Contracts Pool. The representations of the
Seller include a representation that no adverse selection with respect to the
Contracts has occurred. The Seller will represent that all of the Contracts are
commercial, rather than consumer, leases or loans/financings, and that no
adverse selection process was employed in the Seller's selection of Contracts
for sale under the Transfer and Sale Agreement. As of the Cutoff Date, the ADCB
of the Transferred Contracts was $535,019,738, the weighted average remaining
term to maturity for the Transferred Contracts was approximately 43.78 months,
the final scheduled payment date of the Transferred Contract with the latest
maturity or expiration was October 31, 2004 and the average Discounted Contract
Balance was approximately $43,406.
For further information regarding the Transferred Contracts, see "THE
CONTRACTS GENERALLY" herein and "THE CONTRACTS POOL--OTHER POOL DATA" below.
OTHER POOL DATA. Approximately 15.49% of the ADCB of the Transferred
Contracts provide for payments by the Obligor thereunder on a basis other than
monthly payments. The composition and distribution of the Transferred Contracts
by remaining term, original term, Discounted 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 the Cutoff
Date. Subschedules to Transferred Contracts reflecting amounts billed to
separate billing locations are treated as separate Transferred Contracts.
Classification by industry is based on Newcourt's customary procedures for
determining the obligor's industry. The largest End-User industry concentration
(including End-User Obligors on Contracts originated by the Seller directly, as
well as Contracts originated through Vendors with or without Vendor
30
<PAGE>
recourse, and Secondary Contracts securing Vendor Loans), which represents an
ADCB of $215,298,014 or 40.24% of the ADCB of the Contracts Pool as of the
Cutoff Date, relates to the transportation industry. See "RISK FACTORS--CERTAIN
RISKS ASSOCIATED WITH GEOGRAPHIC OR INDUSTRY CONCENTRATIONS OF CONTRACTS"
herein, and "THE CONTRACTS POOL - CONTRACT LOSS EXPERIENCE" below.
The statistical information concerning the Contracts set forth below is
based upon information as of the opening of business on the Cutoff Date and the
Statistical Discount Rate. Certain Contracts included in the pool as of the
Cutoff Date may be determined not to meet the eligibility requirements for the
final pool, and may not be included in the final Contract Pool. While the
statistical distribution of the characteristics as of the Closing Date for the
final Contract Pool and calculated at the actual Discount Rate will vary
somewhat from the statistical distribution of such characteristics as of the
Cutoff Date and calculated at the Statistical Discount Rate as presented in this
Prospectus, such variance will not be material. The percentages and balances
set forth in each of the following tables may not total due to rounding.
31
<PAGE>
COMPOSITION OF THE CONTRACT POOL
Aggregate Discounted Contract Balance $535,019,738
Number of Contracts 12,326
Weighted Average Original Term (Range) 50.32
(in months) 2 - 96
Weighted Average Remaining Term 43.78
(Range)(in months) 1 - 83
Average Discounted Contract Balance $43,406
DISTRIBUTION OF CONTRACTS BY CONTRACT TYPE
<TABLE>
<CAPTION>
Percentage of Aggregate
Percentage of Number of Aggregate Discounted Discounted Contract
Number of Contracts Contracts Contract Balance Balance
<S> <C> <C> <C> <S>
CSAs 5,348 43.39% $319,476,582 59.71%
True Leases 402 3.26% $41,204,481 7.70%
Finance Leases 6,412 52.02% $94,905,800 17.74%
IPAs 46 0.37% $27,494,360 5.14%
Secured Notes 12 0.10% $11,849,594 2.21%
Unsecured Notes 0 0.00% $0 0.00%
Other Financing 106 0.86% $40,088,921 7.49%
Agreements
Total 12,326 100.00% $535,019,738 100.00%
</TABLE>
32
<PAGE>
DISTRIBUTION OF CONTRACTS BY STATE IN WHICH OBLIGORS ARE LOCATED
<TABLE>
<CAPTION>
Percentage of
Aggregate
Percentage of Discounted Discounted
State Number of Number of Contract Contract
Contracts Contracts Balance Balance
<S> <C> <C> <C> <C>
Alabama 253 2.05% $21,419,041 4.00%
Alaska 19 0.15% $223,291 0.04%
Arizona 351 2.85% $9,041,987 1.69%
Arkansas 237 1.92% $11,797,407 2.21%
California 1,140 9.25% $35,854,922 6.70%
Colorado 169 1.37% $5,165,482 0.97%
Connecticut 194 1.57% $13,563,699 2.54%
Delaware 52 0.42% $4,577,001 0.86%
District of Columbia 19 0.15% $423,954 0.08%
Florida 436 3.54% $19,888,200 3.72%
Georgia 284 2.30% $16,662,398 3.11%
Hawaii 47 0.38% $1,590,702 0.30%
Idaho 85 0.69% $3,977,190 0.74%
Illinois 294 2.39% $19,638,967 3.67%
Indiana 239 1.94% $14,868,671 2.78%
Iowa 94 0.76% $3,347,465 0.63%
Kansas 75 0.61% $2,507,744 0.47%
Kentucky 245 1.99% $12,405,034 2.32%
Louisiana 287 2.33% $7,498,138 1.40%
Maine 105 0.85% $6,589,775 1.23%
Maryland 240 1.95% $5,808,433 1.09%
Massachusetts 229 1.86% $9,633,582 1.80%
Michigan 241 1.96% $10,060,785 1.88%
Minnesota 143 1.16% $12,586,427 2.35%
Mississippi 205 1.66% $10,808,611 2.02%
Missouri 159 1.29% $7,480,061 1.40%
Montana 41 0.33% $2,106,063 0.39%
Nebraska 58 0.47% $1,731,278 0.32%
Nevada 64 0.52% $2,713,436 0.51%
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Aggregate
Percentage of Discounted Discounted
State Number of Number of Contract Contract
Contracts Contracts Balance Balance
<S> <C> <C> <C> <C>
New Hampshire 98 0.80% $2,514,144 0.47%
New Jersey 499 4.05% $20,642,184 3.86%
New Mexico 73 0.59% $3,265,604 0.61%
New York 722 5.86% $34,511,402 6.45%
North Carolina 203 1.65% $5,573,286 1.04%
North Dakota 16 0.13% $490,783 0.09%
Ohio 433 3.51% $21,750,214 4.07%
Oklahoma 209 1.70% $9,547,768 1.78%
Oregon 171 1.39% $5,278,053 0.99%
Pennsylvania 704 5.71% $21,419,748 4.00%
Rhode Island 21 0.17% $270,565 0.05%
South Carolina 90 0.73% $2,818,521 0.53%
South Dakota 23 0.19% $1,247,426 0.23%
Tennessee 235 1.91% $11,529,891 2.16%
Texas 1,297 10.52% $64,115,075 11.98%
Utah 205 1.66% $10,630,349 1.99%
Vermont 73 0.59% $4,888,422 0.91%
Virginia 184 1.49% $18,454,477 3.45%
Washington 222 1.80% $7,719,196 1.44%
West Virginia 67 0.54% $3,773,200 0.71%
Wisconsin 751 6.09% $9,748,510 1.82%
Wyoming 25 0.20% $879,176 0.16%
Total 12,326 100.00% $535,019,738 100.00%
</TABLE>
34
<PAGE>
DISTRIBUTION OF CONTRACTS BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Percentage of
Number of Percentage of Number Discounted Contract Aggregate Discounted
Equipment Type Contracts of Contracts Balance Contract Balance
<S> <C> <C> <C> <C>
Transportation 3,897 31.62% $247,042,912 46.17%
Construction 718 5.83% $45,114,216 8.43%
Computer Hardware 1,767 14.34% $58,333,010 10.90%
Computer Software 109 0.88% $61,720,035 11.54%
Resources 168 1.36% $15,976,298 2.99%
Printing 23 0.19% $8,954,372 1.67%
Presses/Equipment
Healthcare Equipment 149 1.21% $17,410,032 3.25%
Industrial Equipment 209 1.70% $8,035,260 1.50%
Commercial/Retail 37 0.30% $9,610,950 1.80%
Fixtures
Automotive Diagnostic 4,220 34.24% $36,988,719 6.91%
Equipment
Manufacturing 109 0.88% $8,604,045 1.61%
Equipment
Other/Miscellaneous 920 7.46% $17,229,886 3.22%
Total 12,326 100.00% $535,019,738 100.00%
</TABLE>
35
<PAGE>
DISTRIBUTION OF CONTRACTS BY OBLIGOR INDUSTRY
<TABLE>
<CAPTION>
Percentage of
Percentage of Number Discounted Contract Aggregate Discounted
Industry Number of Contracts of Contracts Balance Contract Balance
<S> <C> <C> <C> <C>
Transportation 3,541 28.73% $215,298,014 40.24%
Resources 206 1.67% $18,636,687 3.48%
Construction 778 6.31% $52,183,250 9.75%
Printing 36 0.29% $8,237,529 1.54%
Financial Management 151 1.23% $24,856,117 4.65%
Distribution 4,901 39.76% $73,439,450 13.73%
Manufacturing 249 2.02% $31,526,528 5.89%
Government 13 0.11% $2,456,808 0.46%
Commercial 130 1.05% $23,597,332 4.41%
Small Business 1,157 9.39% $6,685,024 1.25%
Other/Miscellaneous 1,164 9.44% $78,102,998 14.60%
Total 12,326 100.00% $535,019,738 100.00%
</TABLE>
36
<PAGE>
DISTRIBUTION OF CONTRACTS BY CONTRACT BALANCE
<TABLE>
<CAPTION>
Percentage of
Discounted Contract Number Percentage of Number Discounted Contract Aggregate Discounted
Balance of Contracts of Contracts Balance Contract Balance
<S> <C> <C> <C> <C>
$ 0
less than or equal to
$25,000 7,727 62.69% $64,394,840 12.04%
$ 25,001
less than or equal to
$50,000 1,593 12.92% $56,797,913 10.62%
$50,001
less than or equal to
$75,000 1,013 8.22% $62,977,757 11.77%
$75,001
less than or equal to
$100,000 1,083 8.79% $93,979,689 17.57%
$100,001
less than or equal to
$200,000 621 5.04% $80,881,458 15.12%
$200,001
less than or equal to
$300,000 94 0.76% $23,067,072 4.31%
$300,001
less than or equal to
$400,000 57 0.46% $19,291,539 3.61%
$400,001
less than or equal to
$500,000 34 0.28% $15,242,635 2.85%
$500,001
less than or equal to
$1,000,000 70 0.57% $49,929,990 9.33%
$1,000,001
less than or equal to
$4,000,000 29 0.24% $42,716,438 7.98%
greater than $4,000,000 5 0.04% $25,740,408 4.81%
TOTAL 12,326 100.00% $535,019,738 100.00%
</TABLE>
37
<PAGE>
DISTRIBUTION OF CONTRACTS BY
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Percentage of
Remaining Term Percentage of Number Discounted Contract Aggregate Discounted
(Months) Number of Contracts of Contracts Balance Contract Balance
<S> <C> <C> <C> <C>
1 less than or equal to 12 661 5.36% $16,759,620 3.13%
13 less than or equal to 24 1,937 15.71% $41,917,533 7.83%
25 less than or equal to 36 3,766 30.55% $102,734,270 19.20%
37 less than or equal to 48 2,182 17.70% $120,541,855 22.53%
49 less than or equal to 60 3,692 29.95% $231,284,531 43.23%
61 less than or equal to 72 56 0.45% $13,535,778 2.53%
73 less than or equal to 84 32 0.26% $8,246,150 1.54%
greater than 84 0 0.00% $0 0.00%
Total 12,326 100.00% $535,019,738 100.00%
</TABLE>
DISTRIBUTIONS OF CONTRACTS BY
ORIGINAL CONTRACT TERM
<TABLE>
<CAPTION>
Percentage of
Original Term Number of Percentage of Number Discounted Contract Aggregate Discounted
(Months) Contracts of Contracts Balance Contract Balance
<S> <C> <C> <C> <C>
1 less than or equal to 12 347 2.82% $8,885,142 1.66%
13 less than or equal to 24 1,670 13.55% $32,090,114 6.00%
25 less than or equal to 36 3,479 28.22% $82,759,274 15.47%
37 less than or equal to 48 2,255 18.29% $105,713,727 19.76%
49 less than or equal to 60 3,858 31.30% $226,452,648 42.33%
61 less than or equal to 72 672 5.45% $62,535,027 11.69%
73 less than or equal to 84 43 0.35% $9,914,604 1.85%
greater than 84 2 0.02% $6,669,203 1.25%
Total 12,326 100.00% $535,019,738 100.00%
</TABLE>
38
<PAGE>
DELINQUENCY AND LOAN LOSS INFORMATION
Set forth below is certain information regarding the delinquency and loss
experience of Newcourt USA with respect to its portfolio of financing agreements
(including Contracts and other financing agreements that it previously sold but
continues to service) for users of a wide variety of new and used information
technology equipment (such as mainframe and mini computers, computer work
stations, personal computers, data storage devices and other computer related
peripheral equipment), communications equipment (such as telephone switching and
networking systems), commercial business and industrial equipment (such as
printing presses, machine tools and other manufacturing equipment,
photocopiers, facsimile machines and other office equipment, energy savings and
control equipment, automotive diagnostic and automated testing equipment),
medical equipment (such as diagnostic and therapeutic examination equipment for
radiology, nuclear medicine and ultrasound and laboratory analysis equipment),
resources equipment (such as feller-bunchers and grapplers), and transportation
and construction equipment (such as heavy and medium duty trucks and highway
trailers, school buses, bulldozers, loaders, graters, excavators, forklifts and
other materials handling equipment, golf carts and other road and off-road
machinery). The information set forth below includes delinquency and loss
experience of Newcourt USA with respect to financing agreements for
"micro-ticket" items which are included in Newcourt USA's portfolio but which
are not being, and will not be, transferred to the Trust. There can be no
assurance that the levels of delinquency and loss experience on the Contracts
will be comparable to that set forth below. The contracts to which the
following tables relate (the "SUBJECT CONTRACTS") were, prior to the end of the
first quarter of 1996, serviced to a limited extent (specifically, the
invoicing, cash application and sales and tax reporting with respect thereto) by
Parrish Financial Servicing L.P., an unaffiliated independent servicing
contractor. In addition, certain of the Subject Contracts which were purchased
by Newcourt USA are or continue to be serviced by the Person (or an affiliate of
the Person) that sold them to Newcourt (each, a "THIRD-PARTY SERVICER") pursuant
to arrangements permitting the substitution by Newcourt USA of itself as
servicer with respect to the applicable Subject Contracts upon default (as
prescribed under such arrangement) by the applicable Third-Party Servicer. Of
the Contracts included in the Contract Portfolio approximately 211 such
Contracts, with an ADCB as of the date hereof of $2,421,011 or 0.45% of the ADCB
of the Contracts Pool are being serviced by Third-Party Servicers. Due to the
acquisition of Contract portfolios from various Vendors and the development of
additional finance programs with various Vendors, the data set forth is not
necessarily comparable on a year-to-year basis. Data set forth for the six
months ended June 30, 1997 is not indicative of results for the full year.
39
<PAGE>
NEWCOURT USA PORTFOLIO
DELINQUENCY EXPERIENCE (a), (b), (c) and (d)
AT
---------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Twelve Months Twelve Months Twelve Months
Ended Ended Ended Ended
June 30, December 31, December 31, December 31,
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Outstanding
Investment in $1,339,937,827 $1,056,983,682 $354,193,858 $117,147,359
Contracts
31-60 days 2.01% 2.86% 4.14% 0.33%
61-90 days 0.50% 1.27% 0.93% 0.07%
Over 90 days 0.31% 0.41% 0.15% 0.00%
Total (% of
Outstanding 2.82% 4.54% 5.22% 0.40%
Investment in
Contracts)
</TABLE>
(a) Outstanding Investment is equal to the outstanding funds deployed for
the acquisition of the financing agreements less any associated
payments made under such financing agreement relating to the principal
component of such financing agreement.
(b) Newcourt USA classifies accounts as delinquent at the time a payment
(or a portion thereof) remains unpaid 31 days or more following the
date on which such payment is due. The amount classified as
delinquent is the present value of all remaining scheduled payments
discounted at the applicable contract rate and any past due amounts
relating to such financing agreements. Delinquent accounts are
written off in their entirety when a determination is made that the
account is uncollectible.
(c) The percentages in any column may not total due to rounding.
(d) Includes all U.S. assets originated through the Transportation &
Construction Equipment Division, Information Technology Division and
Commercial Division including small balance assets (i.e.,
"micro-ticket" assets) originated, and still held on Newcourt USA's
balance sheet, from its acquisition of Anthem in 1996 (but excludes
assets securitized and sold through Newcourt Equipment Receivables
Trust 1996-A and Newcourt Equipment Receivables Trust 1997-A).
40
<PAGE>
NEWCOURT USA PORTFOLIO
LOSS EXPERIENCE (a) AND (d)
AT
---------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Twelve Months Twelve Months Twelve Months
Ended Ended Ended Ended
June 30, 1997 December 31, 1996 December 31, 1995 December 31, 1994
<S> <C> <C> <C> <C>
Outstanding
Investment in $1,339,937,827 $1,056,983,682 $354,193,858 $117,147,359
Contracts
Gross Losses $9,277,448 $13,688,978 0 0
Recoveries $5,270,766 $11,226,180 0 0
Net Losses $4,006,683 $2,462,798 0 0
Net Losses as a
Percentage of
Average
Outstanding
Investment in Contracts(c) 0.64% (b) 0.32% 0.00% 0.00%
</TABLE>
(a) Outstanding Investment is equal to the outstanding funds deployed for
the acquisition of the financing agreements less any associated
payments made under such financing agreement relating to the principal
component of such financing agreement.
(b) Annualized.
(c) Average Outstanding Investment is the average of the Outstanding Investment
at the end of each quarter.
(d) Includes all U.S. assets originated through Newcourt USA's
Transportation & Construction Equipment Division, Information
Technology Division and Commercial Division including small balance
assets (i.e., "micro-ticket" assets) originated, and still held on
Newcourt USA's balance sheet, from its acquisition of Anthem in 1996
(but excludes assets securitized and sold through Newcourt Equipment
Receivables Trust 1996-A and Newcourt Equipment Receivables Trust
1997-A).
THE DATA PRESENTED IN THE FOREGOING TABLES ARE FOR ILLUSTRATIVE PURPOSES ONLY
AND THERE IS NO ASSURANCE THAT THE DELINQUENCY OR LOSS EXPERIENCE OF THE
CONTRACTS WILL BE SIMILAR TO THAT SET FORTH ABOVE. SEE "RISK FACTORS" AND
"CERTAIN LEGAL ASPECTS OF THE CONTRACTS".
41
<PAGE>
THE CONTRACTS GENERALLY
The Trust will be entitled to all collections on account of the Contracts
in the Contract Pool and related Equipment and Applicable Security, except for
(i) collections on deposit in the Collection Account or otherwise received by
the Servicer on or with respect to the Contract Pool or related Equipment, which
collections are attributable to any taxes, fees or other charges imposed by any
governmental authority, (ii) collections representing reimbursements of
insurance premiums or payments for certain services that were not financed by
the Seller, (amounts described in clauses (i) and (ii), "EXCLUDED AMOUNTS") due
on or after the applicable Cutoff Date for such Contracts and (iii) collections
relating to payments which were scheduled to be made by the Obligors on the
Contracts pursuant to the terms of such Contracts prior to the related Cutoff
Date.
END-USER CONTRACTS
The following discussion describes the End-User Contracts (including
End-User Contracts which are Secondary Contracts). All of the End-User
Contracts to be included in the Trust are CSAs, Leases, Secured Notes, IPAs and
Financing Agreements in respect of Equipment, Software and Services. There is
no limit on the number of Contracts in the Contract Pool which may consist of
any of the foregoing types. Each Contract is required, however, to be an
Eligible Contract (as defined UNDER "THE TRANSFER AND SALE AGREEMENT AND SALE
AND SERVICING AGREEMENT GENERALLY") as of the Cutoff Date.
CONDITIONAL SALE AGREEMENTS. The Seller offers financing for Equipment
under CSAs assigned to the Seller by Vendors. It is expected that most of the
CSAs in the Contract Pool will consist of the Seller's standard pre-printed
form, or of the Vendors' standard, pre-printed forms. The CSA sets forth the
description of each Financed Item and the schedule of installment payments.
Generally, loans under CSAs are fixed rate and are for a one to seven year term.
Payments under CSAs generally are due monthly. CSA terms (i) provide for a
grant by the End-User thereunder of a security interest in any related Equipment
(which security interest is assigned by the Vendor to the Seller), (ii) may
allow prepayment of the obligation upon payment, where allowed by applicable
state law, of an additional prepayment fee, (iii) require the End-User to
maintain the Equipment, keep it free and clear of liens and encumbrances and pay
all taxes related to the Equipment, (iv) restrict the modification or disposal
of the Equipment without the seller's, or its assignee's, consent, (v) include a
disclaimer of warranties, (vi) include the End-User's indemnity against
liabilities arising from the use, possession or ownership of the Equipment,
(vii) include the End-User's absolute (except as provided in clause (ii)) and
unconditional obligation to pay the installment payments thereunder and (viii)
include specifically identifiable events of default and remedies therefor. The
CSA also requires each End-User to maintain insurance, the terms of which may
vary. The terms of a CSA may be modified at its inception at the End-User's
request. Such modifications must either be approved by the Seller's legal
department and certain levels of management before the Seller will agree to
accept an assignment of the CSA from a Vendor, or the Vendor must indemnify the
Seller against any losses or damages it may suffer as a result of such
modifications.
LEASES. The Seller, either directly or by assignment from Vendors, offers
financing of Equipment, Software and Services under Leases. Leases may consist
of individual lease agreements relating to a single, separate transaction and
Financed Item, or may consist of individual transactions written under and
governed by a master lease agreement (each, an "MLA") which contains the general
terms and conditions of the transaction. Specific terms and conditions, such as
descriptions of the specific Equipment, Software and Services being leased or
financed and the schedule of related rental payments, are contained in a
supplement or schedule to the MLA (each an "MLA SUPPLEMENT"), which is signed by
the End-User as lessee, and either the Vendor or the Seller, as lessor. The MLA
Supplement incorporates the MLA by reference, and is treated by the Seller as a
separate Lease. Each Lease is originated in the ordinary course of business by
either the Seller or a Vendor (and assigned to the Seller pursuant to a Vendor
Agreement).
The initial terms of the Leases in the Contract Pool generally range from
one to seven years. Each Lease provides for the periodic payment by the
End-User of rent in advance or arrears, generally monthly or quarterly. Such
periodic payments represent the amortization, generally 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 included in the Contract Pool are "NET LEASES" under which
the End-User assumes responsibility for the Financed Items, including operation,
maintenance, repair, insurance or self-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 the Financed Items during the Lease term. The
End-User further agrees to indemnify the lessor for any liabilities arising out
of the use or operation of the Financed Items. 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 generally contain "HELL OR HIGH WATER" clauses
unconditionally obligating the
42
<PAGE>
End-User to make periodic payments, without setoff, at the times and in the
amounts specified in the Lease. If the Seller is the lessor, the Lease contains
no express or implied warranties with respect to the Financed Items other than a
warranty of quiet enjoyment. If a Vendor is the lessor, the Lease or a related
agreement may contain certain representations and warranties with respect to the
Financed Items 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 (which would include the Seller) by way of setoff, counterclaim or
otherwise, and further agrees that it may only bring such claims against the
Vendor. All Leases of Equipment generally 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 such risks, if approved in
advance by the Seller or Vendor, as applicable.
The Leases include both "TRUE LEASES" and leases intended for security as
defined in Section 1-201(37) of the UCC. Under a "TRUE LEASE," the lessor bears
the risk of ownership (although the risk of loss of the Equipment is passed to
the End-User under the Leases), takes any tax benefits associated with the
ownership of depreciable property under applicable law and no title is conferred
upon the lessee. 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. See "--RESIDUAL INVESTMENTS." 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 MLA Supplement, but generally
such terms provide for the purchase of the Equipment at a prestated price, which
may be nominal. The inclusion of "TRUE LEASES" in the Contract Pool will have
no federal income tax impact on Noteholders since the Notes are treated as debt
for federal income tax purposes although the inclusion of such leases may result
in the imposition of state and local taxes which would reduce cash available for
payment on the Notes. See "CERTAIN FEDERAL INCOME TAX MATTERS." "TRUE LEASES"
are treated differently under the Bankruptcy Code from leases intended for
security. See "CERTAIN LEGAL ASPECTS OF THE CONTRACTS--CERTAIN MATTERS RELATING
TO BANKRUPTCY."
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 certain MLAs, the End-User may assign its rights and
obligations under the Lease, but only upon receiving the prior written consent
of the lessor, or may relocate the Equipment upon giving the lessor prompt
written notice of such relocation. The right to grant or deny such consent or
to receive such written notice will be exercised by the Servicer pursuant to the
authority delegated to it in the Sale and Servicing Agreement. Certain 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 generally permit
cancellation by the End-User, certain 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 Seller, or by a Vendor, with the consent of
the Seller, and are generally associated with additional financing opportunities
from the same End-User. End-Users may also negotiate with the Seller, at the
Seller's discretion, an early termination arrangement allowing the End-User to
purchase the Equipment during the term of a Lease for an amount generally equal
to or in excess of the present value of the remaining rental payments under the
Lease plus the anticipated market value of the related Equipment as of the end
of the Lease term. In some circumstances, 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 Seller and an amount generally 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 Seller. 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 such Equipment, the Seller may reprice and extend the
related base Lease term to be coterminous with the desired term of the Lease
relating to the upgrade. In certain cases, subject to certain conditions
described under "DESCRIPTION OF THE NOTES--PREPAID CONTRACTS," such base lease
extensions may remain in the Contract Pool. Newcourt USA expects, as Servicer,
to continue to permit these modifications and terminations with respect to
Leases included in the Contract Pool pursuant to the authority delegated to it
in the Sale and Servicing Agreement, subject to certain conditions and covenants
of the Servicer described under "DESCRIPTION OF THE NOTES--PREPAID CONTRACTS."
In certain circumstances, the standard terms and conditions of the MLA are
modified at the inception of a Lease at the request of the End-User. Such
modifications must either be approved by the Seller's legal department and
certain levels of management before the Seller will agree to enter into the
Lease or accept an assignment of the Lease from
43
<PAGE>
a Vendor, or the Vendor must indemnify the Seller against any losses or damages
it may suffer as a result of such modifications. Common permitted modifications
include, but are not limited to, (i) a one dollar purchase option at the end of
the Lease term, (ii) prearranged mid-Lease purchase options, early termination
options and lease extension options as described above, (iii) modifications to
the lessor's equipment inspection rights, (iv) modifications to the End-User's
insurance requirements permitting the End-User to self-insure against casualty
to the Equipment, (v) 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 (vi) extended grace periods for late payments of
rent.
SECURED NOTES. The Seller also provides direct initial financing or
refinancing of Equipment and Software under secured promissory notes (each a
"SECURED NOTE"), which consist of an installment note and a separate security
agreement. In an initial financing transaction, the Seller pays to the Vendor
the purchase price for the Equipment and Software and in a refinancing
transaction, the Seller pays off an End-User's existing financing source, and
the initial financing or refinancing is documented as a direct loan by the
Seller to the End-User of the Equipment or Software using a Secured Note. In
the case of a refinancing transaction, upon payment to the existing financing
source, the Seller obtains a release of such party's lien on the financed
Equipment. In either case, the Seller records its own lien against the financed
Equipment or Software and takes possession of the Secured Note. Except for the
lack of references to "SALE" or "PURCHASE" of Equipment, the terms and
conditions contained in a Secured Note are substantially similar to those
contained in a CSA.
INSTALLMENT PAYMENT AGREEMENTS. The Seller provides financing for certain
Software license fees and related support and consulting services under
installment payment supplements to software license agreements, separate IPAs as
well as other forms of Financing Agreements assigned to the Seller by Vendors of
Software. Each such Financing Agreement is an unsecured obligation of the
End-User; generally provides for a fixed schedule of payments with no End-User
right of prepayment; is noncancellable for its term and generally contains 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
therein (in the event a Financing Agreement does not provide for
noncancellability or a "HELL OR HIGH WATER" clause such Financing Agreement will
have the benefit of a Vendor Guarantee (See "THE CONTRACTS - PROGRAM AGREEMENTS
WITH VENDORS"); permits the Vendor to assign the payment agreement to a third
party (including the Seller) and include the End-User's agreement, upon such
assignment, not to assert against such assignee any claims or defenses the
End-User may have against the Vendor; and contains default and remedy provisions
that generally include acceleration of amounts due and to become due and, in
certain cases, the right of the Vendor, or the Seller by assignment, to
terminate the underlying Software license and all related support and consulting
activities.
EQUIPMENT
The End-User Contracts and Secondary Contracts cover a wide variety of new
and used equipment relating to a wide variety of new and used information
technology equipment (such as mainframe and mini computers, computer work
stations, personal computers, data storage devices and other computer related
peripheral equipment), communications equipment (such as telephone switching and
networking systems), commercial business and industrial equipment (such as
printing presses, machine tools and other manufacturing equipment,
photocopiers, facsimile machines and other office equipment, energy savings and
control equipment, automotive diagnostic and automated testing equipment),
medical equipment (such as diagnostic and therapeutic examination equipment for
radiology, nuclear medicine and ultrasound and laboratory analysis equipment),
resources equipment (such as feller-bunchers and grapplers), and transportation
and construction equipment (such as heavy and medium duty trucks and highway
trailers, school buses, bulldozers, loaders, graters, excavators, forklifts and
other materials handling equipment, golf carts and other road and off-road
machinery) (collectively, the "EQUIPMENT"). All of the interests of the Seller
in the Equipment subject to each related End-User Contract (which consists or
will consist of either title to the Equipment or a security interest in the
Equipment) will be transferred to the Trust.
SOFTWARE AND SERVICES
Certain of the End-User Contracts 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 ("SOFTWARE"), and such End-User Contracts may also
cover related support and consulting services which are provided by the Vendor,
an affiliate thereof or a third party contract party and which facilitate the
Obligors use of such software ("SERVICES"). No interest in the Software, the
Software license agreement (other than the right to collect the payment of
Software license fees and, in certain cases, to exercise certain rights and
remedies under the Software license agreement or other agreements related
thereto) or the related Services has been or will be conveyed to the Seller by
either the Vendors or licensors of the Software or by the End-Users under the
related End-User Contracts. Consequently, the Trust will not have title to or a
security interest in such Software, nor will it own such Services, and would not
be able to realize any value therefrom under a related End-User Contract upon a
default
44
<PAGE>
by the End-User. Equipment, Software and Services are collectively referred to
as "FINANCED ITEMS". It is a condition to the issuance of the Notes that as of
the Closing Date, no more than 11.54% of the ADCB of the Contract Pool will
consist of Software transactions.
VENDOR LOANS
The Contracts may include limited recourse loan or repayment obligations
(which may take the form of promissory notes with related security interests
documented by security agreements or specific provisions in Program Agreements)
("VENDOR LOANS") each of which is payable by a Vendor and secured by all of the
Vendor's interest in an individual End-User Contract originated by such Vendor
and by the Equipment related to such End-User Contract.
Vendor Loans may be originated through, and incorporate terms and
conditions of, a Program Agreement (including a Program Agreement under which
End-User Contracts also are or may be originated by the Seller directly, or
purchased by the Seller from the Vendor, in separate transactions not giving
rise to Vendor Loans). Vendor Loans generally are non-recourse to the Vendor,
I.E., the Seller 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 Program
Agreement. 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 such Vendor
Loan. Each Vendor Loan either includes most, if not all, of the
representations and warranties regarding the End-User Contract and related
Equipment typically included in a Vendor Agreement, or incorporates such
representations and warranties included in any related Program Agreement by
reference.
PROGRAM AGREEMENTS WITH VENDORS
It is expected that a substantial portion of the End-User Contracts to be
included in the Trust will consist of End-User Contracts originated by Vendors
and assigned or pledged to the Seller pursuant to Program Agreements. Also, as
described above, Vendor Loans may be originated through Program Agreements with
the related Vendor. The Seller's Program Agreements are agreements with
Equipment manufacturers, dealers and distributors, or Software licensors or
distributors, located in the United States ("VENDORS") which provide the Seller
with the opportunity to finance transactions relating to the acquisition or use
by an End-User of a Vendor's Equipment, Software, Services or other products.
Vendor finance arrangements provide the Seller with a steady, sustainable flow
of new business, generally with lower costs of origination than asset-based
financings marketed directly to end-users. Many of the Program Agreements
provide various forms of support to the Seller, including representations and
warranties by the Vendor in respect of the End-User Contracts assigned by the
Vendor to the Seller and related Equipment, Software or 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
End-User. Some of the Program Agreements take the form of a referral
relationship which is less formal, and may or may not include credit or
remarketing support to the Seller from the Vendor.
Each Program Agreement (other than Program Agreements that only establish a
referral relationship) generally includes the following provisions, among
others:
1. Vendor representations, warranties and covenants regarding each
End-User Contract assigned to the Seller, including among other things
that: the obligations of the End-User under the assigned End-User Contract
are absolute, unconditional, noncancellable, enforceable in accordance with
its terms and free from any rights of offset, counterclaim or defense; the
Seller holds the sole original of the End-User Contract and has either
title to or a first priority perfected security interest in the Equipment;
the Equipment and the End-User Contract are free and clear of all liens,
claims or encumbrances except for Permitted Liens; the Equipment or the
Software has been irrevocably accepted by the End-User and will perform as
warranted to the End-User; and the assigned End-User Contract was duly
authorized and signed by the End-User.
2. Remedies in the event of a misrepresentation or breach of a
warranty or covenant by the Vendor regarding an assigned End-User Contract,
which usually require the Vendor to repurchase the affected End-User
Contract for the Seller's investment balance in the End-User Contract plus
costs incurred by the Seller in breaking any underlying funding arrangement
(which may or may not be calculated in accordance with a specified
formula).
3. 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
45
<PAGE>
under the End-User Contract (to assist the Seller in realizing proceeds
from the Equipment assigned as collateral security to support the
obligations of the End-User under the End-User Contract).
4. The right of the Seller to further assign its interests in
assigned End-User Contracts, all payments thereunder and any related
interest in Equipment.
In addition to the foregoing, a Program Agreement may include recourse
against the Vendor with respect to End-User defaults under certain identified
End-User Contracts, (i) by specifying that the assignment of the End-User
Contract from the Vendor to the Seller is with full recourse against the Vendor,
(ii) by specifying that the Vendor will absorb a limited fixed dollar or
percentage amount of "FIRST LOSSES" on the Contract, (iii) by inclusion of the
End-User Contract in an "ULTIMATE NET LOSS POOL" ("UNL POOL") created under the
Program Agreement as well as certain Vendor Guarantees ("Vendor Guarantees")
with respect to certain End-User Contracts which are "CANCELLABLE" or which do
not contain "HELL OR HIGH WATER" provisions or (iv) by providing for Vendor
repurchase of the End-User Contract or Vendor indemnification payments for
breaches of certain representations and warranties made by the Vendor with
respect to such Contract. In the event of an End-User default under an End-User
Contract which was assigned by the Vendor to the Seller subject to the UNL Pool,
the Seller may draw against the UNL Pool up to the amount of the Seller's
remaining unpaid investment balance in the defaulted End-User Contract, but not
in excess of the UNL Pool balance then available. Drawings may also be made
against the UNL Pool with respect to End-User Contracts that are not included in
the Contract Pool and, accordingly, there can be no assurance that any amounts
contributed by a Vendor to the UNL Pool will be available in the event of an
End-User default under a End-User Contract included in the Contract Pool.
The manner in which End-User Contracts are assigned to the Seller by the
Vendors differs under each Program Agreement, depending upon the nature of the
Financed Items, the form of the End-User Contract, the accounting treatment
sought by the Vendor and the End-User, and certain tax considerations.
For example, the Seller might (x) accept a Vendor Loan and collateral
assignment of the End-User Contract and related Equipment (or security interest
therein) from the Vendor, or (y) accept a full assignment of such End-User
Contract and a collateral assignment of the related Equipment (or security
interest therein) from the Vendor, which collateral assignment secures the
End-User's obligations under the End-User Contract or Lease. The Seller also
may receive, from a Vendor with respect to Software, a full assignment of
leases, installment payment agreements, installment payment supplements to
license agreements, and other types of financing agreements used in financing
Software license payments and related support and consulting services. Such
assignments may include an assignment of the Software Vendor's or licensor's
right, or the agreement of the Vendor or licensor (at the Seller's
instructions), to terminate the software license covered by the End-User
Contract and suspend related support in the event of an End-User default under
the End-User Contract. In some cases, the Software Vendor also agrees not to
relicense the same or similar software to a defaulted End-User for some period
of time (E.G., one year) unless the End-User cures its default.
It is also expected that some portion of the End-User Contracts included in
the Contract Pool, especially in the case of CSAs, will consist of End-User
Contracts originated by Vendors and assigned to the Seller pursuant to Vendor
Assignments, each of which relates to an individual End-User Contract, rather
than pursuant to a Program Agreement. Each Vendor Assignment will either be
made with or without recourse against the Vendor for End-User defaults and will
generally contain many, if not all, of the representations, warranties and
covenants typically contained in Program Agreements, as well as a Vendor
repurchase requirement in the event of a breach by the Vendor of such
representations, warranties or covenants. Vendor Assignments may or may not
provide for any Vendor remarketing support in the event of an End-User default.
RESIDUAL INVESTMENTS
The Seller may finance all or a portion of the residual interest in the
Equipment under certain Program Agreements and under direct transactions between
the Obligor and the Seller. (Any investment by the Seller in such residual
interest shall be referred to as a "RESIDUAL INVESTMENT".) Certain Program
Agreements provide that the Seller may, at its sole discretion and in connection
with the funding of a "TRUE LEASE" of Equipment make a Residual Investment in
the Equipment subject to a Contract by advancing additional funds against a
portion of the anticipated residual value of the Equipment, and not just against
the discounted present value of the rental payments due under the End-User
Contract. Such Residual Investments may take the form of an advance of the
present value of some specified percentage of the anticipated residual value of
the Equipment or a specified percentage (generally not greater than 10%) of the
amount to be paid by the Seller in funding the present value of the rental
payments due under the End-User Contract. Certain transactions involving Vendor
Assignments result in the Seller advancing the entire purchase price of the
Equipment subject to a "TRUE LEASE", taking title to the Equipment, and
accepting an assignment of the "TRUE LEASE"
46
<PAGE>
Contract from a Vendor. Certain direct transactions between the Obligor under a
"TRUE LEASE" Contract and the Seller also result in the Seller advancing the
entire purchase price of the Equipment to the Vendor, taking title to the
Equipment from the Vendor, and entering into a "TRUE LEASE" Contract with the
Obligor (with the Seller named as "LESSOR" under such Contract). In either of
the two foregoing types of transactions, the Seller will have advanced more than
the discounted present value of the rents payable under the "TRUE LEASE"
Contracts by paying the purchase price for the Equipment, and so will have made
a Residual Investment in the Equipment.
In some Program Agreements, the Seller may make the Residual Investment in
the form of a full recourse loan of additional funds to the Vendor, repayable by
the Vendor at the expiration or termination of the End-User Contract with
interest, secured by a security interest in the Equipment covered by the
End-User Contract. In some transactions involving Vendor Assignments or direct
transactions with Obligors under "TRUE LEASE" Contracts, the Seller may obtain
the obligation of either the Vendor or the Obligor to purchase the Equipment at
the end of the Lease term for the full amount of the Seller's Residual
Investment in such Equipment with interest thereon. (Any such transaction in
which the Seller may look to either the Vendor or the Obligor, and not just the
value of Equipment itself, to recover its Residual Investment with interest
shall be referred to as a "GUARANTEED RESIDUAL INVESTMENT"). It is a condition
to the issuance of the Notes that as of the related Closing Date, after giving
effect to any Addition on such date, the aggregate amount of Guaranteed Residual
Investments included in the Contract Pool will not exceed 0.27% of the ADCB of
the Contract Pool. Other than Guaranteed Residual Investments, a Residual
Investment is not included in the Discounted Contract Balance of any End-User
Contract and, therefore, is not financed with the proceeds of the Notes.
Other than a Guaranteed Residual Investment, the Residual Investment
associated with any End-User Contract included in the Contract Pool has not been
and will not be purchased by the Trust Depositor from the Seller under the
Transfer and Sale Agreement, and, accordingly, will not be sold to the Trust
under the Sale and Servicing Agreement. The Trust's interest in End-User
Contracts with associated Residual Investments (other than Guaranteed Residual
Investments) will be limited to the discounted present value of the rental
payments due under the End-User Contract and a security interest in the related
Equipment. The Seller may assign its Residual Investment (other than a
Guaranteed Residual Investment) to a third party (a "RESIDUAL ASSIGNEE"),
including the security interest in the Equipment in respect of such Residual
Investment (the "SUBORDINATED RESIDUAL INTEREST"), either prior to the inclusion
of the related End-User Contract in the Contract Pool or thereafter. Under the
Transfer and Sale Agreement, the Seller will warrant to the Trust Depositor and
under the Sale and Servicing Agreement the Trust Depositor will warrant and
covenant to the Trust, that any Subordinated Residual Interest will be
subordinated to the interests of the Seller and the Trust, respectively, and
that any Residual Assignee will bear the full risk of any deficiency in respect
of the Residual Investment as a result of prior satisfaction of the Trust's
interest in the related End-User Contract and the related Equipment.
CONTRACT FILES
The Seller will indicate in the appropriate computer files relating to the
Transferred Contracts that such Contracts have been transferred to the Trust for
the benefit of the Noteholders. The Seller 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
Cutoff Date.
COLLECTIONS ON CONTRACTS
All collections received with respect to the Contracts will be allocated as
described herein. See "DESCRIPTION OF THE NOTES--ALLOCATIONS". Prepayments
will be given effect as of the last day of the Collection Period in which they
are received and Scheduled Payments of principal made in advance of their due
date will be given effect on their due date.
47
<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 such Contracts may be in the form of Scheduled Payments, Prepayments
or liquidations due to default, casualty and other events, which cannot be
specified at present. Any such payments may result in distributions to
Noteholders of amounts which would otherwise have been distributed over the
remaining term of the Contracts. In general, the rate of such payments may be
influenced by a number of factors, including general economic conditions. The
rate of principal payments with respect to any Class may also be affected by any
repurchase by the Trust Depositor pursuant to the Sale and Servicing Agreement
(and contemporaneously therewith by the Seller from the Trust Depositor pursuant
to the Transfer and Sale Agreement), whether as a result of a breach of
representation or warranty as to such Contract constituting a Warranty Contract,
as defined herein, or at the Trust Depositor's and Seller's option upon
satisfaction of the Cleanup Call Condition (and, in the case of Warranty
Contracts, such rate of prepayment would also be influenced by the Trust
Depositor's decision not to repurchase such Warranty Contract and instead, to
accept a Substitute Contract therefor as described below). In the event of a
repurchase, the repurchase price will decrease the 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--PREPAYMENTS
ON THE CONTRACTS AFFECT THE YIELD OF THE NOTES."
In the event a Contract becomes a Defaulted Contract, an Adjusted Contract,
an Early Termination Contract or a Warranty Contract (each as defined herein),
the Seller will have the option to substitute for the affected Contract another
of similar characteristics (a "SUBSTITUTE CONTRACT"), subject to an overall
limitation, in respect of Defaulted Contracts or Adjusted Contracts only, of an
aggregate amount not to exceed 10% of the ADCB of the Contracts as of the
initial Cutoff Date. In addition, in the event of an Early Termination
Contract (as defined herein) which has been prepaid in full, the Seller will
have the option to transfer to the Trust through the Trust Depositor, and the
Trust Depositor may cause the Trust to reinvest such prepayment proceeds in, an
additional Contract of similar characteristics (an "ADDITIONAL CONTRACT"). The
Substitute Contracts and Additional Contracts will have a Discounted Contract
Balance equal to or greater than that of the Contracts being modified and/or
replaced and the monthly payments on the Substitute Contracts or Additional
Contracts will be at least equal to those of the replaced Contracts through the
term of such replaced Contracts and shall provide for a last scheduled payment
which is not in excess of the Contract substituted for unless the Servicer
discounts the Substitute Contract's cash flows up to and including such last
scheduled payment. In the event that an Early Termination is allowed by the
Servicer and an Additional Contract is not provided, the amount prepaid (whether
by the related Obligor, or through a combination of payments from the related
Obligor and the Seller/Servicer) will be equal to at least the Discounted
Contract Balance of the terminated Contract, plus any delinquent payments.
The effective yield to holders of the Notes will depend upon, among other
things, the amount of and rate at which principal is paid to such Noteholders.
The after-tax yield to Noteholders may be affected by lags between the time
interest income accrues to Noteholders and the time the related interest income
is received by the Noteholders.
The following chart sets forth the percentage of the Initial Principal
Amount 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 and the C Notes which would be outstanding on
the Distribution Dates set forth below assuming a conditional payment rate (a
"CONDITIONAL PAYMENT RATE" or "CPR") of 0.00%, 7.00%, 11.0% and 15.0%,
respectively. Such information is hypothetical and is set forth for
illustrative purposes only. The CPR assumes that a fraction of the outstanding
Contract Pool is prepaid on each Distribution Date, which implies that each
Contract in the Contract Pool is equally likely to prepay. The CPR measures
prepayments based on the outstanding Discounted Contract Balances of the
Contracts, after the payment of all Scheduled Payments on the Contracts during
such Collection Period. The CPR 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 the Cutoff Date,
assumes that the Trust Depositor exercises its option to cause a redemption of
the Notes in connection with the Cleanup Call Condition, and assumes the Closing
Date is November 25, 1997.
48
<PAGE>
PERCENTAGE OF THE
INITIAL CLASS A-1 PRINCIPAL AMOUNT,
INITIAL CLASS A-2 PRINCIPAL AMOUNT,
INITIAL CLASS A-3 PRINCIPAL AMOUNT,
INITIAL CLASS A-4 PRINCIPAL AMOUNT,
INITIAL CLASS B PRINCIPAL AMOUNT,
AND INITIAL CLASS C PRINCIPAL AMOUNT
AT THE RESPECTIVE CPR SET FORTH BELOW
<TABLE>
<CAPTION>
0.00% CPR 7.00% CPR
Distribution Class Class Class Class Class Class Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing
Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
12/20/1997 90.83% 100.00% 100.00% 100.00% 100.00% 100.00% 88.35% 100.00% 100.00% 100.00% 100.00% 100.00%
01/20/1998 80.07% 100.00% 100.00% 100.00% 100.00% 100.00% 75.24% 100.00% 100.00% 100.00% 100.00% 100.00%
02/20/1998 69.32% 100.00% 100.00% 100.00% 100.00% 100.00% 62.30% 100.00% 100.00% 100.00% 100.00% 100.00%
03/20/1998 57.49% 100.00% 100.00% 100.00% 100.00% 100.00% 48.44% 100.00% 100.00% 100.00% 100.00% 100.00%
04/20/1998 48.67% 100.00% 100.00% 100.00% 100.00% 100.00% 37.66% 100.00% 100.00% 100.00% 100.00% 100.00%
05/20/1998 38.38% 100.00% 100.00% 100.00% 100.00% 100.00% 25.58% 100.00% 100.00% 100.00% 100.00% 100.00%
06/20/1998 28.82% 100.00% 100.00% 100.00% 100.00% 100.00% 14.32% 100.00% 100.00% 100.00% 100.00% 100.00%
07/20/1998 18.95% 100.00% 100.00% 100.00% 100.00% 100.00% 2.89% 100.00% 100.00% 100.00% 100.00% 100.00%
08/20/1998 7.65% 100.00% 100.00% 100.00% 100.00% 100.00% 0.00% 87.51% 100.00% 100.00% 96.96% 96.96%
09/20/1998 0.00% 97.39% 100.00% 100.00% 99.37% 99.37% 0.00% 73.45% 100.00% 100.00% 93.53% 93.53%
10/20/1998 0.00% 85.72% 100.00% 100.00% 96.52% 96.52% 0.00% 60.21% 100.00% 100.00% 90.31% 90.31%
11/20/1998 0.00% 73.77% 100.00% 100.00% 93.61% 93.61% 0.00% 46.86% 100.00% 100.00% 87.06% 87.06%
12/20/1998 0.00% 61.84% 100.00% 100.00% 90.71% 90.71% 0.00% 33.68% 100.00% 100.00% 83.85% 83.85%
01/20/1999 0.00% 50.38% 100.00% 100.00% 87.92% 87.92% 0.00% 21.08% 100.00% 100.00% 80.78% 80.78%
02/20/1999 0.00% 37.95% 100.00% 100.00% 84.89% 84.89% 0.00% 7.73% 100.00% 100.00% 77.53% 77.53%
03/20/1999 0.00% 24.94% 100.00% 100.00% 81.72% 81.72% 0.00% 0.00% 95.05% 100.00% 74.18% 74.18%
04/20/1999 0.00% 14.38% 100.00% 100.00% 79.15% 79.15% 0.00% 0.00% 85.67% 100.00% 71.41% 71.41%
05/20/1999 0.00% 2.37% 100.00% 100.00% 76.22% 76.22% 0.00% 0.00% 75.32% 100.00% 68.36% 68.36%
06/20/1999 0.00% 0.00% 92.41% 100.00% 73.41% 73.41% 0.00% 0.00% 65.42% 100.00% 65.44% 65.44%
07/20/1999 0.00% 0.00% 82.40% 100.00% 70.45% 70.45% 0.00% 0.00% 55.21% 100.00% 62.42% 62.42%
08/20/1999 0.00% 0.00% 72.02% 100.00% 67.39% 67.39% 0.00% 0.00% 44.80% 100.00% 59.35% 59.35%
09/20/1999 0.00% 0.00% 63.00% 100.00% 64.72% 64.72% 0.00% 0.00% 35.68% 100.00% 56.66% 56.66%
10/20/1999 0.00% 0.00% 54.10% 100.00% 62.10% 62.10% 0.00% 0.00% 26.79% 100.00% 54.03% 54.03%
11/20/1999 0.00% 0.00% 45.62% 100.00% 59.59% 59.59% 0.00% 0.00% 18.35% 100.00% 51.54% 51.54%
12/20/1999 0.00% 0.00% 36.82% 100.00% 56.99% 56.99% 0.00% 0.00% 9.73% 100.00% 49.00% 49.00%
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Distribution Class Class Class Class Class Class Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/20/2000 0.00% 0.00% 27.86% 100.00% 54.35% 54.35% 0.00% 0.00% 1.07% 100.00% 46.44% 46.44%
02/20/2000 0.00% 0.00% 19.65% 100.00% 51.93% 51.93% 0.00% 0.00% 0.00% 95.62% 44.10% 44.10%
03/20/2000 0.00% 0.00% 10.42% 100.00% 49.20% 49.20% 0.00% 0.00% 0.00% 90.05% 41.54% 41.54%
04/20/2000 0.00% 0.00% 2.40% 100.00% 46.83% 46.83% 0.00% 0.00% 0.00% 85.20% 39.30% 39.30%
05/20/2000 0.00% 0.00% 0.00% 96.55% 44.53% 44.53% 0.00% 0.00% 0.00% 80.53% 37.15% 37.15%
06/20/2000 0.00% 0.00% 0.00% 91.50% 42.21% 42.21% 0.00% 0.00% 0.00% 75.86% 34.99% 34.99%
07/20/2000 0.00% 0.00% 0.00% 86.28% 39.80% 39.80% 0.00% 0.00% 0.00% 71.10% 32.79% 32.79%
08/20/2000 0.00% 0.00% 0.00% 81.25% 37.48% 37.48% 0.00% 0.00% 0.00% 66.55% 30.70% 30.70%
09/20/2000 0.00% 0.00% 0.00% 76.78% 35.42% 35.42% 0.00% 0.00% 0.00% 62.51% 28.83% 28.83%
10/20/2000 0.00% 0.00% 0.00% 72.20% 33.30% 33.30% 0.00% 0.00% 0.00% 58.43% 26.95% 26.95%
11/20/2000 0.00% 0.00% 0.00% 67.84% 31.29% 31.29% 0.00% 0.00% 0.00% 54.57% 25.17% 25.17%
12/20/2000 0.00% 0.00% 0.00% 63.80% 29.43% 29.43% 0.00% 0.00% 0.00% 51.01% 23.53% 23.53%
01/20/2001 0.00% 0.00% 0.00% 59.52% 27.45% 27.45% 0.00% 0.00% 0.00% 47.30% 21.82% 21.82%
02/20/2001 0.00% 0.00% 0.00% 55.72% 25.70% 25.70% 0.00% 0.00% 0.00% 44.01% 20.30% 20.30%
03/20/2001 0.00% 0.00% 0.00% 51.34% 23.68% 23.68% 0.00% 0.00% 0.00% 40.31% 18.59% 18.59%
04/20/2001 0.00% 0.00% 0.00% 47.52% 21.92% 21.92% 0.00% 0.00% 0.00% 37.08% 17.11% 17.11%
05/20/2001 0.00% 0.00% 0.00% 43.96% 20.27% 20.27% 0.00% 0.00% 0.00% 34.10% 15.73% 15.73%
06/20/2001 0.00% 0.00% 0.00% 40.34% 18.61% 18.61% 0.00% 0.00% 0.00% 31.10% 14.34% 14.34%
07/20/2001 0.00% 0.00% 0.00% 36.78% 16.96% 16.96% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
08/20/2001 0.00% 0.00% 0.00% 33.11% 15.27% 15.27% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
09/20/2001 0.00% 0.00% 0.00% 29.95% 13.82% 13.82% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/20/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted
Average
Life (Years) 0.44 1.19 1.99 3.35 2.42 2.42 0.37 1.01 1.75 3.09 .2.19 2.19
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
11.00% CPR 15.00% CPR
Distribution Class Class Class Class Class Class Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Date
12/20/1997 86.85% 100.00% 100.00% 100.00% 100.00% 100.00% 85.29% 100.00% 100.00% 100.00% 100.00% 100.00%
01/20/1998 72.35% 100.00% 100.00% 100.00% 100.00% 100.00% 69.35% 100.00% 100.00% 100.00% 100.00% 100.00%
02/20/1998 58.11% 100.00% 100.00% 100.00% 100.00% 100.00% 53.78% 100.00% 100.00% 100.00% 100.00% 100.00%
03/20/1998 43.06% 100.00% 100.00% 100.00% 100.00% 100.00% 37.52% 100.00% 100.00% 100.00% 100.00% 100.00%
04/20/1998 31.15% 100.00% 100.00% 100.00% 100.00% 100.00% 24.46% 100.00% 100.00% 100.00% 100.00% 100.00%
05/20/1998 18.04% 100.00% 100.00% 100.00% 100.00% 100.00% 10.33% 100.00% 100.00% 100.00% 100.00% 100.00%
06/20/1998 5.83% 100.00% 100.00% 100.00% 100.00% 100.00% 0.00% 96.38% 100.00% 100.00% 99.12% 99.12%
07/20/1998 0.00% 91.73% 100.00% 100.00% 97.99% 97.99% 0.00% 79.58% 100.00% 100.00% 95.03% 95.03%
08/20/1998 0.00% 74.60% 100.00% 100.00% 93.81% 93.81% 0.00% 61.54% 100.00% 100.00% 90.63% 90.63%
09/20/1998 0.00% 59.64% 100.00% 100.00% 90.17% 90.17% 0.00% 45.72% 100.00% 100.00% 86.78% 86.78%
10/20/1998 0.00% 45.56% 100.00% 100.00% 86.74% 86.74% 0.00% 30.86% 100.00% 100.00% 83.16% 83.16%
11/20/1998 0.00% 31.49% 100.00% 100.00% 83.31% 83.31% 0.00% 16.11% 100.00% 100.00% 79.57% 79.57%
12/20/1998 0.00% 17.67% 100.00% 100.00% 79.95% 79.95% 0.00% 1.72% 100.00% 100.00% 76.06% 76.06%
01/20/1999 0.00% 4.50% 100.00% 100.00% 76.74% 76.74% 0.00% 0.00% 90.13% 100.00% 72.73% 72.73%
02/20/1999 0.00% 0.00% 92.33% 100.00% 73.38% 73.38% 0.00% 0.00% 78.44% 100.00% 69.28% 69.28%
03/20/1999 0.00% 0.00% 80.74% 100.00% 69.96% 69.96% 0.00% 0.00% 66.64% 100.00% 65.80% 65.80%
04/20/1999 0.00% 0.00% 71.06% 100.00% 67.10% 67.10% 0.00% 0.00% 56.72% 100.00% 62.87% 62.87%
05/20/1999 0.00% 0.00% 60.54% 100.00% 64.00% 64.00% 0.00% 0.00% 46.09% 100.00% 59.73% 59.73%
06/20/1999 0.00% 0.00% 50.52% 100.00% 61.04% 61.04% 0.00% 0.00% 36.00% 100.00% 56.75% 56.75%
07/20/1999 0.00% 0.00% 40.27% 100.00% 58.01% 58.01% 0.00% 0.00% 25.77% 100.00% 53.73% 53.73%
08/20/1999 0.00% 0.00% 29.91% 100.00% 54.95% 54.95% 0.00% 0.00% 15.51% 100.00% 50.71% 50.71%
09/20/1999 0.00% 0.00% 20.82% 100.00% 52.27% 52.27% 0.00% 0.00% 6.51% 100.00% 48.05% 48.05%
10/20/1999 0.00% 0.00% 12.00% 100.00% 49.67% 49.67% 0.00% 0.00% 0.00% 98.59% 45.48% 45.48%
11/20/1999 0.00% 0.00% 3.65% 100.00% 47.20% 47.20% 0.00% 0.00% 0.00% 93.35% 43.06% 43.06%
12/20/1999 0.00% 0.00% 0.00% 96.93% 44.71% 44.71% 0.00% 0.00% 0.00% 88.07% 40.62% 40.62%
01/20/2000 0.00% 0.00% 0.00% 91.54% 42.22% 42.22% 0.00% 0.00% 0.00% 82.86% 38.22% 38.22%
02/20/2000 0.00% 0.00% 0.00% 86.61% 39.95% 39.95% 0.00% 0.00% 0.00% 78.10% 36.02% 36.02%
03/20/2000 0.00% 0.00% 0.00% 81.27% 37.49% 37.49% 0.00% 0.00% 0.00% 73.01% 33.67% 33.67%
04/20/2000 0.00% 0.00% 0.00% 76.61% 35.34% 35.34% 0.00% 0.00% 0.00% 68.56% 31.62% 31.62%
05/20/2000 0.00% 0.00% 0.00% 72.15% 33.28% 33.28% 0.00% 0.00% 0.00% 64.31% 29.67% 29.67%
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
Distribution Class Class Class Class Class Class Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/2000 0.00% 0.00% 0.00% 67.72% 31.23% 31.23% 0.00% 0.00% 0.00% 60.13% 27.74% 27.74%
07/20/2000 0.00% 0.00% 0.00% 63.23% 29.17% 29.17% 0.00% 0.00% 0.00% 55.93% 25.80% 25.80%
08/20/2000 0.00% 0.00% 0.00% 58.98% 27.20% 27.20% 0.00% 0.00% 0.00% 51.97% 23.97% 23.97%
09/20/2000 0.00% 0.00% 0.00% 55.19% 25.46% 25.46% 0.00% 0.00% 0.00% 48.45% 22.35% 22.35%
10/20/2000 0.00% 0.00% 0.00% 51.39% 23.71% 23.71% 0.00% 0.00% 0.00% 44.94% 20.73% 20.73%
11/20/2000 0.00% 0.00% 0.00% 47.83% 22.06% 22.06% 0.00% 0.00% 0.00% 41.66% 19.22% 19.22%
12/20/2000 0.00% 0.00% 0.00% 44.54% 20.54% 20.54% 0.00% 0.00% 0.00% 38.65% 17.83% 17.83%
01/20/2001 0.00% 0.00% 0.00% 41.15% 18.98% 18.98% 0.00% 0.00% 0.00% 35.58% 16.41% 16.41%
02/20/2001 0.00% 0.00% 0.00% 38.15% 17.60% 17.60% 0.00% 0.00% 0.00% 32.86% 15.16% 15.16%
03/20/2001 0.00% 0.00% 0.00% 34.82% 16.06% 16.06% 0.00% 0.00% 0.00% 29.87% 13.78% 13.78%
04/20/2001 0.00% 0.00% 0.00% 31.91% 14.72% 14.72% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
05/20/2001 0.00% 0.00% 0.00% 29.23% 13.48% 13.48% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
06/20/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
07/20/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
08/20/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
09/20/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/20/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted
Average
Life (Years) 0.33 0.92 1.62 2.96 2.07 2.07 0.30 0.85 1.50 2.81 1.95 1.95
</TABLE>
WEIGHTED AVERAGE LIFE (YEARS)
If the Trust Depositor does not exercise its option to cause a redemption
of the Notes in connection with the Cleanup Call Condition, the average life of
the Class A -1 Notes would be 0.44 years, 0.37 years, 0.33 years and 0.30 years,
the average life of the Class A-2 Notes would be 1.19 years, 1.01 years, 0.92
years and 0.85 years, the average life of the Class A -3 Notes would be 1.99
years, 1.75 years, 1.62 years and 1.50 years, the average life of the Class A-4
Notes would be 3.46 years, 3.23 years, 3.09 years and 2.95 years, the average
life of the Class B Notes would be 2.49 years, 2.26 years, 2.14 years and 2.02
years, and the average life of the Class C Notes would be 2.49 years, 2.26
years, 2.14 years and 2.02 years for the 0.00% CPR, 7.00% CPR, 11.00% CPR and
15.00% CPR scenarios, respectively.
The weighted average life of a Class A-1 Note, a Class A-2 Note, a Class
A-3 Note, a Class A-4 Note, a Class B Note or a Class C Note is determined by
(a) multiplying the amount of cash distributions in reduction of the outstanding
Class A-1 Principal Amount, outstanding Class A-2 Principal Amount, outstanding
Class A-3 Principal Amount, outstanding Class A-4 Principal Amount, outstanding
Class B Principal Amount or outstanding Class C Principal Amount, as the case
may be, on any given Distribution Date by the number of months from the Closing
Date to such Distribution Date on which each such principal payment is made, (b)
adding the results, and (c) dividing the sum by the Initial Class A-1 Principal
Amount, Initial Class A-2 Principal Amount, Initial Class A-3 Principal Amount,
Initial Class A-4 Principal Amount, Initial Class B Principal Amount or Initial
Class C Principal Amount, as the case may be.
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NEWCOURT CREDIT GROUP INC.
NEWCOURT FINANCIAL USA INC.
NEWCOURT USA
Newcourt USA was incorporated on January 8, 1992 in Delaware and is a
wholly-owned subsidiary of Newcourt Credit Group USA, Inc. Newcourt USA
originates and acquires conditional sales agreements, leases, secured promissory
notes, installment purchase agreements and other similar types of financing
agreements through various vendor programs covering a variety of transportation,
construction, information technology, communications, commercial and industrial,
and resource equipment. Newcourt USA's vendor financing arrangements are
typically structured as (i) direct originations with customers and end-users of
a vendor's products, either with or without recourse, or (ii) assignments of
contracts, either with or without recourse, by a vendor to Newcourt USA.
Newcourt USA's principal executive offices are located at 2700 Bank One
Tower, 111 Monument Circle, Suite 2700, Indianapolis, Indiana 46204 and its
telephone number is (317) 767-0077. Newcourt USA is a one-hundred percent
(100%) owned subsidiary of Newcourt Credit Group USA, which is a one-hundred
percent (100%) owned subsidiary of Newcourt.
NEWCOURT
Newcourt is an independent financial services company which originates and
manages asset-based financings. Newcourt was formed in 1984 as an investment
bank which originated and structured asset based financings for the corporate
and institutional asset finance market and syndicated such financings to
Canadian financial institutions. In 1988, Newcourt broadened its activities to
include vendor and direct equipment financing. With owned and managed assets
in excess of Canadian $9.9 billion, Newcourt is one of North America's leading
non-bank financial institutions.
Newcourt is presently in discussions with AT&T Capital Corp. regarding a
possible acquisition by Newcourt of AT&T Capital Corp. The Servicer believes
that there will be no affect on its ability to service the Trust Assets should
its indirect parent successfully complete such transaction.
Newcourt and its subsidiaries originate their asset-based financings by
providing services to specific segments of the vendor asset finance market and
corporate and institutional asset finance market. Newcourt's strategy has been
to sell and manage, rather than own, the majority of the finance assets it and
its subsidiaries originate, thereby reducing its capital requirements.
Consequently, Newcourt's consolidated revenues are generated primarily by gains
and fees earned from the sale of financings it and its subsidiaries originate
and by management fees earned following such sales.
Newcourt's principal executive offices are located at BCE Place, 181 Bay
Street, Suite 3500, P.O. Box 827, Toronto, Ontario, Canada M5J 2T3 and its
telephone number is (416) 594-2400. Newcourt has 24 North American offices and
one overseas office. The servicing obligations of Newcourt USA as Servicer
under the Sale and Servicing Agreement will be guaranteed by Newcourt.
As of June 30, 1997, Newcourt had total assets of CAN $2,278,058,000
compared with CAN $1,908,379,000 as of June 30, 1996, total liabilities of CAN
$1,607,907,000 compared with CAN $1,539,238,000 as of June 30, 1996,
shareholder's equity of CAN $670,151,000 compared with CAN $369,141,000 as of
June 30, 1996 and total revenues and net income of CAN $111,553,000 and CAN
$33,991,000, respectively, for the period ended June 30, 1997, compared with CAN
$66,542,000 and CAN $19,228,000, respectively, for the period ended June 30,
1996. For the fiscal year ended December 31, 1996, Newcourt had total assets of
CAN $2,164,494,000 compared with CAN $1,158,215,000 as of December 31, 1995,
total liabilities of CAN $1,648,560,000 compared with CAN $913,021,000 as of
December 31, 1995, shareholder's equity of $515,934,000 compared with
$245,194,000 as of December 31, 1995 and total revenues and net income of CAN
$171,589,000 and CAN $50,681,000, respectively, for the fiscal year ended
December 31, 1996 compared with CAN $92,160,000 and CAN $29,405,000,
respectively, for the fiscal year ended December 31, 1995.
CREDIT UNDERWRITING PROCESS
As part of its credit underwriting procedures (which procedures in all
material respects are the same procedures utilized by Newcourt), Newcourt USA
reviews the creditworthiness of the End-User, the value of the Financed Items
and
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the creditworthiness of the Vendor. Newcourt has designed and Newcourt USA uses
specific credit philosophies, credit standards and processes for each of its
marketing units, which are enumerated in Newcourt's Credit Manual. Newcourt's
philosophy is that credit adjudication policies and procedures require strict
adherence to the Credit Manual. The underwriting policies detailed in Newcourt's
Credit Manual include, but are not limited to, (i) clearly defined underwriting
criteria for each business segment, (ii) within each individual business
segment, strict guidelines for certain equipment types and End-User types, (iii)
the use of two forms of credit rating (as described below) on every approved
transaction that quantify the financial strength of the End-User and the overall
perceived risk rating of the transaction being approved and (iv) a requirement
that asset financings must normally carry a credit rating of BBB or better on
the covenant-based rating system and a credit rating of 3 or better on the
asset-based rating system.
If a potential End-User is publicly rated by an independent ratings agency
for a similarly structured debt instrument, the public rating is used as the
covenant-based rating. If a potential End-User is not publicly rated, it will be
scored on a covenant-based rating system with six categories ranging from AAA to
single B. This system is based on the methods commonly used to rate public and
private debt issues which Newcourt USA has adapted to suit equipment financing
and leasing transactions. The system is based on four key financial ratios:
return on assets, long-term debt to equity, cash flow to long-term debt and
interest coverage. Qualitative considerations include the reputation of the
Vendor as well as existing vendor recourse agreements. Allowance is also made
for being fully secured on the transaction. Newcourt USA and its subsidiaries
will limit new financing commitments with potential End-Users that are rated a
single B. With potential End-Users rated BB or lower, significant credit
enhancements would be required, such as an extremely strong security position or
full corporate guarantees from creditworthy companies, for any credit exposure
to be considered. Newcourt USA's goal is to maintain a credit quality of its
portfolio of End-Users of BBB or better.
In addition, an asset-based rating system has been developed by Newcourt
and used by Newcourt USA to score every potential transaction in five categories
ranging from 1 to 5. This system takes into account a broader range of factors
than the covenant-based rating system, combining certain key financial ratios
with collateral and business considerations. The evaluation of collateral
examines the remarketability of the assets as well as the length of the finance
term relative to the economic life of the assets. Newcourt USA will not, under
normal circumstances, enter into any new transaction with a potential End-User
rating a 5 and will enter into a new transaction with a potential End-User
rating a 4 only in special circumstances. Newcourt USA's goal is to maintain an
overall credit quality of 3 or better throughout its portfolio.
A portion of the portfolio representing 9.32% of the ADCB of the pool is
underwritten utilizing automated credit scoring systems developed by Fair Isaac.
Fair Isaac is a major credit scoring company and has a long history of consumer,
small business and related credit data. This empirical data is used to develop
specific parameters within a designated group and to predict future delinquency
and default rates. By setting approval cutoff levels on total scores at levels
associated with predetermined default rates, Newcourt USA is able to provide a
program level credit score according to its internal policies.
Credit review procedures require the preparation of a credit application
outlining the structure and purpose of the transaction, the background and
business of the proposed End-User and the reasons of the source account
executive for recommending approval. Newcourt's credit guidelines require
financial statements covering three fiscal years and interim financial
information if the most recent year-end financial statement is more than six
months out of date. If the assigned credit officer makes an initial
determination that the request has sufficient merit to consider an approval and
sufficient information is provided, the credit officer will prepare a full
credit report and financial analysis which includes expanded basic information,
an analysis of the financial condition, performance and covenants of the
proposed End-User, a review of the proposed End-User's banking facilities and
contacts with credit agencies, and collateral and exposure analyses. The
transaction will be assigned a grade based on the two credit rating systems
described above. If a favorable credit report approved by the credit officer is
completed, approval of the new business is made at the appropriate level,
depending on the size of the transaction. In cases in which credit approval is
permitted to be made by a senior credit manager, such approvals are reviewed on
a regular basis by a corporate vice president to ensure adherence to the
appropriate approval policies. Credit authorization levels are reviewed at least
annually by a committee of Newcourt's Board of Directors and approved by the
Board of Directors.
Newcourt's current policy is to perform a written annual review on every
account with an outstanding book value equal to or in excess of $500,000
(Canadian). In addition, standard documentation requires the End-User to provide
annual financial statements within 120 days of its fiscal year-end and certain
transactions may require quarterly or semi-annual financial statements as a
condition of approval. If, based upon such financial statements, a credit
officer determines that there appears to be a financial impairment in the
End-User's repayment ability, a formal review will also be performed for
accounts with an outstanding book value of less than $500,000 (Canadian).
In initially establishing a Program Agreement or other form of financing
arrangement with a Vendor, Newcourt USA completes a formal underwriting review
of such Vendor to ensure that the Vendor can perform the financial and other
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<PAGE>
obligations contained in any Vendor Agreement. This review encompasses a
financial review, a product review (including an analysis of market acceptance
of the Vendor's products) and a general operational and managerial review of the
Vendor.
Vendors must be established in their field and must market
industry-accepted Equipment or other products. The Vendor must have a history of
success, maintain a substantial market position and have sufficient financial
resources to support the financing relationship contemplated by Newcourt USA.
Program Agreements are continually monitored by Newcourt USA . Formal
annual reviews are undertaken on each Vendor which cover general financial,
operating and performance review as well as performance under the Program
Agreement.
CONTRACT COLLECTIONS
Newcourt USA's portfolio management unit will be responsible for the
ongoing management of portfolios.
Newcourt USA will generate and mail to the End-Users (other than those
End-Users whose payment obligations are evidenced by payment coupon books or
whose payments are automatically debited from their accounts) monthly invoices
and statements summarizing the account activity and current invoicing details.
The invoiced amount will represent the contracted repayment amount under the
End-User Contract inclusive of applicable taxes, if any. Copies of the invoices
and statements will also be distributed to the appropriate offices of Newcourt
USA for review.
Newcourt USA's portfolio management unit will also be responsible for the
preparation of monthly reports on past due, delinquent and problem accounts, the
collection and administration of such accounts, the preparation and
recommendation of requests for account restructuring and/or payment
rescheduling, and asset remarketing in cases of repossession or end of lease
equipment returns. The approval required in the case of End-User requests for
account restructuring and/or payment rescheduling will be the same as that
required for a new transaction, as set forth in Newcourt USA's Credit Manual.
Such restructuring and/or rescheduling generally will only be approved in cases
where it is believed that an End-User's financial difficulties are only
temporary and that the security value will not be seriously impaired by such
undertaking. Newcourt USA has no set policy on the timing of repossession, but
its practice is to proceed to repossess as soon as required and usually no later
than when an account is 120 days past due. In such situations, Vendors may
decide to make payments on behalf of an End-User or, under certain Vendor
Agreements, Vendors may be responsible for remarketing the repossessed
Equipment.
CASH COLLECTIONS
Payments by End-Users of amounts payable under their respective Contracts
are made by check mailed to a Newcourt USA's post office box or wire transfer to
a Newcourt USA's lock-box account. Invoices mailed to an End-User instruct the
End-User to forward payment to a post office box for processing by a lock-box
bank. End-Users that wish to remit by wire transfer are provided with wire
transfer instructions to remit to a lock-box account.
Invoices sent to End-Users contain a remittance advice. The lock-box bank
processes the deposits and credits the appropriate Newcourt bank accounts daily.
A daily summary of deposits received by the lock box bank is forwarded to
Newcourt USA, together with copies of the remittance advices and any other
information passed along with the payment. Newcourt USA then matches the
remittance advices to the cash deposits and applies the payments to the
End-Users' accounts. Amounts received from an End-User with respect to a
Secondary Contract are applied to the related Vendor Loan and reduce, on a
dollar-for-dollar basis, amounts due under such Secondary Contract and related
Vendor Loan. Unmatched deposits are recorded as unapplied cash for further
review and processing after investigation by Newcourt USA.
WRITE-OFF POLICY
When the recoverability of an account is in question, or if the underlying
collateral with respect to an account has been repossessed, Newcourt USA
generally will suspend the accrual of income on that account for Newcourt USA's
own accounting purposes.
Upon the repossession of collateral, an evaluation of the collateral
involved is immediately undertaken in order to establish a liquidation value.
After a liquidation value has been established, the difference between the net
book value of the account at the time of income suspension and the liquidation
value, if less than the net book value of the account, is stated as a "LIKELY
LOSS." The "LIKELY LOSS" amount may change, upward or downward, over a period of
time as more current or detailed information on the collateral is obtained. When
the collateral is sold, the difference between the net book value of the account
and the actual net sales proceeds, if less than the net book value of the
account, will be
55
<PAGE>
written off. If, however, there is any potential for future recovery, the
account will continue to be followed for the recovery of any deficiency balance.
THE TRUST DEPOSITOR
The Trust Depositor is a wholly-owned bankruptcy-remote subsidiary of
Newcourt Credit Group USA, formed solely for the purpose of acquiring from the
Seller Contracts and Equipment as well as certain other financial assets from
time to time and either issuing debt securities secured by, or selling interests
in, identifiable fixed or revolving pools of such 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 (a) it does not engage in business with, or incur liabilities to, any other
entity (other than the Indenture Trustee on behalf of the Noteholders and the
trustees or collateral agents on behalf of other securityholders under
indentures, security agreements, pooling agreements or similar agreements or
undertakings which provide for essentially nonrecourse, asset-backed financings)
which may bring bankruptcy proceedings against the Trust Depositor and (b) the
risk that it will be consolidated into the bankruptcy proceedings of any other
entity is diminished. The Trust Depositor will have no other assets available
to pay amounts owing under the Indenture except the Trust Assets, including the
Contracts and the interests in the Equipment, the proceeds thereof and the
amounts on deposit in the Collection Account and the Reserve Fund. The Trust
Depositor's address is 2700 Bank One Tower, 111 Monument Circle, Suite 2700,
Indianapolis, Indiana 46204, and its phone number is (317) 767-0077.
As of the Cutoff Date, the Trust Depositor will convey to the Trust,
pursuant to the Sale and Servicing Agreement, Contracts which were sold to the
Trust Depositor pursuant to the Transfer and Sale Agreement.
The Trust Depositor has taken steps in structuring the transactions
contemplated hereby that are intended to ensure that the voluntary or
involuntary application for relief by Newcourt Credit Group USA or Newcourt USA
under the United States Bankruptcy Code or similar applicable state laws or
applicable laws of other countries ("INSOLVENCY LAWS") will not result in the
consolidation of the assets and liabilities of the Trust Depositor with those of
Newcourt Credit Group USA or Newcourt USA and its affiliates. These steps
include incorporating the Trust Depositor as a separate, special purpose company
pursuant to a certificate of incorporation containing certain restrictions on
the nature of its business and on its ability to commence a voluntary case or
proceeding under any bankruptcy or insolvency law, or to cause the Trust to
commence a voluntary case or proceeding under any bankruptcy or insolvency law,
without the affirmative vote of all of its directors, including its independent
directors, and the requirement, set forth in the Trust Depositor's certificate
of incorporation, that at all times no less than one member of the Board of
Directors of the Trust Depositor will be an individual who has not been, within
the previous five years, affiliated with Newcourt or any of its affiliates other
than the Trust Depositor, the Trust and other trusts formed for similar
operations (Newcourt and each of its affiliates other than the Trust Depositor,
the Trust and other trusts formed for similar operations, a "NEWCOURT ENTITY").
However, there can be no assurance that the activities of the Trust Depositor
would not result in a court concluding that the assets and liabilities of the
Trust Depositor should be consolidated with those of Newcourt Credit Group USA
or Newcourt USA in a proceeding under any Insolvency Law. See "RISK
FACTORS--CERTAIN LEGAL RISKS" and "CERTAIN LEGAL RISKS OF THE CONTRACTS--CERTAIN
MATTERS RELATING TO BANKRUPTCY". In such event there is no assurance that the
Trust would not become a debtor in such a bankruptcy case as well.
The Trust Depositor will receive, on the Closing Date, a reasoned opinion
from its counsel concluding (although there is no case litigated on the merits
directly in point) that, subject to certain assumptions and qualifications
specified therein, in the event a Newcourt Entity were to become a debtor in a
case under the Bankruptcy Code, a bankruptcy court would not, on motion of such
Newcourt Entity, as debtor-in-possession, or any other party in interest in such
case, (a) substantively consolidate the Trust Depositor and Newcourt Credit
Group USA or Newcourt USA or (b) substantively consolidate the Trust and
Newcourt Credit Group USA or Newcourt USA. The opinion assumes, among other
things, that (a) the Trust Depositor and the Trust will adhere to specified
operating procedures including, without limitation, (i) that at all times no
less than one member of the Board of Directors of the Trust Depositor will be an
individual who has not been, within the previous five years, affiliated with any
Newcourt Entity, (ii) the Trust's business will be run by officers and
employees of the Indenture Trustee, (iii) the Trust Depositor will maintain its
own payroll and separate books of account and will maintain an office space
separate from any Newcourt Entity, (iv) neither the Trust Depositor nor the
Trust will, except as provided in the Sale and Servicing Agreement, commingle
any of its money or other assets with those of any Newcourt Entity, (v) the
Trust Depositor and the Trust will maintain separate bank accounts in its own
name or in the name of the Trust Depositor and (vi) except for the obligations
under the Transfer and Sale Agreement and similar obligations under similar
agreements, neither the Trust Depositor nor the Trust will acquire obligations
or securities of, or make loans or advances to, any Newcourt Entity, (b) the
Trust Depositor and the Trust will maintain an arm's-length relationship in all
transactions with each Newcourt Entity, (c) the purchase price for the Contracts
set forth in the Transfer and Sale Agreement represents fair and reasonably
equivalent value for the sale of the Contracts transferred thereunder to the
Trust Depositor, (d) the financing provided by the issuance of the Notes
constitutes a
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<PAGE>
practical and reasonable course of action designed to improve the financial
position of Newcourt without impairing the rights of its creditors and (e) the
financing provided by the issuance of the Notes is being effected in furtherance
of Newcourt's ongoing business operations and not in contemplation of
bankruptcy. The opinion is not binding on any court. Accordingly, there can be
no assurance that a court will not reach a different conclusion. If a court
concluded otherwise, or if an attempt were made to litigate any of the
foregoing issues, delays of distributions on the Notes and possible reductions
in the amount of payments of principal of and interest on the Notes could occur.
The Trust Depositor will not acquire any assets other than Trust Assets and
other assets transferred to the Trust Depositor pursuant to the Transfer and
Sale Agreement or other equipment and contracts transferred to the Trust
Depositor pursuant to similar agreements, including operating and finance
leases, loans, installment payment obligations, receivables and other
obligations received from Newcourt or its affiliates.
DESCRIPTION OF THE NOTES
The statements under this caption are summaries, do not purport to be
complete and are subject to and qualified in their entirety by reference to the
Sale and Servicing Agreement and the Indenture (the "OPERATIVE DOCUMENTS").
Copies of the Sale and Servicing Agreement and the Indenture have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.
GENERAL
The 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, the Class B Notes and the Class
C Notes. The Notes will be issued pursuant to the Indenture between the Trust
and the Indenture Trustee. Another class of Notes, the Subordinated Notes, will
also be issued but are not being offered pursuant to this Prospectus. The
following summary describes the material terms of the Notes and is qualified in
its entirety by reference to the Sale and Servicing Agreement and the Indenture.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes, the Class B Notes and the Class C Notes will initially be represented
by one or more certificates registered in the name of the nominee of DTC
(together with any successor depositary selected by the Trust Depositor, the
"DEPOSITARY"), except as set forth below. The Notes will be available for
purchase in minimum denominations of $1,000 and in integral multiples thereof in
book-entry form. The Trust Depositor has been informed by DTC that DTC's
nominee will be Cede. See "--BOOK-ENTRY REGISTRATION" and "--DEFINITIVE NOTES"
below. Only the Notes will be offered hereby.
The Indenture Trustee will be granted a first priority lien on the Trust
Assets to secure the Notes; PROVIDED, that distributions on the Notes (and each
Class thereof) will be allocated as provided herein. The Notes are nonrecourse
obligations of the Trust only and do not represent interests in or obligations
of either the Seller, the Servicer or the Trust Depositor, or any affiliate
thereof.
INTEREST
Interest on the Notes will be payable on each of the Distribution Dates
occurring on or prior to the earlier of (i) the date of payment in full of such
Notes and (ii) the Maturity Date for the Notes. Interest will accrue at the
applicable 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 or the
Class C Interest Rate, for the period from and including the most recent
Distribution Date on which interest has been paid (or, in the case of the
initial Distribution Date, from and including the Closing Date) to but excluding
the following Distribution Date (each period for which interest accrues on the
Notes, an "ACCRUAL PERIOD") on the outstanding principal amount of such Notes as
of the first day of such Accrual Period.
Interest on the Class A-1 Notes is payable on a Distribution Date from
Available Amounts on such date (and after application of such Available Amounts
to repay any outstanding Servicer Advances and to pay the Servicing Fee)
subject to the limitation described in the third succeeding paragraph. Such
Available Amounts represent primarily collections of payments due under the
Contracts, certain amounts received upon the prepayment or purchase of Contracts
or liquidation of the Contracts and disposition of the related Equipment upon
defaults thereunder, proceeds of Servicer Advances, if any, as well as amounts
in the Reserve Fund, if any.
Interest on the Class A-2 Notes is payable on a Distribution Date from
Available Amounts on such date, but only after the application of such Available
Amounts to repay any outstanding Servicer Advances, to pay the Servicing Fee,
and to pay interest on the Class A-1 Notes; subject to the limitation described
in the second succeeding paragraph.
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Interest on the Class A-3 Notes is payable on a Distribution Date from
Available Amounts on such date, but only after the application of such Available
Amounts to repay any outstanding Servicer Advances, to pay the Servicing Fee,
and to pay interest on the Class A-1 Notes and the Class A-2 Notes subject to
the limitation described in the next succeeding paragraph.
Interest on the Class A-4 Notes is payable on a Distribution Date from
Available Amounts on such date, but only after the application of such Available
Amounts to repay any outstanding Servicer Advances, to pay the Servicing Fee,
and to pay interest on the Class A-1 Notes, the Class A-2 Notes and the Class
A-3 Notes; PROVIDED, HOWEVER, after the occurrence of an Event of Default, or
after the occurrence of, and the continuance of a Restricting Event, interest on
the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes will
be paid pro-rata based upon the then outstanding principal amounts thereof.
Interest on the Class B Notes is payable on a Distribution Date from
Available Amounts on such date, but only after the application of such Available
Amounts to repay any outstanding Servicer Advances, to pay the Servicing Fee,
and to pay interest on the Class A-1 Notes and the Class A-2 Notes.
Interest on the Class C Notes is payable on a Distribution Date from
Available Amounts on such date, but only after the application of such Available
Amounts to repay any outstanding Servicer Advances, to pay the Servicing Fee,
and to pay interest on the Class A-1 Notes, the Class A-2 and the Class B Notes.
PRINCIPAL
The stated maturity of the Class A-1 Notes is the December 1998
Distribution Date (the "CLASS A-1 MATURITY DATE"). The Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class B Notes and the Class C Notes
will have a stated maturity of the May 2005 Distribution Date (the "MATURITY
DATE"). However, if all payments on the Contracts are made as scheduled, final
payment with respect to the Notes would occur prior to stated maturity.
Principal of the Class A-1 Notes will be payable on each Distribution Date
in an amount equal to the Class A-1 Principal Payment Amount for such
Distribution Date to the extent Available Amounts are available therefor, but
after payment from such Available Amounts of unpaid Servicer Advances, the
Servicing Fee and interest payments on the Notes and the Subordinated Notes.
Principal of the Class A-2 Notes will be payable on each Distribution Date
in an amount equal to the Class A-2 Principal Payment Amount for such
Distribution Date to the extent Available Amounts are available therefor, but
after payment from such Available Amounts of unpaid Servicer Advances, the
Servicing Fee, interest payments on the Notes and the Subordinated Notes and the
payment of the Class A-1 Principal Payment Amount. See "--ALLOCATIONS" herein.
Principal of the Class A-3 Notes will be payable on each Distribution Date
in an amount equal to the Class A-3 Principal Payment Amount for such
Distribution Date to the extent Available Amounts are available therefor, but
after payment from such Available Amounts of unpaid Servicer Advances, the
servicing fee, interest payments on the Notes and Subordinated Notes and the
payment of the Class A-1 Principal Payment Amount and Class A-2 Principal
Payment Amount.
Principal of the Class A-4 Notes will be payable on each Distribution Date
in an amount equal to the Class A-4 Principal Payment Amount for such
Distribution Date to the extent Available Amounts are available therefor, but
after payment from such Available Amounts of unpaid Servicer Advances, the
servicing fee, interest payments on the Notes and Subordinated Notes and the
payment of the Class A-1 Principal Payment Amount, Class A-2 Principal Payment
Amount and Class A-3 Principal Payment Amount.
Principal of the Class B Notes will be payable on each Distribution Date in
an amount equal to the Class B Principal Payment Amount for such Distribution
Date to the extent Available Amounts are available therefor, but after payment
from such Available Amounts of unpaid Servicer Advances, the Servicing Fee,
interest payments on the Notes and the Subordinated Notes, and the payment of
the Class A-1 Principal Payment Amount, the Class A-2 Principal Payment Amount,
the Class A-3 Principal Payment Amount and the Class A-4 Principal Payment
Amount. See "--ALLOCATIONS" herein.
Principal of the Class C Notes will be payable on each Distribution Date in
an amount equal to the Class C Principal Payment Amount for such Distribution
Date to the extent Available Amounts are available therefor, but after payment
from such Available Amounts of unpaid Servicer Advances, the Servicing Fee,
interest payments on the Notes and the Subordinated Notes, and the payment of
the Class A -1 Principal Payment
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Amount, the Class A-2 Principal Payment Amount, the Class A-3 Principal Payment
Amount, the Class A-4 Principal Payment Amount and the Class B Principal Payment
Amount. See "--ALLOCATIONS" herein.
The Notes will mature and be due and payable on their respective Maturity
Dates. Prior thereto, amounts to be applied in reduction of the outstanding
Principal Amount of any Note, including the payment of 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 or the Class C Principal Payment Amount payable on any
Distribution Date, will not be due and payable, although the failure of the
Trust Depositor or Servicer to remit any Available Amounts (including Available
Amounts to be used to make a Class A-1 Principal Payment Amount, a Class A-2
Principal Payment Amount, a Class A-3 Principal Payment Amount, a Class A-4
Principal Payment Amount, a Class B Principal Payment Amount or a Class C
Principal Payment Amount) will, after the applicable grace period, constitute an
Event of Default under the Indenture. See "-- EVENTS OF DEFAULT".
As used herein, the following terms shall have the following meanings:
The "ADCB" or "AGGREGATE DISCOUNTED CONTRACT BALANCE" means, with
respect to the Contracts, the sum of the Discounted Contract Balances
of each Contract included in the group of Contracts for which an ADCB
determination is being made.
"AGGREGATE PRINCIPAL AMOUNT" means, for any group of Notes at
any date of determination, the sum of the Principal Amounts of such
Notes at such date.
"CLASS A PERCENTAGE" means the ratio (expressed as a percentage)
that the sum of the Initial Principal Amount of the Class A-2 Notes,
the Class A-3 Notes, and the Class A-4 Notes bears to the sum of the
Initial Principal Amount of the Class A-2 Notes, the Class A-3 Notes,
the Class A-4 Notes, the Class B Notes, the Class C Notes and the
Class D Notes.
"CLASS A NOTES" means the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes.
"CLASS B PERCENTAGE" means the ratio (expressed as a percentage)
that the Initial Principal Amount of the Class B Notes bears to (a)
until the Principal Amount of all Class A Notes has been paid in full,
the sum of the Initial Principal Amount of the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C
Notes and the Class D Notes; (b) thereafter, the sum of the Initial
Principal Amount of the Class B Notes, the Class C Notes and the Class
D Notes.
"CLASS C PERCENTAGE" means the ratio (expressed as a percentage)
that the Initial Principal Amount of the Class C Notes bears to (a)
until the Principal Amount of all the Class A Notes has been paid in
full, the sum of the Initial Principal Amount of the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class
C Notes and the Class D Notes; (b) after the Principal Amount of all
the Class A Notes has been paid in full and until the Principal Amount
of the Class B Notes has been paid in full, the sum of the Initial
Principal Amount of the Class B Notes, the Class C Notes and the Class
D Notes, and (c) after the Principal Amount of the Class A Notes and
the Class B Notes has been paid in full and until the Principal Amount
of the Class C Notes has been paid in full, the sum of the Initial
Principal Amount of the Class C Notes and the Class D Notes.
"CLASS D PERCENTAGE" means the ratio (expressed as a percentage)
that the Initial Principal Amount of the Class D Notes bears to (a)
until the Principal Amount of all the Class A Notes has been paid in
full, the sum of the Initial Principal Amount of the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class
C Notes and the Class D Notes; (b) after the Principal Amount of all
the Class A Notes has been paid in full and until the outstanding
principal of the Class B Notes has been paid in full, the sum of the
Initial Principal Amount of the Class B Notes, the Class C Notes and
the Class D Notes, and (c) after the Principal Amount of the Class A
Notes and the Class B Notes has been paid in full and until the
outstanding principal of the Class C Notes has been paid in full, the
sum of the Initial Principal Amount of the Class C Notes and the Class
D Notes, and (d) thereafter, 100%.
"CLASS A-1 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-1 Notes, the lesser of (a) the
Principal Amount of the Class A-1 Notes, and (b) (i) prior to the
occurrence of any Event of Default, or prior to the occurrence and
during the
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continuance of a Restricting Event, the Total Principal Payment Amount and
(ii) following the occurrence of an Event of Default or following the
occurrence and during the continuance of a Restricting Event, all remaining
Available Amounts after payment has been made in accordance with paragraphs
(A) through (G) in "DESCRIPTION OF THE NOTES -- ALLOCATIONS; FOLLOWING AN
EVENT OF DEFAULT OR RESTRICTING EVENT".
"CLASS A-2 PRINCIPAL PAYMENT AMOUNT" means, with respect to the
Class A-2 Notes and any Distribution Date, (a) $0 until the Principal
Amount of the Class A-1 Notes has been paid in full, and (b)
thereafter, the lesser of (i) the Principal Amount of the Class A-2
Notes and (ii) (A) prior to the occurrence of an Event of Default, or
prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of all the
Class A Notes immediately prior to such Distribution Date, and (2) the
product of (x) the Class A Percentage and (y) the ADCB for all
Contracts held by the Trust as of the last day of the Collection
Period immediately preceding such Distribution Date, and (B) following
the occurrence of an Event of Default or following the occurrence and
during the continuance of a Restricting Event, all remaining Available
Amounts after payment has been made in accordance with paragraphs (A)
- (H) in "DESCRIPTION OF THE NOTES -- ALLOCATIONS; FOLLOWING AN EVENT
OF DEFAULT OR RESTRICTING EVENT".
"CLASS A-3 PRINCIPAL PAYMENT AMOUNT" means, with respect to the
Class A-3 Notes and any Distribution Date, (a) $0 until the Principal
Amount of the Class A-1 and the Class A-2 Notes has been paid in full,
and (b) thereafter, the lesser of (i) the Principal Amount of the
Class A-3 Notes and (ii) (A) prior to the occurrence of an Event of
Default, or prior to the occurrence and during the continuance of a
Restricting Event, the difference between (1) the Principal Amount of
all the Class A Notes immediately prior to such Distribution Date, and
(2) the product of (x) the Class A Percentage and (y) the ADCB for all
Contracts held by the Trust as of the last day of the Collection
Period immediately preceding such Distribution Date, and (B) following
the occurrence of an Event of Default, or following the occurrence and
during the continuance of a Restricting Event, all remaining Available
Amounts after payment has been made in accordance with paragraphs (A)
- (I) in "DESCRIPTION OF THE NOTES -- ALLOCATIONS; FOLLOWING AN EVENT
OF DEFAULT OR RESTRICTING EVENT".
"CLASS A-4 PRINCIPAL PAYMENT AMOUNT" means, with respect to the
Class A-4 Notes and any Distribution Date, (a) $0 until the Principal
Amount of the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes has been paid in full, and (b) thereafter, the lesser of (i) the
Principal Amount of the Class A-4 Notes and (ii) (A) prior to the
occurrence of an Event of Default, or prior to the occurrence and
during the continuance of a Restricting Event, the difference between
(1) the Principal Amount of all the Class A Notes immediately prior to
such Distribution Date, and (2) the product of (x) the Class A
Percentage and (y) the ADCB for all Contracts held by the Trust as of
the last day of the Collection Period immediately preceding such
Distribution Date, and (B) following the occurrence of an Event of
Default, or following the occurrence and during the continuance of a
Restricting Event, all remaining Available Amounts after payment has
been made in accordance with paragraphs (A) - (J) in "DESCRIPTION OF
THE NOTES -- ALLOCATIONS; FOLLOWING AN EVENT OF DEFAULT OR RESTRICTING
EVENT".
"CLASS B PRINCIPAL PAYMENT AMOUNT" means, with respect to the
Class B Notes and any Distribution Date, (a) $0 until the Principal
Amount of the Class A-1 Notes has been paid in full, and (b)
thereafter, the lesser of (i) the Principal Amount of the Class B
Notes and (ii) (A) prior to the occurrence of an Event of Default, or
prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of the Class B
Notes immediately prior to such Distribution Date, and (2) the product
of (x) the Class B Percentage and (y) the ADCB for all Contracts held
by the Trust as of the last day of the Collection Period immediately
preceding such Distribution Date, and (B) following the occurrence of
an Event of Default, or following the occurrence and during the
continuance of a Restricting Event, (1) until the Principal Amount of
the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes has
been paid in full, $0 and (2) thereafter, all remaining Available
Amounts after payment has been made in accordance with paragraphs (A)
- (K) in "DESCRIPTION OF THE NOTES -- ALLOCATIONS; FOLLOWING AN EVENT
OF DEFAULT OR RESTRICTING EVENT".
"CLASS C PRINCIPAL PAYMENT AMOUNT" means, with respect to the
Class C Notes and any Distribution Date, (a) $0 until the Principal
Amount of the Class A-1 Notes has been paid in full, and (b)
thereafter, the lesser of (i) the Principal Amount of the Class C
Notes and (ii) (A) prior to the occurrence of an Event of Default, or
prior to the occurrence and during the continuance of
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a Restricting Event, the difference between (1) the Principal Amount of the
Class C Notes immediately prior to such Distribution Date, and (2) the
product of (x) the Class C Percentage and (y) the ADCB for all Contracts
held by the Trust as of the last day of the Collection Period immediately
preceding such Distribution Date, and (B) following the occurrence of an
Event of Default, or following the occurrence and during the continuance of
a Restricting Event, (1) until the Principal Amount of the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes and the Class B Notes has been
paid in full, $0 and (2) thereafter, all remaining Available Amounts after
payment has been made in accordance with paragraphs (A) - (L) in
"DESCRIPTION OF THE NOTES -- ALLOCATIONS; FOLLOWING AN EVENT OF DEFAULT OR
RESTRICTING EVENT".
"CLASS D PRINCIPAL PAYMENT AMOUNT" means, with respect to the
Class D Notes and any Distribution Date, (a) $0 until the Principal
Amount of the Class A-1 Notes has been paid in full, and (b)
thereafter, the lesser of (i) the Principal Amount of the Class D
Notes and (ii) (A) prior to the occurrence of an Event of Default, or
prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of the Class D
Notes immediately prior to such Distribution Date, and (2) the product
of (x) the Class D Percentage and (y) the ADCB for all Contracts held
by the Trust as of the last day of the Collection Period immediately
preceding such Distribution Date, and (B) following the occurrence of
an Event of Default, or following the occurrence and during the
continuance of a Restricting Event, (1) until the Principal Amount of
the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class B Notes and the Class C Notes has been paid in full, $0 and (2)
thereafter, all remaining Available Amounts after payment has been
made in accordance with paragraphs (A) - (M) in "DESCRIPTION OF THE
NOTES -- ALLOCATIONS; FOLLOWING AN EVENT OF DEFAULT OR RESTRICTING
EVENT".
"DISCOUNTED CONTRACT BALANCE" means, with respect to any
Contract, (A) 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 and (B) as of any other date of determination, the sum of (1) the
present value of all of the remaining Scheduled Payments becoming due
under such Contract on or after such date of determination discounted
monthly at the Discount Rate, and (2) 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 which have not been
replaced with an Additional Contract or Substitute Contract) that have
not then been received by the Servicer.
The Discounted Contract Balance for each Contract shall be calculated
assuming:
(a) All payments due in any Collection Period are due on the
last day of the Collection Period;
(b) Payments are discounted on a monthly basis using a 30 day
month and a 360 day year; and
(c) 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.
"PRINCIPAL AMOUNT" of a Class of Notes or Subordinated Notes
means 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 or certificate payment account, if any,
for such Class of Notes or Subordinated Notes established in
accordance with the Indenture or the Sale and Servicing Agreement and
to be applied in reduction of such principal amount in accordance
therewith.
"SCHEDULED PAYMENTS" 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).
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"TOTAL PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date, the difference between (a) the aggregate outstanding
principal of all Classes of Notes and Subordinated Notes and (b) the ADCB for
all Contracts held by the Trust as of the last day of the Collection Period
immediately preceding such Distribution Date.
ALLOCATIONS
PRIOR TO AN EVENT OF DEFAULT OR RESTRICTING EVENT. On the second Business
Day prior to each Distribution Date (each, a "DETERMINATION DATE"), prior to the
occurrence of an Event of Default, or the occurrence and continuance of a
Restricting Event, the Servicer 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 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:
(A) pay to the Servicer, the amount of any unreimbursed Servicer
Advances;
(B) pay to the Servicer, 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;
(C) pay to the Indenture Trustee, on behalf of the Class A-1
Notes, an amount equal to interest accrued in respect of
such Class A-1 Notes 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;
(D) pay to the Indenture Trustee, on behalf of the Class A-2
Notes, an amount equal to interest accrued in respect of
such Class A-2 Notes 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;
(E) pay to the Indenture Trustee, on behalf of the Class A-3
Notes, an amount equal to interest accrued in respect of
such Class A-3 Notes 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;
(F) pay to the Indenture Trustee, on behalf of the Class A-4
Notes, an amount equal to interest accrued in respect of
such Class A-4 Notes 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;
(G) pay to the Indenture Trustee, on behalf of the Class B
Notes, an amount equal to the interest accrued thereon 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;
(H) pay to the Indenture Trustee, on behalf of the Class C
Notes, an amount equal to interest accrued thereon 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;
(I) pay to the holders of the Subordinated Notes an amount equal
to interest accrued in respect of 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;
(J) pay to the Indenture Trustee, on behalf of the Class A-1
Notes, the Class A-1 Principal Payment Amount for such
Distribution Date; PROVIDED, if the amount to be allocated
pursuant to this clause exceeds the
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amount needed to repay the Class A-1 Principal Payment Amount in
full, then such excess shall be applied in repayment of principal
on the Class A-2 Notes;
(K) pay to the Indenture Trustee, on behalf of the Class A-2
Notes, the A-2 Principal Payment Amount for such
Distribution Date; PROVIDED, if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay
the Class A-2 Principal Payment Amount in full, then such
excess shall be applied in repayment of principal on the
Class A-3 Notes;
(L) pay to the Indenture Trustee, on behalf of the Class A-3
Notes, the Class A-3 Principal Payment Amount for such
Distribution Date; PROVIDED, if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay
the Class A-3 Principal Payment Amount in full, then such
excess shall be applied in repayment of principal on the
Class A-4 Notes;
(M) pay to the Indenture Trustee, on behalf of the Class A-4
Notes, the Class A-4 Principal Payment Amount for such
Distribution Date; PROVIDED, if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay
the Class A-4 Principal Payment Amount in full, then such
excess shall be applied in repayment of principal on the
Class B Notes;
(N) pay to the Indenture Trustee, on behalf of the holders of
the Class B Notes, the Class B Principal Payment Amount for
such Distribution Date; PROVIDED, if the amount to be
allocated pursuant to this clause exceeds the amount needed
to repay the Class B Principal Payment Amount in full, then
such excess shall be applied in repayment of principal on
the Class C Notes;
(O) pay to the Indenture Trustee, on behalf of the holders of
the Class C Notes, the Class C Principal Payment Amount for
such Distribution Date; PROVIDED, if the amount to be
allocated pursuant to this clause exceeds the amount needed
to repay the Class C Principal Payment Amount in full, then
such excess shall be applied in repayment of principal on
the Subordinated Notes;
(P) pay to the holders of the Subordinated Notes the Class D
Principal Payment Amount for such Distribution Date;
PROVIDED, if the amount to be allocated pursuant to this
clause exceeds the amount needed to repay the Subordinated
Notes principal in full then such excess shall be allocated
consistent with the next succeeding paragraph;
(Q) pay to the Indenture Trustee for deposit into the Reserve
Funds any Available Amounts not necessary to make the
payments described in paragraph (A) through (L) above to the
extent that such amount is necessary to meet the Reserve
Fund Amount; and
(R) any excess shall be paid to the holder of the Certificates.
As used herein, "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
inclusive of such payments received through Vendor recourse or support and
agreements, but excluding the Excluded Amounts due on or before, as well as
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) such amounts as from time to
time may be held in the Collection Account, together with earnings on funds
therein, (iv) any late charges relating to a Contract provided such late charges
were included in the Contract's terms as of the Cutoff Date ("LATE CHARGES")
and (v) any amounts received with respect to the Guaranteed Residual
Investments.
Pursuant to the Indenture, the Indenture Trustee will distribute amounts
received from the Indenture Trustee in accordance with the foregoing to the
Class A-1 Noteholders, Class A-2 Noteholders, Class A-3 Noteholders, Class A-4
Noteholders, Class B Noteholders, Class C Noteholders and the holders of the
Subordinated Notes represented thereby PRO RATA in accordance with the
respective amounts owed thereto.
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FOLLOWING AN EVENT OF DEFAULT OR RESTRICTING EVENT. On each Determination
Date after the occurrence of an Event of Default, or after the occurrence of,
and during the continuance of, a Restricting Event, the Servicer 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 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:
(A) pay to the Indenture Trustee, the amount of any unpaid fees,
expenses, late charges or other losses;
(B) pay to the Servicer, the amount of any unreimbursed Servicer
Advance;
(C) pay to the Servicer, 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;
(D) pay to the Indenture Trustee, on behalf of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes, an amount equal to interest accrued in
respect of such Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes 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 is 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 thereof;
(E) pay to the Indenture Trustee, on behalf of the Class B
Notes, an amount equal to the interest accrued thereon 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 is 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;
(F) pay to the Indenture Trustee, on behalf of the Class C
Notes, an amount equal to interest accrued in respect of the
Class C Notes 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 is 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;
(G) pay to the Indenture Trustee, on behalf of the Subordinated
Notes, an amount equal to interest accrued in respect of the
Subordinated Notes 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 is less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated
to each Subordinated Note PRO RATA based on the outstanding
principal amount thereof;
(H) pay to the Indenture Trustee, on behalf of the Class A-1
Notes the Class A-1 Principal Payment Amount for such
Distribution Date; PROVIDED (i) that if the Available
Amounts remaining to be allocated pursuant to this clause is
less than the full amount required to be so allocated, such
remaining Available Amounts shall be allocated to each Class
A-1 Note PRO RATA based on the outstanding principal amount
thereof, and (ii) if the amount to be allocated pursuant to
this clause exceeds the amount needed to repay the
outstanding Class A-1 Note principal in full, then such
excess shall be applied in repayment of principal on the
Class A-2 Notes;
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(I) pay to the Indenture Trustee, on behalf of the Class A-2
Notes the Class A-2 Principal Payment Amount for such
Distribution Date; PROVIDED (i) that if the Available
Amounts remaining to be allocated pursuant to this clause is
less than the full amount required to be so allocated, such
remaining Available Amounts shall be allocated to each Class
A-2 Note, respectively PRO RATA based on the outstanding
principal amount thereof, and (ii) if the amount to be
allocated pursuant to this clause exceeds the amount needed
to repay the outstanding Class A-2 Note principal in full,
then such excess shall be applied in repayment of principal
on the Class A-3 Notes;
(J) pay to the Indenture Trustee, on behalf of the Class A-3
Notes the Class A-3 Principal Payment Amount for such
Distribution Date; PROVIDED (i) that if the Available
Amounts remaining to be allocated pursuant to this clause is
less than the full amount required to be so allocated, such
remaining Available Amounts shall be allocated to each Class
A-3 Note, respectively PRO RATA based on the outstanding
principal amount thereof, and (ii) if the amount to be
allocated pursuant to this clause exceeds the amount needed
to repay the outstanding Class A-3 Note principal in full,
then such excess shall be applied in repayment of principal
on the Class A-4 Notes;
(K) pay to the Indenture Trustee, on behalf of the Class A-4
Notes the Class A-4 Principal Payment Amount for such
Distribution Date; PROVIDED (i) that if the Available
Amounts remaining to be allocated pursuant to this clause is
less than the full amount required to be so allocated, such
remaining Available Amounts shall be allocated to each Class
A-4 Note, respectively PRO RATA based on the outstanding
principal amount thereof, and (ii) if the amount to be
allocated pursuant to this clause exceeds the amount needed
to repay the outstanding Class A-4 Note principal in full,
then such excess shall be applied in repayment of principal
on the Class B Notes;
(L) pay to the Indenture Trustee, on behalf of the holders of
the Class B Notes, the Class B Principal Payment Amount for
such Distribution Date; PROVIDED (i) that if the Available
Amounts remaining to be allocated pursuant to this clause is
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, and (ii) if the amount to be allocated pursuant to
this clause exceeds the amount needed to repay outstanding
Class B Note principal in full, then such excess shall be
applied in repayment of principal on the Class C Notes;
(M) pay to the Indenture Trustee, on behalf of the holders of
the Class C Notes, the Class C Principal Payment Amount for
such Distribution Date; PROVIDED (i) that if the Available
Amounts remaining to be allocated pursuant to this clause is
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, and (ii) if the amount to be allocated pursuant to
this clause exceeds the amount needed to repay outstanding
Class C Note principal in full, then such excess shall be
applied in repayment of principal on the Subordinated
Notes; and
(N) pay to the holders of the Subordinated Notes the Class D
Principal Payment Amount for such Distribution Date;
PROVIDED (i) that if the Available Amounts remaining to be
allocated pursuant to this clause is less than the full
amount required to be so paid, such remaining Available
Amounts shall be allocated to each Subordinated Notes PRO
RATA based on the outstanding principal amount thereof, and
(ii) if the amount to be allocated pursuant to this clause
exceeds the amount needed to repay outstanding Subordinated
Notes principal in full, then such excess shall be paid to
the holder of the Certificates.
RESERVE FUND
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GENERAL
The Reserve Fund will be an account in the name of the Indenture Trustee on
behalf of the Noteholders and the holders of the Subordinated Notes. The
Reserve Fund will be created with an initial deposit by the Trust Depositor on
the Closing Date of an amount equal to the Reserve Fund Amount.
If the amount on deposit in the Reserve Fund on any Distribution Date
(after giving effect to all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Reserve Fund Amount, the Indenture
Trustee will distribute any excess to the holder of the Certificates. Upon any
such distributions to the holder of the Certificates, the Noteholders and the
holders of the Subordinated Notes will have no further rights in, or claims to,
such amounts.
If on any Distribution Date the principal balance of the Subordinated Notes
equals zero and amounts on deposit in the Reserve Fund have been depleted as a
result of losses in respect of the Contracts, the protection afforded to the
Noteholders by the Subordinated Notes and by the Reserve Fund will be exhausted
and the Noteholders will bear directly the risks associated with the ownership
of the Contracts.
None of the Noteholders, the Indenture Trustee, the Owner Trustee, the
Seller nor the Trust Depositor will be required to refund any amounts properly
distributed or paid to them whether or not there are sufficient funds on any
subsequent Distribution Date to make full distributions to the Noteholders.
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 Reserve Fund Amount that is
different from the formula described above and would result in a decrease in the
amount of the Reserve Fund 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 any such new formulation will
not in and of itself result in a qualification, reduction or withdrawal of its
then-current rating of any Class of Notes, then the Reserve Fund Amount will be
determined in accordance with such new formula. The Agreement will accordingly
be amended to reflect such new calculation without the consent of any
Noteholder.
WITHDRAWALS FROM THE RESERVE FUND
Amounts held from time to time in the Reserve Fund will continue to be held
for the benefit of the Noteholders and the holders of the Subordinated Notes.
On each Distribution Date, funds will be withdrawn from the Reserve Fund to the
extent that Available Amounts with respect to any Distribution Date are less
than the amount necessary to pay interest on the Notes and the Subordinated
Notes; PROVIDED, HOWEVER, upon the occurrence of an Event of Default or upon the
occurrence and continuance of Restricting Event amounts in the Reserve Fund
shall be available to pay the principal on the most senior outstanding Class of
Notes or, if no Notes are outstanding, the Subordinated Notes; PROVIDED FURTHER,
in the event the Available Amounts are insufficient to pay outstanding principal
on the Class A-1 Notes on the Class A-1 Maturity Date amounts in the Reserve
Fund may be utilized to make principal payments on the Class A-1 Notes.
Additionally, to the extent monies are present in the Reserve Fund as of the
Maturity Date, to the extent necessary, such monies shall be applied to pay the
principal of the most senior outstanding Class of Notes, or, if no Notes are
outstanding, the Subordinated Notes.
DEFAULTED CONTRACTS
A Contract will automatically be deemed to be in default (a "DEFAULTED
CONTRACT") if (i) it is more than 120 days past due; (ii) if at any time the
Servicer determines, in accordance with its customary and usual practices, that
such Contract is not collectible (and taking into account any available Vendor
recourse); or (iii) the End-User under such Contract becomes the subject of an
Insolvency Event. The current policy of the Servicer with respect to writing
off Contracts is described in "NEWCOURT CREDIT GROUP USA INC.--WRITE-OFF POLICY"
above.
Upon classification as a Defaulted Contract, the Servicer shall accelerate
all payments due thereunder or take such other action as the Servicer reasonably
believes will maximize the amount of Recoveries in respect thereof and shall
otherwise follow its customary and usual collection procedures, which may
include the repossession and sale of any related Equipment or other Applicable
Security on behalf of the Trust. Any recoveries on account of a previously
Defaulted Contract (including proceeds of repossessed Equipment or other
Applicable Security or other property, Insurance Proceeds, amounts representing
late fees and penalties and amounts subsequently received pursuant to a Program
Agreement with a Vendor, but net of amounts representing costs and expenses of
liquidation incurred by the Servicer; such recoveries net of such amounts,
"RECOVERIES") shall be deemed to be Available Amounts.
COLLECTION ACCOUNT
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The Servicer, for the benefit of the Noteholders, shall cause to be
established and maintained in the name of the Indenture Trustee, with an
office or branch of a depositary institution or trust company (which may
include the Indenture Trustee) organized under the laws of the United States
of America or any one of the states thereof and located in the state
designated by the Servicer, a segregated corporate trust account (the
"COLLECTION ACCOUNT") bearing a designation clearly indicating that the funds
deposited therein are held in trust for the benefit of the Noteholders;
PROVIDED, HOWEVER, that at all times such depositary institution or trust
company shall be (a) the corporate trust department of the Indenture Trustee
or, (b) a depositary 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 Federal
Deposit Insurance Corporation (the "FDIC"; any such depositary institution or
trust company, a "QUALIFIED INSTITUTION"). Funds in the Collection Account
generally will be invested in (i) obligations fully guaranteed by the United
States of America, (ii) demand deposits, time deposits or certificates of
deposit of depositary institutions or trust companies having commercial paper
with the highest rating from each Rating Agency, (iii) commercial paper (or
other short term obligations) having, at the time of the Trust's investment
therein, the highest rating from each Rating Agency, (iv) demand deposits,
time deposits and certificates of deposit which are fully insured by the
FDIC, (v) notes or bankers' acceptances issued by any depositary institution
or trust company described in (ii) above, (vi) money market funds which have
the highest rating from, or have otherwise been approved in writing by, each
Rating Agency, (vii) time deposits with an entity, the commercial paper of
which has the highest rating from the Rating Agency, (viii) eligible
repurchase agreements, and (ix) any other investments approved in writing by
the Rating Agency (collectively, "ELIGIBLE INVESTMENTS"). Such funds may be
invested in debt obligations of Newcourt or its affiliates so long as such
obligations qualify as Eligible Investments. Any earnings (net of losses and
investment expenses) on funds in the Collection Account will be held therein
and be treated as Available Amounts. 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.
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REPLACEMENT ACCOUNTS
If any institution with which any of the accounts established pursuant to
the Sale and Servicing Agreement or the Indenture are established ceases to be
a Qualified Institution, the Servicer or the Indenture Trustee (as the case may
be) shall, within ten Business Days, establish a replacement account at a
Qualified Institution after notice thereof.
EVENTS OF DEFAULT
Allocations of Available Amounts will be made as described above under
"--ALLOCATIONS; PRIOR TO AN EVENT OF DEFAULT OR RESTRICTING EVENT" unless and
until an Event of Default or Restricting Event has occurred, in which case
allocations of Available Amounts will be made as described above under
"--ALLOCATIONS; FOLLOWING AN EVENT OF DEFAULT OR RESTRICTING EVENT". An "EVENT
OF DEFAULT" refers to any of the following events:
(a) failure to pay the Principal Amount of any Note, if
any, on its related Maturity Date;
(b) failure to pay on each Distribution Date the full
amount of accrued interest on any Class A Note, Class B
Note or Class C Note;
(c) (i) failure on the part of the Seller to make any
payment or deposit required under the Sale and
Servicing Agreement or Transfer and Sale 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 Seller, the Trust Depositor, the Trust
or the Owner Trustee to observe or perform any other
covenants or agreements of such entity set forth in the
Transfer and Sale Agreement, 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
Seller to perform their joint and several agreement to
accept reassignment of Ineligible Contracts, and
FURTHER PROVIDED, that only a five day cure period
shall apply in the case of a failure by any Seller, the
Trustee 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 the Seller, the
Trust Depositor, the Trustee or the Owner Trustee in
the Sale and Servicing Agreement or the Indenture or
any information required to be given by the Seller 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
Seller has repurchased the related Contracts through
the Trust Depositor during such period in accordance
with the provisions of the Sale and Servicing Agreement
and the Transfer and Sale Agreement;
(e) the occurrence of an Insolvency Event relating to the
Seller, the Trust Depositor or the Trust; or
(f) 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 in clause (a), (b), (c), or (e) 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 and the Servicer of such 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 Seller, the
Servicer and the Owner Trustee.
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If an Insolvency Event relating to the Trust Depositor occurs, pursuant to
the Sale and Servicing Agreement, on the day of such Insolvency Event, the Trust
Depositor will promptly give notice to the Indenture Trustee of the Insolvency
Event, and the Indenture Trustee will, if directed by the Required Holders (as
defined in the next succeeding paragraph), 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 such sale, disposition or
liquidation of Contracts will be deposited in the Collection Account and
allocated as described in the Sale and Servicing Agreement and herein. 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 such Class in full, such Noteholders will incur a loss.
As used herein, "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 Class A-4 Noteholders voting as a single class
evidencing more than 66 2/3% of the Aggregate Principal Amount of the Class A
Notes, (ii) from and after the payment in full of the Class A Notes
outstanding, Class B Noteholders holding Class B Notes evidencing more than 66
2/3% of the Aggregate Principal Amount of the Class B Notes outstanding, (iii)
from and after the payment in full of the Class B Notes outstanding, Class C
Noteholders holding Class C Notes evidencing more than 66 2/3% of the Aggregate
Principal Amount of the Class C Notes outstanding and (iv) from and after the
payment in full of the Class C Notes outstanding, Class D Notes evidencing more
than 66 2/3% of the Aggregate Principal Amount of the Class D Notes.
RESTRICTING EVENTS
Prior to the occurrence of a Restricting Event, allocations of Available
Amounts will be made as described above under "--ALLOCATIONS; PRIOR TO AN EVENT
OF DEFAULT OR RESTRICTING EVENT" unless a Restricting Event has occurred and is
continuing in which case allocations will be made as described above under
"--ALLOCATIONS; FOLLOWING AN EVENT OF DEFAULT OR RESTRICTING EVENT". A
"RESTRICTING EVENT" refers to any of the following events:
(a) As of any Distribution Date, the weighted average ADCB
of all Contracts in respect to which, during the three
preceding Collection Periods, a scheduled payment is more
than sixty (60) days past due exceeds 3.0% of the weighted
average of ADCB of all Contracts in the Contracts Pool
during such three Collection Periods; or
(b) As of any Distribution Date, the product of (i) two (2)
multiplied by (ii) the difference between (x) the ADCB of
all Contracts that became Defaulted Contracts during the six
preceding Collection Periods and (y) Recoveries received
during such six preceding Collection Periods on account of
all Defaulted Contracts, exceeds 3.0% of the weighted
average ADCB of all Contracts in the Contract Pool during
such six Collection Periods; or
(c) As of any Distribution Date, after giving effect to the
allocations to be made on such date, (i) until the Principal
Amount of all Class A Notes has been paid in full, the sum
of (a) the amount on deposit in the Reserve Fund plus (b)
the difference between (1) the ADCB for all Contracts held
by the Trust as of the last day of the Collection Period
immediately preceding such Distribution Date, and (2) the
Principal Amount of all Class A Notes is less than the
lesser of (A) the Principal Amount of all Class A Notes and
(B) $10,700,395; and (ii) thereafter, the amount on deposit
in the Reserve Fund is less than the Reserve Fund Amount; or
(d) A Servicer Default or an Event of Default has occurred
and is continuing.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation with respect to its servicing activities and
reimbursement for its expenses for any Collection Period will be a servicing fee
(the "SERVICING FEE") calculated monthly, and payable on each Distribution Date,
in an amount equal to the product of (i) one-twelfth, (ii) .60% (such
percentage, the "SERVICING FEE PERCENTAGE") and (iii) the ADCB of the Contract
Pool as of the beginning of the related Collection Period. The Servicing Fee
will be funded from Available Amounts and will be paid on the Distribution Date
with respect to each Collection Period from the Collection Account.
The Servicer will pay from its servicing compensation certain 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, casualty insurance on Equipment (to the extent the
Contracts provide for the Seller to pay such insurance) and other fees which are
not
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expressly stated in the Sale and Servicing Agreement to be payable by the Trust,
the Noteholders or the Trust Depositor (other than federal, state, local and
foreign income, franchise or other taxes based on income, if any, or any
interest or penalties with respect thereto, imposed upon the Trust). In the
event that Newcourt USA is acting as Servicer and fails to pay the fees and
disbursements of the Indenture Trustee or Owner Trustee (the "TRUSTEES"), such
Trustee will be entitled to receive the portion of the Servicing Fee that is
equal to such unpaid amounts. In no event will the Noteholders be liable to the
Trustees for the Servicer's failure to pay such amounts, and any such amounts so
paid to the Trustees will be treated as paid to the Servicer for all other
purposes of the Sale and Servicing Agreement.
RECORD DATE
Payments on the Notes will be made as described herein to the Noteholders
in whose names the Notes were registered (expected to be Cede, as nominee of
DTC) at the close of business on the Record Date. However, the final payment on
the Notes offered hereby will be made only upon presentation and surrender of
such Notes. All payments with respect to the principal of and interest on the
Notes (each, a "DISTRIBUTION") will be made to DTC in immediately available
funds. See "DESCRIPTION OF THE NOTES--BOOK-ENTRY REGISTRATION".
OPTIONAL TERMINATION
On any Distribution Date occurring on or after the date on which the ADCB
of the Contract Pool is less than 10% of the initial ADCB of the Contract Pool
as of the Cutoff Date (the "CLEANUP CALL CONDITION"), 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 Subordinated Notes. The
redemption price will be equal to the sum of the outstanding principal amount of
the Notes and Subordinated Notes, together with accrued interest thereon through
the date of redemption, and shall be payable to the holders of the Notes and
Subordinated Notes on such Distribution Date from the proceeds of the Trust's
sale to the Trust Depositor (and the Trust Depositor's concurrent resale to the
Seller), for a repurchase price equal to such redemption price, of the remaining
Contracts Pool and other Trust Assets held by the Trust. Following any
redemption, the Noteholders will have no further rights with respect to the
Trust Assets.
REPORTS
No later than the second Business Day prior to each Distribution Date, the
Servicer will forward to the Indenture Trustee and each Rating Agency a
statement (the "MONTHLY REPORT") prepared by the Servicer setting forth certain
information with respect to the Trust and the Notes and Subordinated Securities,
including: (i) the ADCB (A) as of the end of the related Collection Period and
(B) as of the end of the second Collection Period preceding such Distribution
Date (or, in the case of Contracts that were first added to the Contract Pool
during the related Collection Period, as of the Cutoff Date for such Contracts);
(ii) 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 (including the calculations
utilized in the determination thereof); (iii) the ADCB of Contracts held by the
Trust which were 30, 60, 90 and 120 days or more delinquent as of the end of
such Collection Period; (iv) the Discounted Contract Balance of each Contract in
the Contract Pool that became a Defaulted Contract during such Collection Period
and cumulatively for each preceding Collection Periods; (v) the monthly
Servicing Fee for such Collection Period; and (vi) the Available Amounts with
respect to the related Collection Period (including the calculation utilized in
the determination thereof).
With respect to each Distribution Date, the Monthly Report also will
include the following information with respect to the Notes: (i) the total
amount distributed; (ii) the amount allocable to principal on the Notes and each
Class thereof; (iii) the amount allocable to interest on the Notes and each
Class thereof; and (iv) the amount, if any, by which the unpaid principal amount
of the Notes of each Class exceeds the Principal Amount of such Class as of the
Record Date with respect to such Distribution Date. On each Distribution 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, 1998,
the Indenture Trustee (or an agent on its behalf) 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 Code for such preceding calendar
year or the applicable portion thereof during which such person was a
Noteholder, together with such other customary information as is necessary to
enable the Noteholders to prepare their tax returns. See "CERTAIN FEDERAL
INCOME TAX MATTERS".
LIST OF NOTEHOLDERS
At such time, if any, as Definitive Notes have been issued, 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
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Notes, the Indenture Trustee will afford such Noteholders 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
Sale and Servicing Agreement or 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
Newcourt USA, in its capacity as administrator (in such capacity, the
"ADMINISTRATOR" ), will enter into an agreement (the "ADMINISTRATION AGREEMENT")
with the Trust, the Trust Depositor and the Indenture Trustee pursuant to which
the Administrator 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. The Administrator in the Administration Agreement
agrees to perform certain accounting functions of the Trust which the Owner
Trustee is required to perform pursuant to 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 each Noteholder (except 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 related thereto,
the Administrator will be entitled to a monthly administration fee (the
"ADMINISTRATION FEE"), which fee will be paid by the Servicer out of the
Servicing Fee, if available.
BOOK-ENTRY REGISTRATION
Noteholders may only hold their Notes through DTC (in the United States) or
CEDEL or Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations which are participants in such systems.
Cede, as nominee for DTC, will hold the global Class A-1 Note or Notes, the
global Class A-2 Note or Notes, the global Class A-3 Note or Notes, the global
Class A-4 Note or Notes, the global Class B Note or Notes, and the global Class
C Note or Notes. CEDEL and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective Depositaries (as defined
herein) which in turn will hold such positions in customers' securities accounts
in the Depositaries' names on the books of DTC. Citibank will act as depositary
for CEDEL and Morgan Guaranty Trust will act as depositary for Euroclear (in
such capacities, the "DEPOSITARIES").
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 UCC and a "CLEARING AGENCY" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("PARTICIPANTS") and
facilitate the settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of notes. Participants include the
Underwriter, securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. Indirect access to
the DTC system also is available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("INDIRECT PARTICIPANTS").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants (as defined in this section) and Euroclear
Participants (as defined in this section) will occur in accordance with their
respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected through
DTC in accordance with DTC rules on behalf of the relevant European
international clearing systems by its Depositary. Cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its Depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds 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 received in CEDEL
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date. Such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
CEDEL Participants on such business day. Cash received in CEDEL or Euroclear
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as a result of sales of securities by or through a CEDEL Participant or a
Euroclear Participant to a 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. For
information with respect to tax documentation procedures relating to the Notes,
see "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS."
Noteholders that are not Participants or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or other interests in,
Notes may do so only through Participants and Indirect Participants. In
addition, Noteholders will receive all distributions of principal and interest
on the Notes from the Indenture Trustee through DTC and its Participants. Under
a book-entry format, Noteholders will receive payments after the related
Distribution Date, as the case may be, because, while payments are required to
be forwarded to Cede, as nominee for DTC, on each such date, DTC will forward
such payments to its Participants which thereafter will be required to forward
them to Indirect Participants or holders of beneficial interests in the Notes.
It is anticipated that the only "CLASS A-1 NOTEHOLDER" , "CLASS A-2 NOTEHOLDER",
"CLASS A-3 NOTEHOLDER", "CLASS A-4 NOTEHOLDER", "CLASS B NOTEHOLDER" and "CLASS
C NOTEHOLDER" will be Cede, as nominee of DTC, and that holders of beneficial
interests in the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class B Notes or Class C Notes, respectively, under the Indenture will
only be permitted to exercise the rights of Class A-1 Noteholders, Class A-2
Noteholders, Class A-3 Noteholders, Class A-4 Noteholders, Class B Noteholders
or Class C Noteholders, respectively, under the Indenture indirectly through DTC
and its Participants who in turn will exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Notes and is required to receive and
transmit distributions of principal of and interest on the Notes. Participants
and Indirect Participants with which holders of beneficial interests in the
Notes have accounts similarly are required to make book-entry transfers and
receive and transmit such payments on behalf of these respective holders.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of holders of
beneficial interests in the Notes to pledge Notes to persons or entities that do
not participate in the DTC system, or otherwise take actions in respect of such
Notes, may be limited due to the lack of a Definitive Note for such Notes.
DTC has advised the Issuer that it will take any action permitted to be
taken by a Class A-1 Noteholder, Class A-2 Noteholder, Class A-3 Noteholder,
Class A-4 Noteholder, Class B Noteholder or Class C Noteholder under the
Indenture only at the direction of one or more Participants to whose account
with DTC the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes,
Class B Notes or Class C Notes are credited. Additionally, DTC has advised the
Issuer that it may take actions with respect to percentage interests in any
particular Class of the Notes represented by holders of beneficial interests
evidencing that percentage, which actions may conflict with other of its actions
with respect to other percentage interests therein.
CEDEL is incorporated under the laws of Luxembourg as a professional
depositary. CEDEL holds securities for its participating organizations ("CEDEL
PARTICIPANTS") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depositary, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the Underwriter. 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 ("EUROCLEAR PARTICIPANTS") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and 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 (the "EUROCLEAR OPERATOR"), under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "COOPERATIVE"). All operations are conducted by the Euroclear
Operator and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policies for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks
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(including central banks), securities brokers and dealers and other professional
financial intermediaries and may include the Underwriter. 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.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "TERMS AND CONDITIONS"). The Terms and Conditions govern
transfers of securities and cash within 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 Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Notes held through CEDEL or Euroclear will be
credited to the cash accounts of CEDEL Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by its Depositary. Such distributions will be subject to tax reporting
in accordance with relevant United States tax laws and regulations. See
"CERTAIN FEDERAL INCOME TAX CONSIDERATIONS." CEDEL or the Euroclear Operator,
as the case may be, will take any other action permitted to be taken by an
Noteholder under the Indenture on behalf of a CEDEL Participant or Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its Depositary's ability to effect such actions on its behalf through
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 Servicer, any Seller, 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 .
DEFINITIVE NOTES
The Notes will be issued in fully registered, authenticated form to
beneficial owners or their nominees (the "DEFINITIVE NOTES"), rather than to DTC
or its nominee, only if (a) the Trust advises the Indenture Trustee in writing
that DTC is no longer willing or able to discharge properly its responsibilities
as Depositary with respect to such Notes, and the Indenture Trustee or the
Issuer is unable to locate a qualified successor or (b) the Issuer at its option
elects to terminate the book-entry system through DTC.
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 DTC of the availability of
Definitive Notes for such Class. Upon surrender by DTC of the Definitive Note
representing the Notes and instructions for reregistration, the Indenture
Trustee will issue such Definitive Notes, and thereafter the Indenture Trustee
will recognize the holders of such Definitive Notes as Noteholders under the
Indenture (the "HOLDERS"). The Indenture Trustee will also notify the Holders
of any adjustment to the Record Date with respect to the Notes necessary to
enable the Indenture Trustee to make distributions to Holders of the Definitive
Notes for such Class of record as of each Distribution Date.
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 Holders in accordance with the procedures set
forth herein and in the Indenture. Distributions will be made by check, mailed
to the address of such Holder 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 (whether the Definitive Notes or the Note for such Class registered in the
name of Cede representing the Notes of such Class) 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.
Definitive 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 Definitive
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 therewith.
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THE SUBORDINATED NOTES
On the Closing Date, the Trust will also issue the ___% Class D
Receivables-Backed Notes (the "SUBORDINATED NOTES") with an aggregate principal
balance of $16,051,000. The Subordinated Notes will be issued pursuant to the
Indenture.
The Subordinated Notes are not being offered and sold hereunder.
Distributions with respect to the Subordinated Notes will be subordinated to the
rights of the Noteholders to the extent described herein. See "DESCRIPTION OF
THE NOTES--ALLOCATIONS" herein.
THE CERTIFICATE
On the Closing Date, the Trust will also issue the Certificate with an
initial certificate balance of $8,025,000 (the "CERTIFICATE"); the Certificate
will not bear interest and shall have the right to monies in the Reserve Fund
and to certain other excess funds (after the payment of all principal and
interest on the Notes and the Subordinated Notes). The Certificates will
represent fractional undivided beneficial equity interests in the Trust, and
will be issued pursuant to the Trust Agreement.
The Certificate is not being offered and sold hereunder. The Trust
Depositor is expected initially to retain the Certificate, although the
Certificate could be transferred 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 or
Certificateholder. Distributions with respect to the Certificate will be
subordinated to the rights of the Noteholders and the holders of the
Subordinated Notes to the extent described herein. See "DESCRIPTION OF THE
NOTES--ALLOCATIONS" herein.
THE TRANSFER AND SALE AGREEMENT AND
SALE AND SERVICING AGREEMENT GENERALLY
The following is a summary of the material terms of the Transfer and Sale
Agreement and the Sale and Servicing Agreement, the forms of which were filed as
exhibits to the Registration Statement of which this Prospectus is a part, and
this summary is qualified in its entirety by reference to the Transfer and Sale
Agreement and Sale and Servicing Agreement, respectively.
TERMINATION OF TRUST
Unless the Trust Depositor instructs the Owner Trustee otherwise, the Trust
will terminate only on the earliest to occur of (i) final distribution 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 the Trust Agreement
or (ii) ninety (90) days following the occurrence of an Insolvency Event as
described under "DESCRIPTION OF THE NOTES--EVENTS OF DEFAULT" unless the Owner
Trustee shall have received instructions from the Required Holders not to
terminate or dissolve the Trust, (the "TRUST TERMINATION DATE"). Upon
termination of the Trust, all right, title and interest in the Trust Assets
(other than amounts in accounts maintained by the Trust for the final payment of
principal and interest to Noteholders or Certificateholders) will be conveyed
and transferred to the holder of the Certificate and any permitted assignee.
CONVEYANCE OF CONTRACTS
The Contracts, and interests in the Equipment and other Applicable
Security, to be sold or contributed to the Trust by the Trust Depositor will be
acquired by the Trust Depositor from the Seller pursuant to the Transfer and
Sale Agreement dated as of November 1, 1997 by and between the Trust Depositor
and Newcourt USA (the "TRANSFER AND SALE AGREEMENT"). A form of Transfer and
Sale Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
Under the Transfer and Sale Agreement, the Seller will sell to the Trust
Depositor, to the extent of the Seller's interest therein, (i) the Contracts
and its interest in any related Equipment and Applicable Security as of the
Cutoff Date, and (ii) the proceeds thereof (except Excluded Amounts). Pursuant
to the Sale and Servicing Agreement, such interests in the related Contracts,
the Equipment, the Applicable Security and the proceeds thereof will then be
sold by the Trust Depositor to the Trust, and pursuant to the Indenture a lien
thereon will be granted by the Trust in favor of the Indenture
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Trustee, and the Trust Depositor will also assign its rights in, to and under
the Transfer and Sale Agreement with respect to the Contracts and Equipment and
Applicable Security to the Trust and the Trust will assign such rights to the
Indenture Trustee.
Pursuant to the Transfer and Sale Agreement, the Seller will sell,
transfer, assign, set over and otherwise convey to the Trust Depositor, without
recourse (except as expressly set forth in such Transfer and Sale Agreement) all
of the Seller's right, title and interest in and to (i) specified Contracts and
all monies due or to become due in payment of such Contracts on or after the
related Cutoff Date, including all Scheduled Payments thereunder due on or after
such 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 Cutoff Date or any Excluded
Amounts, (ii) the related Equipment and, in the case of any Vendor Loan,
Applicable Security, including all proceeds from any sale or other disposition
of such Equipment or Applicable Security, (iii) any documents delivered to the
Trust Depositor or held by the Servicer on its behalf with respect to each such
Contract (the "CONTRACT FILES"), (iv) all payments made or to be made in the
future with respect to each such Contract and the Vendor thereunder under any
Vendor Agreements with the Seller and under any other guarantee or similar
credit enhancement with respect to such Contracts, (v) all payments made with
respect to each such Contract under any insurance policy covering physical
damage to the related Equipment (the "INSURANCE PROCEEDS") and (vi) all income
and proceeds of the foregoing (the foregoing are referred to collectively as the
"TRANSFERRED ASSETS"). As of the Cutoff Date the Trust Depositor will transfer
and assign, among other things, the Transferred Assets to the Trust for the
benefit of the Noteholders and the holders of the Subordinated Securities and
the Trust will grant a lien on such Transferred Assets in favor of the Indenture
Trustee, pursuant to the Sale and Servicing Agreement and the Indenture.
Newcourt USA, as Servicer under the Sale and Servicing Agreement, will
retain custody of (but not title to) the Contracts, the Contract Files and any
related evidence of insurance payments, Scheduled Payments and any other similar
payments under the Contracts; provided that certain Persons identified in the
Transfer and Sale Agreement will retain custody of certain of the Contracts and
Contract Files. Prior to the conveyance of any Contracts to the Trust
Depositor, Newcourt USA caused (in the case of the Contracts sold under the
Transfer and Sale Agreement on the Closing Date) or will cause (in the case of
Additional Contracts or Substitute Contracts conveyed after the Closing Date)
its and/or Newcourt USA's computer accounting systems to be marked to show that
the Contracts transferred thereunder have been conveyed to the Trust Depositor,
and prior to each transfer of any Trust Assets to the Trust pursuant to the Sale
and Servicing Agreement, Newcourt USA or the Trust Depositor, as appropriate,
will file UCC financing statements reflecting (A) the conveyance of the
Transferred Assets to the Trust Depositor, (B) each sale of Trust Assets to the
Trust pursuant to the Sale and Servicing Agreement and (C) the grant of a lien
thereon in favor of the Indenture Trustee (except that financing statements will
be filed with respect to each conveyance of an interest in Equipment to the
Trust Depositor by Newcourt and each sale of an interest in Equipment to the
Trust by the Trust Depositor, and each transfer of an interest in Equipment to
the Indenture Trustee by the Trust, in each case, only to the extent the same
may be viewed as inventory of Newcourt, the Trust Depositor and the Trust,
respectively). The Seller and the Trust Depositor will notate in the
appropriate computer files relating to the Contracts, that all interests in the
Contracts have been conveyed (i) to the Trust Depositor, (ii) by the Trust
Depositor to the Trust, and (iii) by the Trust to the Indenture Trustee. See
"CERTAIN LEGAL ASPECTS OF THE CONTRACTS".
REPRESENTATIONS AND WARRANTIES
The Seller has made certain representations and warranties in the Transfer
and Sale Agreement with respect to the Contracts transferred thereunder as of
the Cutoff Date, and the Seller will similarly make or be deemed to have made
certain representations and warranties with respect to each Additional Contract
or Substitute Contract transferred by either of them as of its related Cutoff
Date, including that: (i) 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 the Transfer and Sale
Agreement is true and correct in all material respects; (ii) immediately prior
to the transfer of a Contract and any related Equipment (or security interest
therein) or Applicable Security (or security interest therein) to the Trust
Depositor, such Contract was owned by the Seller free and clear of any adverse
claim; (iii) the Contract, as of the Cutoff Date, did not have a Scheduled
Payment that was a delinquent payment for more than 60 days, and the Contract is
not otherwise a Defaulted Contract; (iv) no provision of the Contract has been
either waived, altered or modified in any respect, except by instruments or
documents contained in the Contract File (other than payment delinquencies
permitted under clause (iii) above); (v) 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, bankruptcy,
moratorium, reorganization, or other similar laws affecting enforceability of
creditors' rights generally and the availability of equitable remedies); (vi)
the Contract is not and will not be subject to rights of rescission, setoff,
counterclaim or defense and, to the Seller's knowledge, no such rights have been
asserted or threatened with respect to the Contract; (vii) the Contract, at the
time it was made, did not violate the laws of the United States or any
applicable state, except for any such violations which do not materially and
adversely affect the collectibility of the Contracts in the Contract Pool taken
as a whole; (viii) (x) the Contract and any related Equipment have not been
sold, transferred,
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assigned or pledged by the Seller to any other person (other than the sale of
the Equipment to the End-User in connection with CSAs, Secured Notes and
"NON-TRUE LEASES" and, with respect to a Contract which is a "TRUE LEASE", any
Equipment related to such true lease is free and clear of any liens or
encumbrances of any third parties (except for Permitted Liens) and (y) either
(A) such 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 Applicable
Security or (B) in the case of a Contract secured by Vehicles, (1) within 30
calendar days of the origination or acquisition of such Contract by the Seller
an application was filed in the appropriate state office to note Newcourt USA's
interest on the certificate of title for such vehicle, and in any case such
interest will be so noted or recorded within 180 days of such acquisition or
origination or (2) a certificate of title or similar evidence or recordation on
which the Seller's interest has been noted has been obtained; (ix) if the
Contract constitutes either an "INSTRUMENT" or "CHATTEL PAPER" for purposes of
the UCC, there is not more than one "SECURED PARTY'S ORIGINAL" counterpart of
the Contract; (x) all filings necessary to evidence the conveyance or transfer
of the Contract to the Trust Depositor have been made in all appropriate
jurisdictions; (xi) the Obligor is not to the Seller's knowledge, subject to
bankruptcy or other insolvency proceedings; (xii) the Contract is a U.S.
dollar-denominated obligation and the related Equipment is located in the United
States; (xiii) 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 such Contract's conveyance to the Trust); (xiv)
either (A) 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 (xxiv) below, or if
not irrevocable and unconditional has the benefit of a Vendor Guarantee or (B)
with respect to certain Leases with Lessees that are governmental entities or
municipalities, if such Lease is cancelled in accordance with its terms, either
(1) the Vendor which assigned such Lease to the Seller is unconditionally
obligated to repurchase such Lease from the Seller for a purchase price not less
than the Discounted Contract Balance of such Lease (as of the Determination Date
immediately prior to the date of purchase) plus interest thereon at the
Discount Rate through the Distribution Date following such date of repurchase or
(2) pursuant to the Transfer and Sale Agreement, the Seller has indemnified the
Trust Depositor against such cancellation in an amount equal to the Discounted
Contract Balance of such Lease (as of the Determination Date immediately prior
to 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); (xv) the Contract has an original maturity of not
greater than the term specified in the Sale and Servicing Agreement; (xvi) no
adverse selection procedure was used in selecting the Contract for transfer;
(xvii) 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 accordance with the Servicer's normal
requirements; (xviii) the Contract constitutes chattel paper, an account, an
instrument or a general intangible as defined under the UCC; (xix) no Lease is a
"CONSUMER LEASE" as defined in Section 2A-103(1)(e) of the UCC; (xx) each Lessee
has represented to the Seller or the Vendor that it has accepted the related
Equipment and that it has had a reasonable opportunity to inspect and test such
Equipment and the Seller has not been notified of any defects therein; (xxi) the
Contract is not subject to any guarantee by any Seller nor has the Seller
established any specific credit reserve with respect to the related Obligor;
(xxii) each 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; (xxiii) each 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 (and assuming the interest rate specified
in such Vendor Loan is the "DISCOUNT RATE" for purposes of calculating such
Discounted Contract Balance); and (xxiv) no provision of such Contract provides
for a Prepayment Amount less than the amount calculated in accordance with the
definition thereof (unless otherwise indemnified by the Vendor or the Seller 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).
As used above, "PREPAYMENT AMOUNT" shall mean, with respect to a Contract,
the sum of (i) the Discounted Contract Balance of such Contract on the
Determination Date immediately prior to the date of prepayment plus any accrued
and unpaid interest payments thereon (at the Discount Rate) and (ii) any
outstanding Servicer Advances thereon.
The foregoing representations and warranties, as appropriate, will be
reaffirmed by the Seller with respect to any Additional Contract or Substitute
Contract transferred by any Seller to the Trust Depositor. A Contract which
satisfies all of the above representations and warranties shall be termed an
"ELIGIBLE CONTRACT" and Contracts with respect to which the representations in
clauses (iii), (xv) and (xxiv) are not true shall also be Eligible Contracts if
the Trust Depositor shall have received confirmation from each Rating Agency
that the discrepancy will not result in a Ratings Effect. In addition, the
Seller will represent and warrant to the Trust Depositor that the conveyance
pursuant to the Transfer and Sale Agreement constitutes a valid sale and
assignment to the Trust Depositor of all right, title and interest of the Seller
in the related Contracts, whether then existing or thereafter created, and the
proceeds thereof, which is effective as of the date of conveyance of such
Contract.
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As used above, "PERMITTED LIENS" shall mean (a) with respect to Contracts
in the Contract 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 pursuant to the
Transfer and Sale Agreement and transferred to the Trust pursuant to the Sale
and Servicing Agreement, (iii) liens in favor of the Trust created pursuant to
the Sale and Servicing Agreement, and (iv) liens in favor of the Indenture
Trustee created pursuant to the Sale and Servicing Agreement and the Indenture;
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 pursuant to the Transfer and Sale Agreement and transferred to the Trust
pursuant to the Sale and Servicing Agreement, (iv) liens in favor of the Trust
created pursuant to the Sale and Servicing Agreement; (v) liens in favor of the
Indenture Trustee created pursuant to the Sale and Servicing Agreement and the
Indenture, (vi) other subordinated liens which are subordinated to the prior
payment of the Notes and the Subordinated Notes on terms described in the Sale
and Servicing Agreement, (viii) subordinated interests relating to the
Guaranteed Residual Investments and (ix) liens granted by the End-Users or
Vendors which are subordinated to the interest of the Trust in such Equipment.
In addition to the foregoing, the Seller will represent and warrant in the
Transfer and Sale Agreement with respect to each Secondary Contract securing a
Vendor Loan transferred by the Seller under the Transfer and Sale Agreement as
of the related Cutoff Date (unless otherwise indicated), among other things, (i)
that each such Secondary Contract satisfies the representations set forth in the
second preceding paragraph (other than the representations set forth in clauses
(ii), (viii) (with respect to ownership by the Seller of the Contract) and
(xxiii), and except that the term "OBLIGOR" shall be deemed to be "END-USER" in
all such representations), (ii) that the Seller holds a duly perfected lien of
the first priority on such Secondary Contract and (iii) that the transfer of the
Seller's security interest in such Secondary Contract and the proceeds thereof
to the Trust Depositor is effective to create in favor of the Trust Depositor a
lien thereon and that such lien has been duly perfected (Secondary Contracts
which satisfy all of the foregoing representations shall be termed "ELIGIBLE
SECONDARY CONTRACTS").
The Trust Depositor will represent and warrant in the Sale and Servicing
Agreement, among other things, (i) that the transfer, assignment and pledge of
the related Contracts, whether then existing or thereafter created will provide
a first perfected security interest therein and that all filings necessary to
evidence the same to the Trust have been made in all appropriate jurisdictions;
(ii) that each Contract transferred by it to the Trust is an "ELIGIBLE
CONTRACT"; (iii) that each Secondary Contract (or interest therein) transferred
by it to the Trust is an "ELIGIBLE SECONDARY CONTRACT"; (iv) that the security
interest granted on the related Contracts, whether then existing or thereafter
created, and the proceeds thereof by the Trust to the Indenture Trustee is
effective to create in favor of the Indenture Trustee a lien thereon and that
such lien has been duly perfected; (v) that the Trust Depositor holds a duly
perfected lien of the first priority on each Secondary Contract and (vi) that
the transfer of the Trust Depositor's security interest in each Secondary
Contract and the proceeds thereof by the Trust to the Indenture Trustee is
effective to create in favor of the Indenture Trustee a lien thereon and that
such lien has been duly perfected.
None of the Indenture Trustee, the Trust, the Owner Trustee or any of them
in their individual capacities (in such capacity, the "TRUST COMPANY"), shall
make or be deemed to have made any representations or warranties, express or
implied, regarding the Trust Assets or the transfers thereof by the Seller, the
Trust Depositor or the Trust.
Under the terms of the Transfer and Sale Agreement and 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 to the Trust
Depositor, and the Seller's will be concurrently obligated to purchase from the
Trust Depositor, any Contract transferred by a Seller and any interest in
Equipment transferred that is subject to such Contract no later than 90 days
after any Seller becomes aware, or receives written notice from the Servicer or
the Trust Depositor, of the breach of any representation or warranty made by the
Seller in the Transfer and Sale Agreement that materially adversely affects the
interests of the Trust Depositor or the Trust or their successors or assigns in
any Contract or the related Contract File, which breach has not been cured or
waived in all material respects (an "INELIGIBLE CONTRACT"). This purchase
obligation will constitute the sole remedy against the Seller available to the
Trust Depositor, the Indenture Trustee and the Noteholders or Certificateholders
for a breach of a representation or warranty under the Transfer and Sale
Agreement made by the Seller with respect to such a Contract. This purchase
obligation also will constitute the sole remedy against the Trust Depositor
available to the Indenture Trustee and the Noteholders or Certificateholders for
a breach of a representation or warranty under the Sale and Servicing Agreement
made by the Trust Depositor with respect to such a Contract.
Pursuant to the Sale and Servicing Agreement, 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
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equal to the sum of the Discounted Contract Balance of the Ineligible Contract
(utilizing, for purposes of calculating the Discounted Contract Balance, the
Discount Rate at the time such Ineligible Contract was transferred to the Trust)
and any outstanding Servicer Advances thereon. Any amount deposited into the
Collection Account in connection with the reassignment of an Ineligible Contract
(the amount of such deposit being referred to herein as a "TRANSFER DEPOSIT
AMOUNT") shall be considered payment in full of the Ineligible Contract. Any
such Transfer Deposit Amount shall be treated as an Available Amount. In the
alternative, the Trust Depositor may instead cause the Seller, or either of
them, to convey to the Trust Depositor, for concurrent conveyance to the Trust
and concurrent pledge to the Indenture Trustee, a Substitute Contract (otherwise
satisfying the terms and conditions generally applicable to Substitute Contracts
in other situations described herein) in replacement for the affected Ineligible
Contract, which shall thereupon be deemed released by the Trust (and Indenture
Trustee) and reconveyed through the Trust Depositor to the Seller thereof.
CONCENTRATION AMOUNTS
In addition to the representations and warranties made by the Seller and
the Trust Depositor with respect to the Contracts as described above under
"--REPRESENTATIONS AND WARRANTIES", the Trust Depositor will represent and
warrant as of the initial Cutoff Date as follows:
(i) the ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities does not exceed 0.19% of the
ADCB of the Contract Pool;
(ii) the ADCB of all End-User Contracts which finance, lease or
are related to Software will not exceed 11.54% of the ADCB of
the Contract Pool;
(iii) the ADCB of all End-User Contracts with Obligors who comprise
the three (3) largest Obligors (measured by ADCB as of the
date of determination) does not exceed 3.30% of the ADCB of
the Contract Pool;
(iv) the ADCB of all End-User Contracts with Obligors who comprise
the twenty (20) largest Obligors (measured by ADCB as of the
date of determination) does not exceed 11.77% of the ADCB of
the Contract Pool;
(v) the ADCB of all End-User Contracts related to a single
Vendor, or representing a Vendor Loan of such Vendor or
affiliate thereof does not exceed 6.91% of the ADCB of the
Contract Pool;
(vi) the ADCB of all End-User Contracts with Obligors or
affiliates thereof located in a single State of the United
States does not exceed 11.98% of the ADCB of the Contract
Pool;
(vii) in the Trust Depositor's reasonable judgment, the Discounted
Contract Balance of End-User Contracts in the Contract Pool
that are "TRUE LEASES" does not exceed 7.70% of the ADCB of
the Contract Pool.
On the date an Additional Contract or a Substitute Contract is added to the
Contract Pool and the Trust Depositor will make the foregoing representations
and warranties as if such transfer occurred on the Closing Date; PROVIDED, that,
for the purposes thereof (i) the Contract Pool on the Closing Date shall be
deemed to include such Additional Contract or Substitute Contract in lieu of the
Contract being replaced or substituted and (ii) the Discounted Contract Balance
of such Additional Contract or Substitute Contract shall be equal to the
Discounted Contract Balance thereof as of the related Cutoff Date.
The Indenture Trustee shall reassign to the Trust Depositor, and the
Seller's will be obligated to purchase from the Trust Depositor, any Contract
transferred by a Seller (and any related Equipment or Applicable Security) (an
"EXCESS CONTRACT"; any such Contract, together with any Ineligible Contract as
described and defined above, being sometimes referred to herein, collectively,
as a "WARRANTY CONTRACT") selected by the Servicer at such time as there is a
breach of any of the foregoing representations or warranties, which breach has
not been cured or waived in all material respects, the removal of which shall
remedy such breach. Such purchase shall occur no later than 90 days after the
Trust Depositor or any Seller 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 Seller available to the Trust Depositor,
the Indenture Trustee and the Noteholders or Certificateholders for a breach of
one of the foregoing representations or warranties.
Pursuant to the Sale and Servicing Agreement, 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 (an
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"EXCESS CONCENTRATION AMOUNT") equal to the sum of the Discounted Contract
Balance of the Excess Contract (together with accrued interest thereon at the
Discount Rate) and any outstanding Servicer Advances thereon. Any amount
deposited into the Collection Account in connection with the reassignment of an
Excess Contract shall be considered payment in full of the Ineligible Contract.
Any such amount shall be considered a Transfer Deposit Amount and shall be
treated as an Available Amount. In the alternative, the Trust Depositor may
instead cause the Seller, to convey to the Trust Depositor, for concurrent
conveyance to the Trust and concurrent pledge to the Indenture Trustee, a
Substitute Contract (otherwise satisfying the terms and conditions generally
applicable to Substitute Contracts in other situations described herein) in
replacement for the affected Excess Contract, which shall thereupon be deemed
released by the Trust (and Indenture Trustee) and reconveyed through the Trust
Depositor to the Seller thereof.
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 pursuant to the Sale and Servicing Agreement except where arising out of
Indemnified Party's bad faith, willful misconduct or gross negligence. Pursuant
to the Sale and Servicing Agreement, the Servicer, irrevocably and
unconditionally, (i) submits for itself and its property in any legal action
arising out of the Sale and Servicing Agreement and the other Operative
Documents, to the nonexclusive general jurisdiction of the courts of the United
States of America for the Southern District of New York, and appellate courts
therefrom and (ii) waives any objection it may have that any action therein was
brought in an inconvenient court. Notwithstanding the foregoing, a court may
determine, on its own motion, that an action brought against the Servicer in any
such court was brought in an inconvenient forum.
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 holders of Notes or
Subordinated Securities or any other person for any action taken, or for
refraining from taking any action, in good faith pursuant to 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 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
such legal action which it may deem necessary or desirable for the benefit of
holders of Notes or Subordinated Securities with respect to the Sale and
Servicing Agreement and the rights and duties of the parties thereto and the
interest of Noteholders or holders of the Subordinated Securities thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Sale and Servicing Agreement, the Servicer is responsible
for servicing, collecting, enforcing and administering the Contracts in
accordance with its customary and usual procedures for servicing contracts
comparable to the Contracts.
The Servicer pursuant to the Sale and Servicing Agreement also may advance
Scheduled Payments with respect to any Contract (a "SERVICER ADVANCE") which
were due in a Collection Period and were not received and identified to a
Contract by the close of business on the Determination Date, to the extent that
the Servicer, in its sole discretion, expects to recover the Servicer Advance
from subsequent payments on or with respect to the Contract. The Servicer shall
be entitled to reimbursement of Servicer Advances from subsequent payments on or
with respect to the Contract, including collections of any Prepayment Amount,
Transfer Deposit Amount or Recoveries with respect to such Contract, and, if the
Servicer determines that Servicer Advances will not be recovered from the
Contracts to which the Servicer Advances were related, from other Contracts
included in the Trust.
CERTAIN OTHER MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the Sale
and Servicing Agreement, except upon determination that such duties are no
longer permissible under applicable law. No such resignation will become
effective until the Indenture Trustee or a successor to the Servicer has assumed
the Servicer's responsibilities and obligations under the Sale and Servicing
Agreement.
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Any person into which, in accordance with the Sale and Servicing Agreement,
Newcourt USA or the Servicer may be merged or consolidated or any person
resulting from any merger or consolidation to which Newcourt USA or the Servicer
is a party, or any person succeeding to the business of Newcourt USA or the
Servicer, will be the successor to Newcourt, 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) (a "TERMINATION NOTICE"),
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 a 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 Assets. The
purchase price for such a retransfer shall be equal to the sum of the Aggregate
Principal Amount of all Notes and Certificates on such Distribution Date plus
accrued and unpaid interest thereon at the applicable interest rate (together
with, if applicable, interest on interest amounts that were due and not paid on
a prior date), through the date of such retransfer.
The Indenture Trustee shall, as promptly as possible after giving a
Termination Notice, appoint a successor Servicer (a "SERVICE TRANSFER"), and if
no successor Servicer has been appointed by the Indenture Trustee and has
accepted such 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 Service Transfer, the Indenture Trustee will seek to obtain bids from
potential Servicers meeting certain 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. The rights and interest of the
Trust Depositor under the Sale and Servicing Agreement as holder of the
Subordinated Certificate will not be affected by any Termination Notice or
Service Transfer.
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 to make any payment, transfer or deposit
pursuant to the Sale and Servicing Agreement on or before the
date occurring three Business Days after the date such payment,
transfer, deposit, or such instruction or notice 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 to duly 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 or holders of the
Subordinated Notes or Certificateholders, 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 holders of the Subordinated Notes
or Certificateholders or the Indenture Trustee on behalf of such
Noteholders of Notes or holders of the Subordinated Notes or
holders of Certificates aggregating not less than 25% of the
Principal Amount of any Class or the Certificates adversely
affected thereby and (ii) the date on which a responsible officer
of the Servicer becomes aware thereof and such failure continues
to materially adversely affect such Noteholders or holders of the
Subordinated Notes or Certificateholders 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 pursuant to the Sale and Servicing
Agreement shall prove to have been incorrect when made, which has
a material adverse effect on the Noteholders or
Certificateholders 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 Certificateholders or by the Indenture Trustee on
behalf of Noteholders of Notes or holders of Certificates
aggregating not less than 25% of the Principal Amount of any
Class adversely affected thereby and (ii) the date on which a
responsible of the Servicer becomes aware thereof, and such
incorrectness continues to materially adversely affect such
Holders for such period; or
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(d) an Insolvency Event shall occur with respect to the Servicer.
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 the Sale and
Servicing 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.
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 (who may also render other services to the
Servicer or the Trust Depositor) to furnish a report to the effect that such
firm has applied certain procedures agreed upon with the Servicer and enumerated
in the Sale and Servicing Agreement and examined certain documents and records
relating to the servicing of the related Contracts all as described in the Sale
and Servicing Agreement and that, on the basis of such procedures, nothing came
to the attention of such firm that caused them to believe that such servicing
was not conducted in compliance with the Sale and Servicing Agreement except for
such exceptions or errors as such firm shall believe to be immaterial and such
other exceptions as shall be set forth in such statement.
The Sale and Servicing Agreement provides for delivery to the Indenture
Trustee and each Rating Agency 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 such 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 such
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 the consent of the Noteholders or Certificateholders (or the Indenture
Trustee) (i) to cure any ambiguity or (ii) to add any consistent provisions;
provided, that such action shall not as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Noteholder or
holders of the Subordinated Securities.
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 Required Holders 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 the rights of
Noteholders. No such amendment, however, may
(i) reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any Note,
Subordinated Note or Certificate without the consent of each
Noteholder or holder of a Subordinated Security affected
thereby;
(ii) change the definition of (or that of any definition included
within 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
"DISCOUNTED CONTRACT BALANCE", the "PRINCIPAL AMOUNT", or the
"AVAILABLE AMOUNT" without the consent of each Noteholder and
holder of a Subordinated Security; or
(iii) reduce the aforesaid percentage required to consent to any
such amendment without the consent of each Noteholder or
holder of a Subordinated Security affected thereby; or
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(iv) modify, amend or supplement the provisions of the Sale and
Servicing Agreement relating to the allocation of Available
Amounts (see "DESCRIPTION OF THE NOTES--ALLOCATIONS") without
the consent of each Noteholder and holder of a Subordinated
Security;
(v) make any Note or Certificate payable in money other than Dollars
without the consent of each Noteholder or holder of a Subordinated
Security affected thereby; or
(vi) affect the Owner Trustee's or Indenture Trustee's, as appropriate,
rights or obligations under the Trust Agreement, Sale and Servicing
Agreement or Indenture without the Owner Trustee's or Indenture
Trustee's Consent.
Promptly following the execution of any such amendment (other than an
amendment described in the preceding paragraph), the Owner Trustee will furnish
written notice of the substance of such amendment to each affected Noteholder
and holder of a Subordinated Security.
THE OWNER TRUSTEE
Chase Manhattan Bank will be the Owner Trustee under the Sale and Servicing
Agreement. Newcourt USA and its affiliates may from time to time enter into
banking and trustee relationships with the Owner Trustee and its affiliates.
Newcourt USA 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. The
Owner Trustee's address is 1201 Market Street, Wilmington, Delaware 19801-1167,
Attention: Trust Department.
For purposes of meeting the legal requirements of any jurisdictions in
which any part of the Trust 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 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
such separate trustee or co-trustee jointly, or, in any jurisdiction in which
the Owner Trustee will be incompetent or unqualified to perform certain acts,
singly upon such separate trustee or co-trustee who shall exercise and perform
such 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 such Owner Trustee ceases to be
eligible to continue as such 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 shall not become effective until
acceptance of the appointment by the successor Owner Trustee.
THE INDENTURE
GENERAL
The Notes will be issued pursuant to an Indenture between the Trust and the
Indenture Trustee. Pursuant to the Sale and Servicing Agreement the Indenture
Trustee will obtain the benefits of the Sale and Servicing Agreement for itself
and the Noteholders represented thereby.
PAYMENTS OF PRINCIPAL AND INTEREST
Pursuant to the Indenture, each payment received by the Indenture Trustee
as described above under "DESCRIPTION OF THE NOTES--ALLOCATIONS; PRIOR TO AN
EVENT OF DEFAULT OR RESTRICTING EVENT" shall be promptly distributed in the
following order of priority:
FIRST, so much of such installment or payment as shall be required to
pay in full the aggregate amount of interest then due on or in respect
of the Class A-1 Notes shall be distributed to the Class A-1
Noteholders ratably, without priority of any one Class A-1 Note over
any other Class A-1 Note, in the proportion that the aggregate amount
of all accrued but unpaid interest to the date of distribution on
each Class A-1 Note bears to the aggregate amount of all accrued but
unpaid interest to the date of distribution on all Class A-1 Notes;
SECOND, so much of such installment or payment as shall be required to
pay in full the aggregate amount of interest then due on or in respect
of the Class A-2 Notes shall be distributed to the
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Class A-2 Noteholders ratably, without priority of any one Class A-2
Note over any other Class A-2 Note, in the proportion that the
aggregate amount of all accrued but unpaid interest to the date of
distribution on each Class A-2 Note bears to the aggregate amount of
all accrued but unpaid interest to the date of distribution on all
Class A-2 Notes;
THIRD, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class A-3 Notes shall be distributed to
the Class A-3 Noteholders ratably, without priority of any one
Class A-3 Note over any other Class A-3 Note, in the proportion
that the aggregate amount of all accrued but unpaid interest to
the date of distribution on each Class A-3 Note bears to the
aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class A-3 Notes;
FOURTH, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class A-4 Notes shall be distributed to
the Class A-4 Noteholders ratably, without priority of any one
Class A-4 Note over any other Class A-4 Note, in the proportion
that the aggregate amount of all accrued but unpaid interest to
the date of distribution on each Class A-4 Note bears to the
aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class A-4 Notes;
FIFTH, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class B Notes shall be distributed to the
Class B Noteholders ratably, without priority of any one Class B
Note over any other Class B Note, in the proportion that the
aggregate amount of all accrued but unpaid interest to the date
of distribution on each Class B Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class B Notes;
SIXTH, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class C Notes shall be distributed to the
Class C Noteholders ratably, without priority of any one Class C
Note over any other Class C Note, in the proportion that the
aggregate amount of all accrued but unpaid interest to the date
of distribution on each Class C Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class C Notes;
SEVENTH, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Subordinated Notes shall be distributed
to the Subordinated Noteholders ratably, without priority of any
one Subordinated Note over any other Subordinated Note, in the
proportion that the aggregate amount of all accrued but unpaid
interest to the date of distribution on each Subordinated Note
bears to the aggregate amount of all accrued but unpaid interest
to the date of distribution on all Subordinated Notes;
EIGHTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class
A-1 Noteholders to pay in full the aggregate amount of the Class
A-1 Principal Payment then due pursuant to or in respect of the
Class A-1 Notes, without priority of any one Class A-1 Note over
any other Class A-1 Note, in the proportion that the aggregate
unpaid principal amount of each Class A-1 Note bears to the
aggregate unpaid principal amount of all Class A-1 Notes;
NINTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class
A-2 Noteholders to pay in full the aggregate amount of the Class
A-2 Principal Payment then due pursuant to or in respect of the
Class A-2 Notes, without priority of any one Class A-2 Note over
any other Class A-2 Note, in the proportion that the aggregate
unpaid principal amount of each Class A-2 Note bears to the
aggregate unpaid principal amount of all Class A-2 Notes;
TENTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class
A-3 Noteholders to pay in full the aggregate amount of the Class
A-3 Principal Payment then due pursuant to or in respect of the
Class A-3 Notes, without priority of any one Class A-3 Note over
any other Class A-3 Note, in the proportion
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that the aggregate unpaid principal amount of each Class A-3 Note
bears to the aggregate unpaid principal amount of all Class A-3 Notes;
ELEVENTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class
A-4 Noteholders to pay in full the aggregate amount of the Class
A-4 Principal Payment then due pursuant to or in respect of the
Class A-4 Notes, without priority of any one Class A-4 Note over
any other Class A-4 Note, in the proportion that the aggregate
unpaid principal amount of each Class A-4 Note bears to the
aggregate unpaid principal amount of all Class A-4 Notes;
TWELFTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class B
Noteholders to pay in full the aggregate amount of the Class B
Principal Payment then due pursuant to or in respect of the Class
B Notes, without priority of any one Class B Note over any other
Class B Note, in the proportion that the aggregate unpaid
principal amount of each Class B Note bears to the aggregate
unpaid principal amount of all Class B Notes; and
THIRTEENTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class C
Noteholders to pay in full the aggregate amount of the Class C
Principal Payment then due pursuant to or in respect of the Class
C Notes, without priority of any one Class C Note over any other
Class C Note, in the proportion that the aggregate unpaid
principal amount of each Class C Note bears to the aggregate
unpaid principal amount of all Class C Notes.
FOURTEENTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the
Subordinated Noteholders to pay in full the aggregate amount of
the Subordinated Principal Payment then due pursuant to or in
respect of the Subordinated Notes, without priority of any one
Subordinated Note over any other Subordinated Note, in the
proportion that the aggregate unpaid principal amount of each
Subordinated Note bears to the aggregate unpaid principal amount
of all Subordinated Notes.
Pursuant to the Indenture, each payment received by the Indenture Trustee
as described above under "DESCRIPTION OF THE NOTES--ALLOCATIONS; FOLLOWING AN
EVENT OF DEFAULT OR RESTRICTING EVENT" shall be promptly distributed in the
following order of priority:
FIRST, so much of such payment as shall be required to reimburse
the Indenture Trustee for any tax, expense, charge or other loss
incurred by the Indenture Trustee (to the extent not previously
reimbursed), (including, without limitation, the expense of sale,
taking or other proceeding, attorneys' fees and expenses, court
costs, and any other expenditures incurred or expenditures or
advances made by the Indenture Trustee in the protection,
exercise or enforcement of any right, power or remedy or any
damages sustained by the Indenture Trustee, liquidated or
otherwise, upon the Indenture Event of Default giving rise to
such expenditures or advances) shall be applied by the Indenture
Trustee in reimbursement of such expenses;
SECOND, so much of such payment remaining as shall be required to
reimburse the Noteholders in full for certain indemnity payments,
if any, made by such Noteholders and holders of Subordinated
Notes to the Indenture Trustee (to the extent not previously
reimbursed) shall be distributed to the Noteholders and holders
of Subordinated Notes, and, if the aggregate amount remaining
shall be insufficient to reimburse all such payments in full, it
shall be distributed ratably, without priority of any such holder
over any other, in the proportion that the aggregate amount of
such unreimbursed indemnity payments made by each such holder
bears to the aggregate amount of such unreimbursed indemnity
payments made by all Noteholders and holder of Subordinated
Notes;
THIRD, so much of such payment remaining as shall be required to
pay in full the aggregate amount of all accrued but unpaid
interest to the date of distribution on the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes
shall be distributed to the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders, the Class A-4
Noteholders, and, if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class A-1 Note,
one Class A-2 Note, one Class A-3 Note and one Class A-4 Note
over any other Class A-1 Note, Class A-2 Note, Class A-3 Note or
Class A-4 Note, in the proportion that the
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aggregate amount of all accrued but unpaid interest to the date of
distribution on each Class A-1 Note, Class A-2 Note, Class A-3 Note or
Class A-4 Note bears to the aggregate amount of all accrued but unpaid
interest to the date of distribution on all Class A Notes;
FOURTH, so much of such payment remaining as shall be required to
pay in full the aggregate amount of all accrued but unpaid
interest to the date of distribution on the Class B Notes shall
be distributed to the Class B Noteholders, and, if the aggregate
amount remaining shall be insufficient to pay all such amounts in
full, it shall be distributed ratably, without priority of any
one Class B Note over any other Class B Note, in the proportion
that the aggregate amount of all accrued but unpaid interest to
the date of distribution on each Class B Note bears to the
aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class B Notes;
FIFTH, so much of such payment remaining as shall be required to
pay in full the aggregate amount of all accrued but unpaid
interest to the date of distribution on the Class C Notes shall
be distributed to the Class C Noteholders, and, if the aggregate
amount remaining shall be insufficient to pay all such amounts in
full, it shall be distributed ratably, without priority of any
one Class C Note over any other Class C Note, in the proportion
that the aggregate amount of all accrued but unpaid interest to
the date of distribution on each Class C Note bears to the
aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class C Notes;
SIXTH, so much of such payment remaining as shall be required to
pay in full the aggregate amount of all accrued but unpaid
interest to the date of distribution on the Subordinated Notes
shall be distributed to the Subordinated Noteholders, and, if the
aggregate amount remaining shall be insufficient to pay all such
amounts in full, it shall be distributed ratably, without
priority of any one Subordinated Note over any other Subordinated
Note, in the proportion that the aggregate amount of all accrued
but unpaid interest to the date of distribution on each
Subordinated Note bears to the aggregate amount of all accrued
but unpaid interest to the date of distribution on all
Subordinated Notes;
SEVENTH, the balance, if any, of such payment remaining
thereafter shall be distributed to the Class A-1 Noteholders in
order to pay in full the outstanding aggregate amount of
principal of the Class A-1 Notes, and if the aggregate amount
remaining shall be insufficient to pay all such amounts in full,
it shall be distributed ratably, without priority of any one
Class A-1 Note over any other Class A-1 Note, in the proportion
that the aggregate unpaid principal amount of each Class A-1 Note
bears to the aggregate unpaid principal amount of all Class A-1
Notes;
EIGHTH, the balance, if any, of such payment remaining thereafter
shall be distributed to the Class A-2 Noteholders in order to pay
in full the outstanding aggregate amount of principal of the
Class A-2 Notes, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class A-2 Note
over any other Class A-2 Note, in the proportion that the
aggregate unpaid principal amount of each Class A-2 Note bears to
the aggregate unpaid principal amount of all Class A-2 Notes;
NINTH, the balance, if any, of such payment remaining thereafter
shall be distributed to the Class A-3 Noteholders in order to pay
in full the outstanding aggregate amount of principal of the
Class A-3 Notes, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class A-3 Note
over any other Class A-3 Note, in the proportion that the
aggregate unpaid principal amount of each Class A-3 Note bears to
the aggregate unpaid principal amount of all Class A-3 Notes;
TENTH, the balance, if any, of such payment remaining thereafter
shall be distributed to the Class A-4 Noteholders in order to pay
in full the outstanding aggregate amount of principal of the
Class A-4 Notes, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class A-4 Note
over any other Class A-4 Note, in the proportion that the
aggregate unpaid principal amount of each Class A-4 Note bears to
the aggregate unpaid principal amount of all Class A-4 Notes;
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ELEVENTH, the balance, if any, of such payment remaining
thereafter shall be distributed to the Class B Noteholders in
order to pay in full the outstanding aggregate amount of
principal of the Class B Notes, and if the aggregate amount
remaining shall be insufficient to pay all such amounts in full,
it shall be distributed ratably, without priority of any one
Class B Note over any other Class B Note, in the proportion that
the aggregate unpaid principal amount of each Class B Note bears
to the aggregate unpaid principal amount of all Class B Notes;
TWELFTH, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class C
Noteholders to pay in full the aggregate amount of principal of
the Class C Notes, then due pursuant to or in respect of the
Class C Notes, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class C Note
over any other Class C Note, in the proportion that the aggregate
unpaid principal amount of each Class C Note bears to the
aggregate unpaid principal amount of all Class C Notes; and
THIRTEENTH, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Subordinated
Noteholders to pay in full the aggregate amount of principal of
the Subordinated Notes, then due pursuant to or in respect of
the Subordinated Notes, and if the aggregate amount remaining
shall be insufficient to pay all such amounts in full, it shall
be distributed ratably, without priority of any one Subordinated
Note over any other Subordinated Note, in the proportion that the
aggregate unpaid principal amount of each Subordinated Note bears
to the aggregate unpaid principal amount of all Subordinated
Notes.
EVENTS OF DEFAULT AND RESTRICTING EVENTS; REMEDIES
If an Event of Default referred to in subparagraphs (d) or (e) (see
"DESCRIPTION OF THE NOTES--EVENTS OF DEFAULT") 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.
If any other Event of Default shall have occurred and be continuing, then
and in every such case, the Notes shall be accelerated with accrued but unpaid
interest thereon; PROVIDED, HOWEVER, such Event of Default may be waived if the
Required Holders may provide the Trustee and the Trust Depositor written notice
of such waiver.
THE INDENTURE TRUSTEE
The Indenture Trustee with respect to the Notes is Manufacturers and
Traders Trust Company. Newcourt USA and its affiliates may from time to time
enter into banking and trustee relationships with the Indenture Trustee and its
affiliates. Newcourt USA 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 generally ministerial in
nature, consisting principally of the distribution of monies received pursuant
to the Sale and Servicing Agreement, the authentication and registration of
transfer of Notes under the Indenture, and the delivery of certain information
received from the Trust Depositor.
For purposes of meeting the legal requirements of any jurisdictions in
which any part of the Trust 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 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 such separate trustee or co-trustee jointly, or, in any jurisdiction
in which the Indenture Trustee will be incompetent or unqualified to perform
certain acts, singly 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.
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 (the "TIA"), 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 such under the Indenture. In such
circumstances, a successor Indenture Trustee which meets the requirements of
Section 310(a) of the TIA 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.
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GOVERNING LAW
The Indenture will be governed by the laws of the State of New York.
AMENDMENTS
At any time and from time to time, (i) 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 (including any appendix or schedule hereto) and (ii) the Indenture
Trustee, with the written consent of a Majority in Interest of the Noteholders
represented thereby, may consent to or execute a written amendment of or
supplement to, or waiver or consent under, the Sale and Servicing Agreement;
PROVIDED, HOWEVER, that, without the consent of each Noteholder under the
Indenture, no such amendment, supplement, waiver or consent shall
(i) reduce the amount or extend the time of payment of
any amount owing or payable under any Note or Subordinated Note
or (except as provided in the Indenture) increase or reduce the
interest payable on any Note or Subordinated Note (except that
only the consent of the affected holder of a Note or Subordinated
Note (as applicable) shall be required for any decrease in an
amount of or the rate of interest payable on such Note or any
extension for the time of payment of any amount payable under
such Note or Subordinated Note), or alter or modify the
provisions of the Sale and Servicing Agreement with respect to
the order of priorities in which distributions thereunder shall
be made or with respect to the amount or time of payment of any
such distribution,
(ii) 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 thereby),
(iii) make any Note payable in money other than U.S.
dollars,
(iv) 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
(v) modify the definition of "MAJORITY IN INTEREST" (as
defined in the Indenture) or the percentage of Noteholders
required to effect any modification of the Indenture.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
TRANSFER OF CONTRACTS. As of the Cutoff Date, Newcourt USA, as Seller,
will sell the Contracts to the Trust Depositor, which Contracts will be
immediately conveyed to the Trust pursuant to the Sale and Servicing Agreement.
Under commercial law, the transfer of the Contracts to the Trust is either a
sale of the Contracts to the Trust or a grant of a security interest in such
property to the Trust. The Trust Depositor has taken and will take all actions
that are required under applicable law to perfect the Trust's interest in the
Contracts in the event the transfer by the Trust Depositor to the Trust is
deemed to be a loan for commercial law purposes, and it is the intent of the
Trust Depositor that the Trust will at all times have a first priority perfected
security interest in the Contracts and in the proceeds thereof, with certain
exceptions. The Trust Depositor will represent and warrant to the Trust that,
in the event the sale of such Contracts by the Trust Depositor to the Trust is
deemed to create a security interest under the UCC, there will exist a valid,
subsisting and enforceable first priority perfected security interest in the
Contracts, in existence at the time of the formation of the Trust with respect
to Contracts conveyed on the Closing Date or at the date of conveyance of any
Additional Contracts or Substitute Contracts, in favor of the Trust. For a
discussion of the Trust's rights arising from these representations and
warranties not being satisfied, see "THE TRANSFER AND SALE AGREEMENT AND THE
SALE AND SERVICING AGREEMENT GENERALLY--REPRESENTATIONS AND WARRANTIES".
Financing statements covering the Contracts will be filed under the UCC by
the Trust Depositor, the Trust and the Indenture Trustee to perfect their
respective interests in the Contracts and continuation statements will be filed
as required to continue the perfection of such interests. In addition, the
Seller will indicate in the appropriate computer files relating to the
Contracts, that such Contracts have been transferred by the Seller to the Trust
Depositor, by the Trust Depositor to the Trust and by the Trust to the Indenture
Trustee, and the Seller will notate in the appropriate computer records that
such Contracts have been transferred to the Trust and assigned to the Indenture
Trustee, and deliver to the Indenture Trustee a computer file or microfiche or
written list containing a true and complete list of all Contracts then
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being transferred to the Trust and all Secondary Contracts in which a security
interest is then being transferred to the Trust, identified by account number
and by the Discounted Contract Balance as of the related Cutoff Date. To
facilitate servicing and reduce administrative costs, however, the Contract
Files (as defined herein) will be retained in the possession of the Servicer and
not deposited with the Indenture Trustee or any other agent or custodian for the
benefit of the Noteholders. Because the Contract Files will remain in the
Servicer's possession, if a subsequent purchaser were able to take physical
possession of the Contract Files without knowledge of such assignment, the
Indenture Trustee's priority interest in the Contracts (as assignee of the
Seller's, Trust Depositor's and the Trust's interest) could be defeated. In
such event, distributions to Noteholders could be adversely affected. The
notation in the computer records, however, mitigates this risk.
Similarly, with respect to Secondary Contracts securing Vendor Loans, in
some instances the Vendor will retain the original contract files associated
with the related End-User Contracts which are Secondary Contracts securing such
Vendor Loan. Although UCC financing statements are filed reflecting the pledge
of such Contracts to the Seller as security for the Vendor Loans, because these
contract files will remain in the Vendor's possession, if a subsequent purchaser
were able to take physical possession of such contract files without knowledge
of the pledge to the Seller, the Indenture Trustee's priority security interest
(as assignee of the Seller's, Trust Depositor's and the Trust's interest) in the
such Secondary Contracts, as security for the related Vendor Loan, could be
defeated. In such event, distributions to Noteholders could be adversely
affected. Each Vendor represents, warrants and covenants in the applicable
agreement evidencing a Vendor Loan, however, that it has not and will not sell
or otherwise convey, unless subordinated to the Trust, or otherwise pledge,
assign or convey to any other party (other than the Seller) any interest in the
Secondary Contracts securing such Vendor Loan, and agrees that it will maintain
possession of the related contract files as custodian for the benefit of the
Seller as secured party with respect to such Secondary Contracts.
There are also certain limited circumstances under applicable federal or
state law in which prior transferees of Contracts or Secondary Contracts could
have an interest in such contracts with priority over the Indenture Trustee's
interest. A tax or other government lien on property of the Seller or the Trust
Depositor arising prior to the time a Contract or interest in a Secondary
Contract is conveyed to the Trust may also have priority over the interest of
the Trust and the Indenture Trustee in such contract. Under the Transfer and
Sale Agreement, the Seller will warrant to the Trust Depositor, and, under the
Sale and Servicing Agreement, the Trust Depositor will warrant to the Indenture
Trustee, that the Contracts have been transferred free and clear of the lien of
any third party other than Permitted Liens (other than the Subordinated Residual
Interest, if any, assigned to any Residual Assignee) and that the interests in
Secondary Contracts transferred thereunder have been transferred free and clear
of the lien of any third party other than Permitted Liens. Each Seller, the
Trust Depositor, the Owner Trustee and the Trust will also covenant that it
will not sell, pledge, assign, transfer or grant any lien on any Contract or
Secondary Contract included in the Trust, other than transfers to the Trust and
by the Trust to the Indenture Trustee. In addition, as described above under
"THE TRUST DEPOSITOR", the Trust Depositor has been organized as a
"BANKRUPTCY-REMOTE" entity which is not engaged in any business or activities
unrelated to the transactions described herein.
Because Software is generally eligible for protection under the Federal
copyright laws, a security interest in Software generally cannot be perfected
without a filing at the U.S. Copyright Office. Some legal authority indicates
that this filing requirement also extends to a sale or grant of a security
interest in Software licenses and the proceeds thereof, while some other legal
authority suggests that where there is an outright assignment of certain
payments (such as royalties) associated with copyrightable materials, the rights
to receive such payments constitute property separate from the copyrightable
material and that no filing in the Copyright Office is required in connection
with such assignment. The Seller believes that the receivables arising from
Contracts that are Software licenses or purport to be secured by Software
licenses constitute property separate from those Software licenses and that no
filing at the U.S. Copyright office is required in order to perfect any
transfers of those receivables that have occurred prior to, or will occur on,
the Closing Date, and no filings have been, or will be, made at the U.S.
Copyright office in connection with those transfers. While the Seller believes,
and will represent, that the Trust will have a perfected ownership or security
interest in those Receivables (and appropriate UCC filings will be made relating
to those Receivables), no assurance can be given that a court would concur with
that conclusion in light of the split in legal authorities referred to above.
The Seller will not make any representation or warranty as to its interest in
any Software underlying any Contract or any Software license securing or
purporting to secure any Contract.
TRANSFERS OF INTERESTS IN FINANCED EQUIPMENT. In connection with the
conveyance of the Contracts to the Trust, security interests in the related
financed Equipment securing such Contracts (or, in connection with Leases, the
Seller's ownership interest in or title to such Equipment) will be assigned by
the Seller to the Trust Depositor and by the Trust Depositor to the Trust and by
the Trust or the Indenture Trustee. It has been the general policy of the
Seller to file or cause to be filed UCC financing statements with respect to the
Equipment relating to the Contracts. Due to the administrative burden and
expense associated with amending many filings in numerous states where Equipment
is located, no assignments of the UCC financing statements evidencing the
security interest of the Seller in the Equipment will be filed to reflect the
Trust Depositor's, the Trust's or the Indenture Trustee's interests therein.
While failure to file
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such assignments does not affect the Trust's interest in the Contracts or
perfection of the Indenture Trustee's interest in such Contracts (including the
related Seller's security interest in the related Equipment), it does expose the
Trust (and thus Noteholders) to the risk that the Servicer could inadvertently
release its security interest in the Equipment of record, and it could
complicate the Trust's enforcement, as assignee, of the Seller's security
interest in the Equipment. While these risks should not affect the perfection
or priority of the interest of the Indenture Trustee in the Contracts or rights
to payment thereunder, they may adversely affect the right of the Indenture
Trustee to receive proceeds of a disposition of the Equipment related to a
Defaulted Contract. Additionally, statutory liens for repairs or unpaid taxes
and other liens arising by operation of law may have priority even over prior
perfected security interests in the Equipment assigned to the Indenture Trustee.
In addition, some of the Equipment related to the Contracts may constitute
"FIXTURES" under the real estate or UCC provisions of the jurisdiction in which
such Equipment is located. In order to perfect a security interest in such
Equipment, the holder of the security interest must file either a "FIXTURE
FILING" under the provisions of the UCC or a real estate mortgage under the real
estate laws of the state where the Equipment is located. These filings must be
made in the real estate records office of the county in which such Equipment is
located. So long as the Obligor does not permanently attach the Equipment to
the real estate, a security interest in the Equipment will be governed by the
UCC, and the filing of a UCC-1 financing statement will be effective to maintain
the priority of the Seller's security interest in such Equipment. Except for a
small portion of such Equipment, the Trust Depositor does not believe that any
of the Equipment will be permanently affixed to the related real estate. If,
however, any Equipment is permanently attached to the real estate in which it is
located, other parties could obtain an interest in the Equipment which is prior
to the security interest originally obtained by the Seller and transferred to
the Trust Depositor. Based on the representation of the Seller, the Trust
Depositor, however, believes that with respect to Equipment which constitutes a
"FIXTURE", it has obtained a perfected first priority security interest,
through assignment of such security interest by the Seller, by virtue of the
Seller's proper filing of UCC-2 financing statements naming the Seller as
secured party in the real estate records office of the county in which the
Equipment is located or by obtaining waivers from landlords or mortgagees.
Also, the Seller will represent that as of the Cutoff Date, in the Seller's
reasonable judgment, the Discounted Contract Balance of End-User Contracts in
the Contract Pool that are secured by fixtures, does not exceed 1.80% of the
ADCB of the Contract Pool.
The Trust Depositor will be obligated to reacquire any Contract transferred
to the Trust (subject to the Seller's reacquisition thereof) in the event it is
determined that a first priority perfected security interest, or ownership
interest in the case of Leases, in the name of the Seller in the Equipment
related to such Contract did not exist as of the date such Contract was conveyed
to the Trust, if (i) such breach shall materially adversely affect such Contract
and (ii) such failure or breach shall not have been cured by the last day of the
second (or, if the Trust Depositor elects, the first) month following the
discovery by or notice to the Trust Depositor of such breach, and the Seller
will be obligated to reacquire such Contract from the Trust Depositor
contemporaneously with the Trust Depositor's reacquisition from the Trust. If
there is any Equipment as to which the Seller failed to perfect its security
interest, such Seller's security interest, and the security interests of the
Trust Depositor and the related Trust (and the Indenture Trustee as assignee),
would be subordinated to, among others, subsequent purchasers of the Equipment
and holders of perfected security interests with respect thereto. To the extent
the security interest of the Seller in the related Equipment is perfected,
subject to the exceptions set forth in the following sentence, the Trust will
have a prior claim over subsequent purchasers from the Obligor of such Equipment
and holders of subsequently perfected security interests granted by Obligors.
However, as against Mechanics' Liens or liens for taxes and other non-consensual
liens unpaid by an Obligor under a Contract, or in the event of fraud or
negligence of the Seller or Servicer, the Trust could lose the priority of its
interest or its interest in such Equipment following the conveyance of such
Contract to the Trust. Neither the Trust Depositor, the Servicer nor the Seller
will have any obligation to reacquire a Contract if any of the occurrences
described in the foregoing sentence (other than fraud or negligence of the
Seller) result in the Trust's losing the priority of its security interest or
its security interest in such Equipment after the date such Contract is conveyed
to the Trust.
TRANSFERS OF INTERESTS IN FINANCED VEHICLES. The Contracts will include
conditional sales agreements for Vehicles subject to state certificate of title
statutes. Security interests in vehicles registered in most states may be
perfected by a notation of the secured party's lien on the certificate of title
for such vehicle, depending on state law. With respect to conditional sales
agreements for vehicles, such liens would be noted in the name of Newcourt USA.
Newcourt USA has been designated as the first and sole lien holder on the
certificate of title. In the event the Vendor fails, due to clerical errors or
for any other reason, to effect such notation of Newcourt USA's interest in a
vehicle, Newcourt USA would not have a perfected first priority security
interest in such vehicle. As a result, the only recourse of Newcourt USA
vis-a-vis third parties would be against the Obligor or the related Vendor on an
unsecured basis. However, Newcourt USA believes that it has obtained a
perfected first priority security interest by notation with respect to almost
all of the vehicles. In addition, the Contracts may also include Leases of
vehicles where Newcourt USA is identified on the certificate of title as the
owner of the vehicle.
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The transfer by the Seller to the Trust Depositor, by the Trust Depositor
to the Trust and by the Trust to the Indenture Trustee of the Seller's security
interest in the Vehicles securing certain Contracts, or its ownership interest
in the Vehicles subject to Leases, and the transfer of such interests by the
Trust Depositor to the Trust and by the Trust to the Indenture Trustee, is
subject to state vehicle registration laws. Due to the significant
administrative burden and expense associated with reregistering transfers of
titles and of security interests with respect to the Vehicles, the certificates
of title with respect to the Vehicles securing Contracts, and to the Vehicles
subject to Leases, will not identify the Trust or the Indenture Trustee as
secured party or owner, as the case may be, of such Equipment. There exists a
risk in not so identifying the Trust or the Indenture Trustee as the new secured
party or owner that, through fraud or negligence, a third party could acquire an
interest in the Vehicles superior to that of the Trust or the Indenture Trustee.
In addition, statutory liens for repairs or unpaid taxes may have priority even
over a perfected security interest in the Vehicles. The Seller will represent
that as of the Cutoff Date, in the Seller's reasonable judgment, the Discounted
Contract Balance of End-User Contracts in the Contract Pool that are secured by
the Vehicles, does not exceed 46.17% of the ADCB of the Contract Pool. Also,
the Seller will execute a power of attorney to the Indenture Trustee authorizing
the Indenture Trustee to designate the Indenture Trustee as the first and sole
lien holder on the certificate of title with respect to the Vehicles after an
Event of Default.
With respect to motor Vehicles, in the event that the owner of a Vehicle
moves to a state other than the state in which such Vehicle is registered, under
the laws of most states the perfected security interest in the Vehicle would
continue for four months after such relocation and thereafter until the owner
titles the Vehicle in such state. A majority of states generally require
surrender of a certificate of title to re-register a Vehicle. Accordingly,
Newcourt USA as Servicer must surrender possession if it holds the certificates
of title to such Vehicle or, in the case of Vehicles originally registered in a
state which provides for notation of lien but does not require possession of the
certificate of title by the holder of the security interest in the related motor
vehicle, Newcourt USA as Servicer would receive notice of surrender if the
security interest in the Vehicle is noted on the certificate of title.
Accordingly, the Servicer would have the opportunity to re-perfect its security
interest in the Vehicle in the state of relocation. In states which do not
require a certificate of title for registration of a motor vehicle,
re-registration could defeat perfection. In the ordinary course of servicing
its portfolio of motor vehicle financing agreements, Newcourt USA takes steps to
effect such reperfection upon receipt of notice of re-registration of
information from the Obligor as to relocation. Similarly, when an Obligor sells
a Vehicle, Newcourt USA must surrender possession of the certificates of title
or will receive notice as a result of its lien noted thereon and accordingly
will have an opportunity to require satisfaction of the related Contract before
release of the lien. Under the Sale and Servicing Agreement, the Servicer is
obligated to take such steps, at the Servicer's expense, as are necessary to
maintain perfection of security interests in the Vehicles.
Under the laws of many states, certain possessory liens for repairs
performed on a motor vehicle and storage, as well as certain rights in favor of
federal and state governmental authorities arising from the use of a motor
vehicle in connection with illegal activities, may take priority even over a
perfected security interest. Certain federal tax liens may have priority over
the lien of a secured party. In the Transfer and Sale Agreement, the Seller
will represent, and the Trust Depositor will represent in the Sale and Servicing
Agreement, that they have no knowledge of any such liens with respect to any
Vehicle. However, such liens could arise at any time during the term of a
Contract. No notice will be given to the Indenture Trustee in the event such a
lien arises.
The Servicer on behalf of the Trust may take action to enforce the Trust's
security interest by repossession and resale of the Vehicles securing the
related Contracts. The actual repossession may be contracted out to third party
contractors. Under the UCC and laws applicable in most states, a creditor can
repossess a motor vehicle securing a loan by voluntary surrender, "SELF-HELP"
repossession that is "PEACEFUL" (I.E., without breach of the peace) and, in the
absence of voluntary surrender and the ability to repossess without breach of
the peace, by judicial process. The UCC and consumer protection laws in most
states place restrictions on repossession sales, including requiring prior
notice to the debtor and commercial reasonableness in effecting such a sale. In
the event of such repossession and resale of a Vehicle (assuming the Trust had a
first perfected security interest in such Vehicle), the Trust would be entitled
to be paid out of the sale proceeds before such proceeds could be applied to the
payment of the claims of unsecured creditors or the holders of subsequently
perfected security interests or, thereafter, to the debtor.
Under the UCC and laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from a debtor for any deficiency on repossession
and resale of the motor vehicle securing such debtor's loan on a commercially
reasonable basis. However, some states impose prohibitions or limitations on
deficiency judgments. In general, a defaulting Obligor may not have sufficient
assets to make the pursuit of a deficiency judgment worthwhile.
Certain other federal and state statutory provisions, including bankruptcy
law, insolvency laws, and other laws affecting the rights of creditors and
debtors generally as well as general equitable principles may limit or delay the
ability of a lender to repossess and resell collateral or enforce a deficiency
judgment.
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CERTAIN MATTERS RELATING TO BANKRUPTCY. The Seller will either (i)
originate Contracts or (ii) acquire End-User Contracts from a Vendor, which
Contracts will be transferred to the Trust Depositor. If the acquisition of an
End-User Contract by a Seller is treated as a sale of such Contract from the
applicable Vendor to such Seller, such Contract generally would not be part of
such Vendor's bankruptcy estate and would not be available to such Vendor's
creditors. If a Vendor became a debtor in a bankruptcy case then, in the case
of End-User Contracts acquired as described in clause (ii) above, if an unpaid
creditor of such Vendor or a representative of creditors of such Vendor, such as
a trustee in bankruptcy, or such Vendor acting as a debtor-in-possession, were
to take the position that the sale of such Contracts to the Seller was
ineffective to remove such Contracts from such Vendor's estate (for instance,
that such sale should be recharacterized as a pledge of Contracts to secure
borrowings of such Vendor), then delays in payments under the Contracts to the
Trust could occur or, should the court rule in favor of such creditor,
representative or Vendor, reductions in the amount of such payments could
result. Further, if the transfer of End-User Contracts to the Seller as
described in clause (ii) above is recharacterized as a pledge, a tax or
government lien on the property of the pledging Vendor arising before the
Contracts came into existence may have priority over the Seller's (and its
assignee's) interest in the Contracts. No law firm will, in connection with
any offering of the Notes, express any opinion as to the issues discussed above.
In the Transfer and Sale Agreement, the Seller will warrant to the Trust
Depositor that the conveyance of the Contracts by a Seller to the Trust
Depositor is a valid sale and transfer of such Contracts to the Trust Depositor.
In addition, each Seller and the Trust Depositor will treat the transactions
described herein as a sale of the Contracts to the Trust Depositor and the
Seller will take all actions that are required under applicable law to perfect
the Trust Depositor's ownership interest in the Contracts sold by it and the
Trust Depositor's security interest in the Secondary Contracts securing Vendor
Loans sold by it. Notwithstanding the foregoing, if the Seller became a debtor
in a bankruptcy case and an unpaid creditor of the Seller or a representative of
creditors of the Seller, such as a trustee in bankruptcy, or the Seller acting
as a debtor-in-possession, were to take the position that the sale of Contracts
to the Trust Depositor was ineffective to remove such Contracts from the
Seller's estate (for instance, that such sale should be recharacterized as a
pledge of Contracts to secure borrowings of the Seller), then delays in payments
under the Contracts to the Trust could occur or, should the court rule in favor
of such creditor, representative or Seller, reductions in the amount of such
payments could result. If the transfer of Contracts to the Trust Depositor is
recharacterized as a pledge, a tax or government lien on the property of the
Seller arising before the Contracts came into existence may have priority over
the Trust Depositor's interest in the Contracts. If the transactions
contemplated herein are treated as a sale of Contracts to the Trust Depositor,
generally the Contracts would not be part of the Seller's bankruptcy estate and
would not be available to the Seller's creditors.
In OCTAGON GAS SYSTEMS, INC. V. RIMMER, 995 F.2d 948 (10th Cir. 1993), the
United States Court of Appeals for the Tenth Circuit held that, under the UCC,
accounts sold by a debtor remain property of the debtor's estate under Section
541 of the Bankruptcy Code. In the event of a bankruptcy of a Seller, or, in
the case of Contracts originated by a Vendor and purchased by a Seller, a
bankruptcy of a Vendor, and a determination by a court that the sale of the
Contracts to the Trust Depositor or to the Seller, respectively, should be
recharacterized as a pledge of such Contracts to secure a borrowing, not as a
"TRUE SALE," including as a result of the application by a court of the Octagon
court's reasoning to the Seller's sale of Contracts to the Trust Depositor or
to a Vendor's sale of Contracts to the Seller, delays in distributions on Notes,
and possible reductions in the amount of distributions, could occur.
The Trust Depositor will warrant in the Sale and Servicing Agreement that
the security interest therein granted by the Trust in favor of the Indenture
Trustee is a valid and duly perfected security interest, and will take all
actions that are required under applicable law to perfect the Trust's and the
Indenture Trustee's respective interests in the Contracts and the Secondary
Contracts securing Vendor Loans sold by it. Nevertheless, if the Trust
Depositor were to become a debtor in a bankruptcy case and an unpaid creditor of
the Trust Depositor or a representative of creditors of the Trust Depositor,
such as a trustee in bankruptcy, or the Trust Depositor acting as a
debtor-in-possession, were to take the position that the sale of Contracts to
the Trust was ineffective to remove such Contract's from the Trust Depositor's
estate (for instance, that such sale should be recharacterized as a pledge of
Contracts to secure borrowings of the Trust Depositor), then delays in payments
under the Contracts to the Trust could occur or, should the court rule in favor
of such creditor, representative or Trust Depositor, reductions in the amount of
such payments could result. If the transfer of Contracts to the Trust is
recharacterized as a pledge, a tax or government lien on the property of the
Trust Depositor arising before the Contracts came into existence may have
priority over the Noteholder's interest in the Contracts. If the transactions
are treated as a sale of Contracts, generally, the Contracts would not be part
of the Trust Depositor's estate and would not be available to the Trust
Depositor's creditors.
A bankruptcy trustee or debtor in possession under the United States
Bankruptcy Code (Title 11 U.S.C. Section 101 et seq.) (the "BANKRUPTCY CODE")
has the right to elect to assume or reject any executory contract or unexpired
lease which is considered to be a "TRUE LEASE" (and not a financing) under
applicable law. Any rejection of such a contract or lease would constitute a
breach of such contract or lease, as applicable, as of the day preceding the
commencement of the applicable bankruptcy case, entitling the nonbreaching party
to a pre-petition claim for damages.
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Certain End-User Contracts will be "TRUE LEASES" and thus subject to
rejection by the lessor under the Bankruptcy Code. Any such End-User Contract
originated by a Seller or acquired by a Seller in a transaction whereby the
Seller is the "LESSOR" thereunder, will be subject to rejection by such Seller,
as debtor in possession, or by such Seller's bankruptcy trustee. Upon any such
rejection, Scheduled Payments under such rejected End-User Contract may
terminate and the Noteholders may be subject to losses if the remaining
unaffected Contracts and security interests in the related Equipment are
insufficient to cover the losses. In addition, any End-User Contract which is a
"TRUE LEASE" originated by a Vendor and transferred to a Seller in a transaction
whereby such Vendor continues to be the "LESSOR" thereunder (such as a transfer
by a Vendor to the Seller of a security interest in such End-User Contract or a
transfer by a Vendor to the Seller of an interest in the right to payments only
under any such End-User Contract), will be subject to rejection by such Vendor,
as debtor in possession, or by such Vendor's bankruptcy trustee. Upon any such
rejection, Scheduled Payments under such rejected End-User Contract may
terminate and the Noteholders may be subject to losses if the remaining
unaffected Contracts, and security interests in the Equipment related thereto,
are insufficient to cover the losses.
Certain restrictions have been imposed on the Trust Depositor and the Trust
and certain other parties to the transactions described herein which are
intended to reduce the risk of an insolvency proceeding involving the Trust
Depositor or the Trust. These restrictions include incorporating the Trust
Depositor as a separate, special purpose company pursuant to a certificate of
incorporation containing certain restrictions on the nature of its business.
Additionally, the Trust Depositor may commence a voluntary case or proceeding
under any bankruptcy or insolvency law, or cause the Trust to commence a
voluntary case or proceeding under any bankruptcy or insolvency law, only upon
the affirmative vote of all its directors, including its independent directors,
as long as the Trust Depositor is solvent and does not reasonably foresee
becoming insolvent. The Trust Depositor's certificate of incorporation requires
that the Trust Depositor have at all times at least two independent directors.
However, no assurance can be given that insolvency proceedings involving either
the Trust Depositor or the Trust will not occur. In the event the Trust
Depositor becomes subject to insolvency proceedings, the Trust, the Trust's
interest in the Trust Assets, and the Trust's obligation to make payments on the
Notes might also become subject to such insolvency proceedings. In the event of
insolvency proceedings involving the Trust, the Trust's interest in the Trust
Assets and the Trust's obligation to make payments on the Notes would become
subject to such insolvency proceedings. No assurance can be given that
insolvency proceedings involving Newcourt USA would not lead to insolvency
proceedings of either, or both, of the Trust Depositor or the Trust. In either
such event, or if an attempt were made to litigate any of the foregoing issues,
delays of distributions on the Notes, possible reductions in the amount of
payment of principal of and interest on the Notes and limitations (including a
stay) on the exercise of remedies under the Indenture and the Sale and Servicing
Agreement could occur, although the Noteholders would continue to have the
benefit of the Indenture Trustee's security interest in the Trust Assets under
the Sale and Servicing Agreement.
The right of the Indenture Trustee, as secured party under the Sale and
Servicing Agreement for the benefit of the Noteholders, to foreclose upon and
sell the Trust Assets is likely to be significantly impaired by applicable
bankruptcy laws, including the automatic stay pursuant to Section 362 of the
Bankruptcy Code, if a bankruptcy proceeding were to be commenced by or against
the Trust, and possibly the Trust Depositor, before or possibly even after the
Indenture Trustee has foreclosed upon and sold the Trust Assets. Under the
bankruptcy laws, payments on debts are not made and secured creditors are
prohibited from repossessing their security from a debtor in a bankruptcy case
or from disposing of security repossessed from such a debtor, without bankruptcy
court approval. Moreover, the bankruptcy laws generally permit the debtor to
continue to retain and to use collateral even though the debtor is in default
under the applicable debt instruments, provided generally that the secured
creditor has the right to seek "ADEQUATE PROTECTION". The meaning of the term
"ADEQUATE PROTECTION" may vary according to circumstances, but it is intended in
general to protect the value of the security from any diminution in the value of
the collateral as a result of the use of the collateral by the debtor during the
pendency of the bankruptcy case. In view of the lack of a precise definition of
the term "ADEQUATE PROTECTION" and the broad discretionary powers of a
bankruptcy court, it is impossible to predict whether or to what extent the
holders of the Notes would be compensated for any diminution in value of the
Trust Assets. Furthermore, in the event a bankruptcy court determines that the
value of the Trust Assets is not sufficient to repay all amounts due on the
Notes, the Noteholders would hold secured claims only to the extent of the value
of the Trust Assets to which the holders are entitled, and unsecured claims with
respect to such shortfall. The bankruptcy laws do not permit the payment or
accrual of post-petition interest, costs and attorneys' fees during a debtor's
bankruptcy case unless, and then only to the extent, the claims are oversecured.
The Seller will either (i) originate Contracts or (ii) acquire End-User
Contracts from a Vendor, which Contracts will be transferred to the Trust
Depositor. If the acquisition of an End-User Contract by the Seller is treated
as a sale of such Contract from the applicable Vendor to the Seller, except in
certain limited circumstances, such Contract would not be part of such Vendor's
bankruptcy estate and would not be available to such Vendor's creditors. If a
Vendor became a debtor in a bankruptcy case and, in the case of End-User
Contracts acquired as described in clause (ii) above, if an unpaid creditor of
such Vendor or a representative of creditors of such Vendor, such as a trustee
in bankruptcy, or such Vendor acting as a debtor-in-possession, were, in any
case, to take the position that the sale of
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such Contracts to the Seller was ineffective to remove such Contracts from such
Vendor's estate (for instance, that such sale should be recharacterized as a
pledge of Contracts to secure borrowings of such Vendor), then delays in
payments under the Contracts to the Trust could occur or, should the court rule
in favor of such creditor, representative or Vendor, reductions in the amount of
such payments could result. If the transfer of End-User Contracts to the Seller
as described in clause (ii) above is recharacterized as a pledge, a tax or
government lien on the property of the pledging Vendor arising before the
Contracts came into existence may have priority over the Seller's (and hence the
Trust Depositor's, the Trust's and the Indenture Trustee's) interest in the
Contracts. No law firm will, in connection with the offering of the Notes,
express any opinion as to the issues discussed in this paragraph.
If an Insolvency Event with respect to the Trust Depositor were to occur,
then an Event of Default would occur with respect to the Notes and, pursuant to
the terms of the Sale and Servicing Agreement, and assuming the Trust Assets
were not then subject to being involved in a bankruptcy case, the Indenture
Trustee would sell the Contracts, thereby causing early termination of the Trust
and would use the proceeds of such sale to pay the outstanding principal of and
accrued interest on the Notes to the extent and in the order of priority
described under "DESCRIPTION OF THE NOTES--ALLOCATIONS; FOLLOWING AN EVENT OF
DEFAULT OR RESTRICTING EVENT". The Noteholders would suffer a loss if the sum
of (i) the proceeds of the sale allocable to the Noteholders and (ii) the
proceeds of any collections on the Contracts in the Collection Account allocable
to the Noteholders is insufficient to pay the Noteholders in full.
State laws impose requirements and restrictions relating to foreclosure
sales and obtaining deficiency judgments following such sales. In the event
that the Noteholders must rely on repossession and disposition of any Equipment
to recover amounts due on Defaulted Contracts, such amounts may not be realized
because of the application of these requirements and restrictions. Other
factors that may affect the ability of the Noteholders to realize the full
amount due on a Contract or Secondary Contract include the failure to file
financing statements to perfect the Seller's, the Trust Depositor's, the Trust's
or Indenture Trustee's security interest, as applicable, in the Equipment or
other Applicable Security, depreciation, obsolescence, damage or loss of any
item of Equipment, and the application of federal and state bankruptcy and
insolvency laws. As a result, the Noteholders may be subject to delays in
receiving payments and losses if the remaining unaffected Contracts are
insufficient to cover such losses.
If a court, in a lawsuit by an unpaid creditor of a Seller or by a
representative of creditors of such Seller, such as a trustee in bankruptcy, or
by the Seller acting as a debtor-in-possession, were to find that, at the time
of or as a result of any transfer by such Seller of Contracts to the Trust
Depositor, (i) (A) the Seller entered into such transaction with the intent of
hindering, delaying or defrauding creditors or (B) the Seller received less than
a reasonably equivalent value or fair consideration as a result of such transfer
and (ii) the Seller (A) was insolvent or would be rendered insolvent by such
transfer, (B) was engaged in a business or transaction for which its assets
constituted unreasonably small capital after such transfer or (C) intended to
incur, or believed that it would incur, indebtedness beyond its ability to pay
as the obligations under such indebtedness matured (as the foregoing terms are
defined in or interpreted under the relevant fraudulent conveyance statutes),
such court could invalidate such transfer to the Trust Depositor or to the
Trust, or substantively consolidate the Trust Depositor, the Trust and the
Seller, or subordinate the rights of the Noteholders to the rights of unsecured
creditors of the Seller, or take other actions that would be adverse to the
Noteholders.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction that is being applied. Generally, however, an
entity would be considered insolvent if the fair saleable value of its assets is
less than the amount of its liabilities (including contingent liabilities) or
the amount that will be required to pay its probable liabilities on its existing
debts as they become absolute and matured. The Seller believes that it is
entering into these transactions (including the transfers of Contracts pursuant
to the Transfer and Sale Agreement) for proper purposes and in good faith and
that the purchase price for the Contracts identified in the Transfer and Sale
Agreement will represent reasonably equivalent value or fair consideration for
the transfers of such Contracts by the Seller to the Trust Depositor.
The Trust Depositor will receive, on the Closing Date, a certificate from
the Seller to the effect that (i) the Seller did not intend, in entering into
the Transfer and Sale Agreement and consummating the transactions contemplated
thereby, to hinder, delay or defraud either then present or future creditors or
any other person to which such Seller was or would thereafter become, as of or
after the consummation of such transactions, indebted and (ii) the purchase
price for the Contracts sold under the Transfer and Sale Agreement represented
reasonably equivalent value or fair consideration as a result of the transfers
of such Contracts to the Trust Depositor. There can be no assurance, however,
that a court would reach the same conclusion.
No law firm will, in connection with any offering of the Notes, express any
opinion as to federal or state laws relating to fraudulent transfers.
Certain states have adopted a version of Article 2A of the UCC ("ARTICLE
2A"), which purports to codify many provisions of existing common law. Although
there is little precedent regarding how Article 2A will be interpreted, it may,
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among other things, limit enforceability of any "UNCONSCIONABLE" lease or
"UNCONSCIONABLE" provision in a lease, provide a lessee with remedies, including
the right to cancel the lease contract, for certain lessor breaches or defaults,
and may add to or modify the terms of "CONSUMER LEASES" and leases where the
lessee is a "MERCHANT LESSEE". However, in the Transfer and Sale Agreement,
the Seller will represent that (i) no Contract is a "CONSUMER LEASE" and (ii)
each Obligor has accepted the equipment leased to it and, after reasonable
opportunity to inspect and test, has not notified Newcourt of any defects
therein. Article 2A, moreover, recognizes typical commercial lease "HELL OR
HIGH WATER" rental payment clauses and validates reasonable liquidated damages
provisions in the event of lessor or lessee defaults. Article 2A also
recognizes the concept of freedom of contract and permits the parties in a
commercial context wide degree of latitude to vary provisions of the law.
VENDOR LOANS AND VENDOR RECOURSE CONTRACTS. The Vendor Loans are, by their
terms, payable solely from the proceeds of the Secondary Contracts securing such
Vendor Loans, and do not generally represent obligations of the Vendor (except
that Secondary Contracts may be covered by such Vendor's UNL Pool or other forms
of Vendor recourse). Consequently, Noteholders must rely solely upon the
Secondary Contracts and any other Applicable Security, if any, for the payment
of principal of, and interest on, the related Vendor Loans. As noted above, any
Secondary Contract which is a "TRUE LEASE" originated by a Vendor will be
subject to rejection by such Vendor, as debtor in possession, or by such
Vendor's bankruptcy trustee if not a "TRUE SALE". Upon any such rejection,
Scheduled Payments under such rejected Secondary Contract may terminate and the
Noteholders may be subject to losses if the remaining unaffected Contract, and
security interests in the related Equipment, are insufficient to cover the
losses. Further, as noted under above, a tax or government lien on the property
of the pledging Vendor arising before a Secondary Contract came into existence
may have priority over the Seller's (and hence its assignee's) interest in such
Secondary Contract.
Certain Vendor Assignments and certain Program Agreements provide that the
Seller has recourse to the related Vendor for all or a portion of the losses the
Seller may incur as a result of a default under the End-User Contracts sold
under such Vendor Assignment or Program Agreement. 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 the Seller pursuant to such
Vendor Assignments or Program Agreements as loans to the Vendor from the Seller
secured by the Contracts sold thereunder. If such an attempt is successful,
such Vendor Assignment or Program Agreement would be subject to the risks
described herein for Vendor Loans. In such case the Contracts sold under such
Vendor Assignment or Program Agreement would constitute Secondary Contracts
under the recharacterized Vendor Assignment or Program Agreement.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general and brief discussion of certain United States
federal income tax consequences of the purchase, ownership and disposition of
the Notes. The discussion that follows, and the opinion described below of
Winston & Strawn, special tax counsel to the Trust Depositor ("TAX COUNSEL"),
are based upon current provisions of the Internal Revenue Code of 1986, as
amended (the "CODE"), Treasury Regulations promulgated thereunder, 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 ("IRS") rulings on comparable transactions or instruments to those
described herein. As a result, there can be no assurance that the IRS will not
challenge the conclusions reached herein, 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 and conclusions set forth
herein as well as the tax consequences to Noteholders.
This discussion does not purport to deal with all aspects of federal income
taxation that may be relevant to Noteholders in light of their personal
investment or tax circumstances nor to certain types of holders who may be
subject to special treatment under the federal income tax laws (including,
without limitation, financial institutions, broker-dealers, insurance companies,
foreign persons, tax-exempt organizations, and persons who hold the Notes as
part of a straddle, hedging, or conversion transaction). The discussion is
generally directed to prospective purchasers who purchase Notes at the time of
original issue, who are citizens or residents of the United States, and who hold
the Notes as "CAPITAL ASSETS" within the meaning of Section 1221 of the Code.
Taxpayers and preparers of tax returns (including those filed by any partnership
or other issuer) should be aware that under applicable Treasury Regulations a
provider of advice on specific issues of law is not considered an income tax
return preparer unless the advice is (i) given with respect to events that have
occurred at the time the advice is rendered and is not given with respect to the
consequences of contemplated actions, and (ii) is directly relevant to the
determination of an entry on a tax return. Accordingly, taxpayers should
consult their own tax advisors and tax return preparers regarding the
preparation of any item on a tax return,
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even where the anticipated tax treatment has been discussed herein. PROSPECTIVE
INVESTORS SHOULD 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 NOTES.
OPINION
In the opinion of Tax Counsel, for federal income tax purposes, although no
transaction closely comparable to that contemplated herein has been the subject
of any Treasury Regulation, revenue ruling, or judicial decision, based on the
application of existing law to the facts as set forth in the applicable
agreements, (i) the Trust will not be treated as an association (or publicly
traded partnership) taxable as a corporation and (ii) the Notes will be treated
as indebtedness. An opinion of counsel 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.
Although it is the opinion of Tax Counsel 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 such characterization of the
Trust and the Notes will prevail. If the Trust were taxable as a corporation
for federal income tax purposes, it would be subject to corporate income tax on
its taxable income. The Trust's taxable income would include all its income on
the related Contracts and other assets, which may be reduced by its interest
expense on the Notes if the Notes are respected as debt of such corporation.
Any such corporate income tax could materially reduce cash available to make
payments on the Notes. If, contrary to the opinion of Tax Counsel, the IRS also
successfully asserted that one or more of the Notes did not represent debt for
federal income tax purposes, the Notes might be treated as equity interests in
the Trust. If so treated, the Trust might be taxable as a corporation with the
adverse tax consequences described above (and the resulting taxable corporation
would not be able to reduce its taxable income by deductions for interest
expense on the Notes recharacterized as equity). Alternatively, if the IRS
treated the Notes as equity, it is also possible that the Trust might be treated
as a publicly traded partnership taxable as a corporation unless the Trust is
able to meet certain qualifying income tests. Even if not taxed as a
corporation, treatment of the Notes as equity interests in such publicly traded
partnership could have adverse tax consequences to certain holders. For
example, income to certain tax-exempt entities (including pension funds) may
constitute "UNRELATED BUSINESS TAXABLE INCOME," income to foreign holders
generally would be subject to U.S. tax and U.S. tax return filing and
withholding requirements, individual holders might be subject to certain
limitations on their ability to deduct their share of Trust expenses, and income
from the Trust's assets would be taxable to Noteholders without regard to
whether cash distributions are made from the Trust or the Noteholders' method of
tax accounting.
The discussion that follows assumes that the Notes will be treated as
indebtedness for federal income tax purposes. The following discussion is also
based in part upon Treasury Regulations interpreting the original issue discount
("OID") provisions of the Code. The OID regulations, however, are subject to
varying interpretations and do not address all issues that would affect
Noteholders.
TAXATION OF INTEREST INCOME TO NOTEHOLDERS
Based upon the discussion below under the heading "OID", Tax Counsel's
interpretation of (i) the definition of "QUALIFIED STATED INTEREST" and (ii)
other provisions of the OID Code sections and regulations, it is not expected
that the Notes will be issued with OID (I.E., any excess of the stated
redemption price at maturity over their issue price), other than perhaps with a
DE MINIMIS amount (I.E., 1/4 of the Notes stated redemption price at maturity
multiplied by the number of full years to maturity). In such case, the stated
interest on each class of Notes should be treated as qualified stated interest
and will be taxable as ordinary income for federal income tax purposes when
received or accrued in accordance with the Noteholder's general method of tax
accounting.
OID
If Notes were issued at a discount from their principal amounts or if the
stated interest were not treated as "QUALIFIED STATED INTEREST," the Notes would
be treated as having OID. Under the OID regulations currently in effect, in
order to have qualified stated interest, the stated interest must be
"UNCONDITIONALLY PAYABLE" in cash or property at least once annually. Interest
is unconditionally payable only if reasonable legal remedies exist to compel
timely payment or the debt instrument otherwise provides terms and conditions
that make the likelihood of late payment (other than a late payment that occurs
within a reasonable grace period) or nonpayment a remote contingency. The Trust
believes that the likelihood of late payment or nonpayment of the stated
interest on the Notes should constitute a remote contingency; the IRS, however,
may disagree. In such case, the stated interest on the Notes would not be
qualified stated interest and the Notes would be considered to have been issued
with OID.
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If the Notes are in fact issued with a greater than DE MINIMIS amount of
OID or are otherwise treated as having been issued with OID, the following rules
should apply. The excess of the "STATED REDEMPTION PRICE AT MATURITY" of a Note
(generally equal to its principal amount as of the date of issuance plus all
interest other than "QUALIFIED STATED INTEREST" payable prior to or at maturity)
over the original issue price (in this case, the initial offering price at which
a substantial amount of the Notes are sold to the public) will constitute OID.
A Noteholder must include OID in income as interest over the term of the Note
under a constant yield method. OID must be included in income in advance of the
receipt of cash representing that income. In general, the amount of OID
included in income is the sum of the "DAILY PORTIONS" of the OID with respect to
the Note for each day during the taxable year the Noteholder held the Note. The
daily portion generally is determined by allocating to each day in an accrual
period a ratable portion of the OID allocable to such accrual period. The
amount of OID allocable to an accrual period is generally equal to the
difference between (i) the product of the Note's adjusted issue price and its
yield to maturity and (ii) the amount of qualified stated interest payments
allocable to such accrual period. The "ADJUSTED ISSUE PRICE" of an OID Note at
the beginning of any accrual period is the sum of its issue price plus the
amount of OID allocable to prior accrual periods minus the amount of prior
payments that were not qualified stated interest.
Alternatively, because the payments on the Notes may be accelerated by
reason of prepayments on the Contracts, OID, other than DE MINIMIS OID, on the
Notes, if any, may have to be accrued under Code section 1272(a)(6), which
allocates OID to each day in an accrual period by taking the ratable portion of
the excess of (i) the sum of the present value of the remaining payments on a
Note as of the close of the accrual period and the payments made during the
accrual period that were included in stated redemption price at maturity, over
(ii) the adjusted issue price of the Note at the beginning of the accrual
period. No regulations have been issued under Code section 1272(a)(6) so it is
not clear if such section would apply to the Notes if they are treated as having
OID. Legislation has been proposed which if enacted, would require any OID (or
interest) on the Notes to be computed in accordance with the rules of Section
1272(a)(6) and certain prepayment assumptions.
A holder of a Note issued with DE MINIMIS OID must include such OID in
income proportionately as principal payments are made on such Note.
ACQUISITION PREMIUM
A holder that purchases a Note for an amount less than or equal to 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 (any such
excess being "ACQUISITION PREMIUM") and that does not make the election
described below under "ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE
DISCOUNT" is permitted to reduce the daily portions of OID, if any, by a
fraction, the numerator of which is the excess of the holder's adjusted basis in
the Note immediately after its purchase over the adjusted issue price of the
Note, and the denominator of which is the excess of the sum 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.
MARKET DISCOUNT
Whether or not the Notes are issued with OID, a subsequent purchaser (I.E.,
a purchaser who acquires a Note not at the time of original issue) of a Note at
a discount will be subject to the "MARKET DISCOUNT RULES" of Sections 1276
through 1278 of the Code. In general, these rules provide that if the holder of
a Note purchases the Note at a market discount (I.E., a discount from its
original issue price plus any accrued OID that exceeds a DE MINIMIS amount
specified in the Code) and thereafter recognizes gain upon a disposition (or
receives a principal payment), the lesser of (i) such gain (or the principal
payment) or (ii) the accrued market discount (not previously included in income)
will be taxed as ordinary income. Generally, the accrued market discount will
be the total market discount (not previously included in income) on the Note
multiplied by a fraction, the numerator of which is the number of days the
holder held the Note and the denominator of which is the number of days from the
date the holder acquired the Note until its maturity date. The holder may
elect, however, to determine accrued market discount under the constant yield
method. The adjusted basis of a Note subject to such election will be increased
to reflect market discount included in gross income, thereby reducing any gain
or increasing any loss on a subsequent sale or taxable disposition. Holders
should consult with their own tax advisors as to the effect of making this
election.
Limitations imposed by the Code, which are intended to match deductions
with the taxation of income, may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A Noteholder who elects to include market
discount in gross income as it accrues, however, is exempt from this rule.
Notwithstanding the above rules, market discount on a Note will be
considered to be zero if it is less than a DE MINIMIS amount, which is .25% of
the remaining principal balance of the Note multiplied by its expected weighted
average remaining life. If market discount is DE MINIMIS, the actual amount of
discount must be allocated to the
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remaining principal distributions on the Note, and when such distribution is
received, capital gain will be recognized equal to discount allocated to such
distribution.
AMORTIZABLE BOND PREMIUM
In general, if a subsequent purchaser acquires a Note at a premium (I.E.,
an amount in excess of the amount payable upon the maturity thereof), such
Noteholder will be considered to have purchased the Note with "AMORTIZABLE BOND
PREMIUM" equal to the amount of such excess. A Noteholder may elect to deduct
the amortizable bond premium as it accrues under a constant yield method over
the remaining term of the Note. Under proposed regulations, if finalized,
accrued amortized bond premium may only be used as an offset against qualified
stated interest income when such income is included in the holder's gross income
under the holder's normal accounting system.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
A holder may elect to include in gross income all interest that accrues on
a Note using the constant yield method described above under the heading "OID,"
with modifications described below. For purposes of this election, interest
includes stated interest, OID, DE MINIMIS OID, market discount, DE MINIMIS
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 holder'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 holder, 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 IRS. Holders should consult with their own tax
advisors as to the effect of making this election in light of their individual
circumstances.
DISPOSITION OF NOTES
Generally, capital gain or loss will be recognized on a sale or other
taxable disposition of the Notes in an amount equal to the difference between
the amount realized (other than amounts attributable to, and taxable as, accrued
interest) and the seller's tax basis in the Notes. A Noteholder's tax basis in
a Note will generally equal his or her cost increased by any OID or market
discount previously included by such Noteholder in income with respect to the
Note and decreased by any bond premium previously amortized and any principal
payments previously received by such Noteholder with respect to the Note.
Subject to the market discount rules of the Code, any such gain or loss will be
capital gain or loss if the Note was held as a capital asset. Capital gain or
loss will be long-term if the Note was held by the holder for more than one year
and otherwise will be short-term. Any capital losses realized generally may be
used by a corporate taxpayer only to offset capital gains, and by an individual
taxpayer only to the extent of capital gains plus $3,000 of other income.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Indenture Trustee will be required to report annually to the IRS, and
to each Noteholder, the amount of interest paid on the Notes (and the amount
withheld for federal income taxes, if any) for each calendar year, except as to
exempt recipients (generally, corporations, tax-exempt organizations, qualified
pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status). Each holder
(other than holders who are not subject to the reporting requirements) will be
required to provide, under penalties of perjury, a certificate (Form W-9)
containing the holder's name, address, correct federal taxpayer identification
number and a statement that the holder is not subject to backup withholding.
Should a non-exempt Noteholder fail to provide the required certification, the
Trustee will be required to withhold (or cause to be withheld) 31% of the
interest otherwise payable to the holder, and remit the withheld amounts to the
IRS as a credit against the holder's federal income tax liability.
TAX CONSEQUENCES TO FOREIGN INVESTORS
Based upon Tax Counsel's opinion that the Notes will be treated as
indebtedness for federal income tax purposes, the following information
describes the general U.S. federal income tax treatment of investors that are
not U.S. persons (each a "FOREIGN PERSON"). The term "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 or fiduciary
the income of which is includible in gross income for U.S. federal income tax
purposes, regardless of its source, or (iv) 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 fiduciaries have the authority to control
all substantial decisions of the trust.
(a) Interest paid or accrued to a Foreign Person that is not effectively
connected with the conduct of a trade or business within the United
States by the Foreign Person, will generally be
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considered "PORTFOLIO INTEREST" and generally will not be subject to
United States federal income tax and withholding tax, as long as the
Foreign Person (i) is not actually or constructively a "10 PERCENT
SHAREHOLDER" of the Trust or the Trust Depositor or a "CONTROLLED
FOREIGN CORPORATION" with respect to which the Trust or the Trust
Depositor is a "RELATED PERSON" within the meaning of the Code, and
(ii) provides an appropriate statement (Form W-8) to the Trustee or
paying agent (generally the clearing agency, financial intermediary,
or broker) 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 Person must provide a new Form
W-8 within 30 days. The Form W-8 is generally effective for three
years. If such interest were not portfolio interest, then it would be
subject to United States federal income and withholding tax at a rate
of 30 percent unless reduced or eliminated pursuant to an applicable
income tax treaty. To qualify for any reduction as the result of an
income tax treaty, the Foreign Person must provide the paying agent
with Form 1001. This form is also effective for three years.
(b) Any capital gain realized on the sale or other taxable
disposition of a Note by a Foreign Person will be exempt from
United States federal income and withholding tax, PROVIDED that
(i) the gain is not effectively connected with the conduct of a
trade or business in the United States by the Foreign Person, and
(ii) in the case of an individual Foreign Person, the Foreign
Person is not present in the United States for 183 days or more
in the taxable year. If an individual Foreign Person is present
in the U.S. for 183 days or more during the taxable year, the
gain on the disposition of the Notes could be subject to a 30%
withholding tax unless reduced by treaty.
(c) If the interest, gain or income on a Note held by a Foreign
Person is effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, the holder
(although exempt from the withholding tax previously discussed if
an appropriate statement (Form 4224) is furnished to the paying
agent) generally will be subject to United States federal income
tax on the interest, gain or income at regular federal income tax
rates. Form 4224 is effective for only one calendar year. In
addition, if the Foreign Person is a foreign corporation, it may
be subject to a branch profits tax equal to 30 percent of its
"EFFECTIVELY CONNECTED EARNINGS AND PROFITS" within the meaning
of the Code for the taxable year, as adjusted for certain items,
unless it qualifies for a lower rate under an applicable tax
treaty.
CERTAIN STATE TAX CONSEQUENCES
Because of the differences in state tax laws and their applicability to
different investors, it is not possible to summarize the potential state tax
consequences of holding the Notes. ACCORDINGLY, PURCHASERS OF NOTES SHOULD
CONSULT THEIR OWN TAX ADVISERS REGARDING THE STATE TAX CONSEQUENCES OF
PURCHASING ANY NOTES.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain requirements on employee benefit plans subject to ERISA ("ERISA
PLANS") and prohibits certain transactions between ERISA Plans and persons who
are "PARTIES IN INTEREST" (as defined under ERISA) with respect to assets of
such Plans. Section 4975 of the Code prohibits a similar set of transactions
between certain plans or individual retirement accounts ("CODE PLANS," and
together with ERISA Plans, "PLANS") and persons who are "DISQUALIFIED PERSONS"
(as defined in the Code) with respect to Code Plans. Certain employee benefit
plans, such as governmental plans and church plans (if no election has been
made under Section 410(d) of the Code), are not subject to the requirements of
ERISA or Section 4975 of the 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 Code and exempt
from taxation under Section 501(a) of the Code is, however, subject to the
prohibited transaction rules set forth in Section 503 of the Code.
Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that investments be made in accordance with
the documents governing the ERISA Plan. Before investing in the Notes, an ERISA
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.
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PROHIBITED TRANSACTIONS
In addition, Section 406 of ERISA and Section 4975 of the Code prohibit
parties in interest and disqualified persons with respect to ERISA Plans and
Code Plans from engaging in certain transactions involving such Plans or "PLAN
ASSETS" of such Plans, unless a statutory or administrative exemption applies to
the transaction. Section 4975 of the Code and Sections 502(i) and 502(1) of
ERISA provide for the imposition of certain excise taxes and civil penalties on
certain persons that engage or participate in such prohibited transactions. The
Trust Depositor, the Underwriter, the Servicer, the Indenture Trustee or the
Owner Trustee or certain affiliates thereof 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 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 Underwriter, the Servicer, the Indenture Trustee, or the Owner
Trustee or an affiliate thereof 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, certain prohibited
transaction exemptions may apply to the purchase or holding of the Notes - for
example, Prohibited Transaction Class Exemption ("PTCE") 96-23, which exempts
certain transactions effected on behalf of a Plan by an "IN-HOUSE ASSET
MANAGER;" PTCE 95-60, which exempts certain transactions between insurance
company general accounts and parties in interest; PTCE 91-38, which exempts
certain transactions between bank collective investment funds and parties in
interest; PTCE 90-1, which exempts certain transactions between insurance
company pooled separate accounts and parties in interest; or PTCE 84-14, which
exempts certain 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 Code of doing so.
PLAN OF DISTRIBUTION
GENERAL
Subject to the terms and conditions set forth in an (i) underwriting
agreement dated November __, 1997 for the sale of the Class A Notes, the Trust
Depositor has agreed to sell to First Union Capital Markets Corp., Deutsche
Morgan Grenfell Inc., Lehman Brothers Inc., and BancAmerica Robertson Stephens
(the "CLASS A UNDERWRITERS") and the Class A Underwriters have separately agreed
to purchase from the Trust Depositor, the principal amount of the Class A Notes
set forth opposite each of their names below and (ii) underwriting agreement
dated November __, 1997 for the sale of the Class B Notes and the Class C Notes,
the Trust Depositor has agreed to sell to First Union Capital Markets Corp., the
Class B Notes and the Class C Notes (the "Class B and Class C Underwriter") and
the Class B and Class C Underwriter has agreed to purchase from the Trust
Depositor, the principal amounts of the Class B Notes and Class C Notes set
forth opposite its name below:
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<TABLE>
<CAPTION>
<S> <C>
Aggregate Principal Amount
to be Purchased
--------------------------
Class A-1 Receivable-Backed Notes, Series 1997-1
------------------------------------------------
First Union Capital Markets Corp. $______________
Deutsche Morgan Grenfell Inc. $______________
Lehman Brothers Inc. $______________
BancAmerica Robertson Stephens $______________
Aggregate Principal Amount
to be Purchased
--------------------------
Class A-2 Receivable-Backed Notes, Series 1997-1
------------------------------------------------
First Union Capital Markets Corp. $______________
Deutsche Morgan Grenfell Inc. $______________
Lehman Brothers Inc. $______________
BancAmerica Robertson Stephens $______________
Aggregate Principal Amount
to be Purchased
--------------------------
Class A-3 Receivable-Backed Notes, Series
-----------------------------------------
1997-1
------
First Union Capital Markets Corp. $______________
Deutsche Morgan Grenfell Inc. $______________
Lehman Brothers Inc. $______________
BancAmerica Robertson Stephens $______________
Aggregate Principal Amount
to be Purchased
--------------------------
Class A-4 Receivable-Backed Notes, Series
-----------------------------------------
1997-1
------
First Union Capital Markets Corp. $______________
Deutsche Morgan Grenfell Inc. $______________
Lehman Brothers Inc. $______________
BancAmerica Robertson Stephens $______________
Aggregate Principal Amount
to be Purchased
--------------------------
Class B Receivable-Backed Notes, Series
---------------------------------------
1997-1
------
First Union Capital Markets Corp. $_____________
Aggregate Principal Amount
to be Purchased
--------------------------
Class C Receivable-Backed Notes, Series
---------------------------------------
1997-1
------
First Union Capital Markets Corp. $_____________
</TABLE>
In the respective underwriting agreements, the Class A Underwriters and the
Class B and Class C Underwriter respectively have agreed, subject to the terms
and conditions set forth therein, to purchase all the Notes offered hereby if
any of such Notes are purchased.
The Class A Underwriters have advised the Issuer that the Class A
Underwriters propose initially to offer the Class A Notes to the public at the
price set forth on the cover page hereof and to certain dealers at such price
less a selling concession not in excess of ____% of the initial principal amount
of the Class A Notes. The
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Class A Underwriters may allow and such dealers may reallow a concession not in
excess of ____% of the initial principal amount of the Class A Notes. After the
initial public offering, the public offering price and such concessions may be
changed.
The Class B and Class C Underwriter has advised the Issuer that the Class B
and Class C Underwriter proposes initially to offer the Class B and the Class C
Notes to the public at the price set forth on the cover page hereof and to
certain dealers at such price less a selling concession not in excess of ___%
and ___% of the initial principal amount of the Class B Notes and Class C Notes,
respectively. The Class B and Class C Underwriter may allow and such dealers
may reallow a concession not in excess of ___% of the initial principal amount
of the Class B Notes and ___% of the initial principal amount of the Class C
Notes.
The respective Underwriting Agreements provide that Newcourt, Newcourt USA
and the Trust Depositor, jointly and severally, will indemnify the Class A
Underwriters and the Class B and Class C Underwriter against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments the respective Underwriters may be required to make in
respect thereof.
In addition, First Union Capital Markets Corp. ("FIRST UNION") will act as
the private placement agent for the Trust Depositor in connection with the sale
of the Subordinated Notes and will receive compensation therefor.
First Union Capital Markets Corp. is the Administrator of VFCC, a special
purpose company the business of which is limited, generally, to the purchase of,
or the making of loans against receivables or interests in financial assets.
The Seller has previously sold certain lease and finance contracts to the Trust
Depositor which has resold them (or interests therein) to VFCC. It is expected
that these contracts will be repurchased from VFCC by the Trust Depositor and
from the Trust Depositor by the Seller simultaneously with (and with the
proceeds of) the issuance of the Notes and the Subordinated Securities
contemplated hereby and that certain of such contracts will be included in the
Contract Portfolio. See "USE OF PROCEEDS." In addition, an affiliate of First
Union provides liquidity and enhancement to VFCC in connection with its funding
obligations of such contracts. VFCC is not affiliated with First Union
Corporation, First Union Capital Markets Corporation or any of their respective
affiliates.
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 Newcourt USA and its affiliates, including the Trust
Depositor.
RATING OF THE NOTES
It is a condition to the issuance of the Notes that the Class A-1 Notes be
rated at least "A-1+" and "P-1", that the Class A-2 Notes be rated at least
"AAA" and "Aaa", that the Class A-3 Notes be rated at least "AAA" and "Aaa",
that the Class A-4 Notes be rated at least "AAA" and "Aaa", that the Class B
Notes be rated at least "A" and "A1", and that the Class C Notes be rated at
least "BBB" and "Baa3", by Standard & Poor's and Moody's Investors Service,
respectively.
Such rating will reflect only the views of the Rating Agency and will be
based primarily on the subordination of the Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes, Class B Notes, Class C Notes and the Subordinated Securities
(in the case of the Class A-1 Notes), the subordination of the Class A-3 Notes,
Class A-4 Notes, Class B Notes, Class C Notes and the Subordinated Securities
(in the case of the Class A-2 Notes), the subordination of the Class A-4 Notes,
Class B Notes, Class C Notes and the Subordinated Securities (in the case of the
Class A-3 Notes), the subordination of the Class B Notes, Class C Notes and the
Subordinated Securities (in the case of the Class A-4 Notes), the subordination
of the Class C Notes and the Subordinated Securities (in the case of the Class B
Notes) and the subordination of the Subordinated Securities (in the case of the
Class C Notes), 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, inasmuch as such 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 such
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 such 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 pursuant to 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 the
Noteholders.
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LEGAL MATTERS
Certain legal matters relating to the Notes, including certain federal
income tax matters, as well as other matters, will be passed upon for the Trust,
the Trust Depositor, the Seller/Servicer and the Administrator by Winston &
Strawn, Chicago, Illinois. Certain legal matters for the Underwriter will be
passed upon by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), New York, New York.
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INDEX OF TERMS
Term(s) Page(s)
ADCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17, 58
Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13, 56
Additional Contract. . . . . . . . . . . . . . . . . . . . . . . . . . .10, 47
Additional Contract Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . 5
Adjusted Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Aggregate Discounted Contract Balance. . . . . . . . . . . . . . . . . .17, 58
Aggregate Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . .58
Applicable Class Percentage. . . . . . . . . . . . . . . . . . . . . . . . .79
Article 2A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27, 91
Available Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Available Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Bankruptcy Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . .25, 89
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Cedel Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 7, 72
Class A Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 58
Class A Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Class A-1 Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-1 Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . .57
Class A-1 Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Class A-1 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-1 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
Class A-1 Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . .16
Class A-1 Principal Payment Amount. . . . . . . . . . . . . . . . . . . . .79
Class A-1 Principal Payment Amount . . . . . . . . . . . . . . . . . . . . .58
Class A-2 Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-2 Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Class A-2 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
Class A-2 Principal Payment Amount . . . . . . . . . . . . . . . . . . . . .79
Class A-2 Principal Payment Amount . . . . . . . . . . . . . . . . . . . . .58
Class A-3 Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-3 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-3 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
Class A-3 Principal Payment Amount . . . . . . . . . . . . . . . . . . .59, 79
Class A-4 Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-4 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-4 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Class A-4 Principal Payment Amount . . . . . . . . . . . . . . . . . . .59, 79
Class B Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class B Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Class B Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . .13, 82
Class B Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
Class B Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Class B Principal Payment Amount . . . . . . . . . . . . . . . . . . . .59, 79
Class C Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class C Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Class C Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class C Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
Class C Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Class C Principal Payment Amount . . . . . . . . . . . . . . . . . . . .59, 79
Class D Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class D Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Class D Principal Payment Amount . . . . . . . . . . . . . . . . . . . .59, 79
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Cleanup Call Condition . . . . . . . . . . . . . . . . . . . . . . . . .16, 68
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92
Code Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 65
Collection Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conditional Payment Rate . . . . . . . . . . . . . . . . . . . . . . . . . .47
Contract Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Contracts Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cooperative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
CPR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
CSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
Defaulted Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Discount Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17, 74
Discounted Contract Balance. . . . . . . . . . . . . . . . . . . . .17, 60, 79
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Early Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Early Termination Contract . . . . . . . . . . . . . . . . . . . . . . . . .10
Eligible Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . .74, 75
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Eligible Secondary Contract. . . . . . . . . . . . . . . . . . . . . . . . .75
Eligible Secondary Contracts . . . . . . . . . . . . . . . . . . . . . . . .75
End-User . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 75
End-User Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 43
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
ERISA Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
Euroclear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Excess Concentration Amount. . . . . . . . . . . . . . . . . . . . . . . . .76
Excess Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Excluded Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Financed Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 43
Financing Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
First Union. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
Guaranteed Residual Investment . . . . . . . . . . . . . . . . . . . . . . .46
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
Indemnitees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Indirect Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Ineligible Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Initial Class A-1 Note Principal Balance . . . . . . . . . . . . . . . . . . 6
Initial Class A-2 Note Principal Balance . . . . . . . . . . . . . . . . . . 6
Initial Class A-3 Note Principal Balance . . . . . . . . . . . . . . . . . . 6
104
<PAGE>
Initial Class A-4 Note Principal Balance . . . . . . . . . . . . . . . . . . 6
Initial Class B Note Principal Balance . . . . . . . . . . . . . . . . . . . 6
Initial Class C Note Principal Balance . . . . . . . . . . . . . . . . . . . 6
Initial Class D Note Principal Balance . . . . . . . . . . . . . . . . . . . 7
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Insolvency Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
investment company . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
IPA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 62
Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Majority in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16, 57
MLA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
MLA Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Monthly Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Newcourt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Newcourt Entity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Newcourt USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
Note Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
NRC II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Obligor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 75
OID. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
Operative Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Optional Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Owner Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
Prepaid Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Prepayment Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . .60, 79
Program Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Program Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
PTCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
Qualified Institution. . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Rating Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Required Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Reserve Fund Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Residual Assignee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Residual Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Restricting Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
S&P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . 2
Scheduled Payments . . . . . . . . . . . . . . . . . . . . . . . . . . .17, 60
Secondary Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Secured Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 43
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
105
<PAGE>
Service Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
Servicer Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . .18, 77
Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 12, 43
Servicing Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18, 67
Servicing Fee Percentage . . . . . . . . . . . . . . . . . . . . . . . . . .67
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 12, 43
Statistical Discount Rate. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Subject Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Subordinated Note Interest Rate. . . . . . . . . . . . . . . . . . . . . . .13
Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . .2, 7, 72
Subordinated Residual Interest . . . . . . . . . . . . . . . . . . . . . . .46
Subordinated Securities. . . . . . . . . . . . . . . . . . . . . . . . . .2, 7
Substitute Contract. . . . . . . . . . . . . . . . . . . . . . . . . . .10, 47
Substitute Contract Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . 5
Tax Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92
Termination Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
Third-Party Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
TIA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
Title Registry Equipment . . . . . . . . . . . . . . . . . . . . . . . . . .24
Total Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . .60
Transfer and Sale Agreement. . . . . . . . . . . . . . . . . . . . . 2, 29, 72
Transfer Deposit Amount. . . . . . . . . . . . . . . . . . . . . . . . . . .75
Transferred Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Transferred Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Transferred Property . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
True Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 7
Trust Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Trust Depositor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Trust Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . .72
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67, 68
UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .97
UNL Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Vendor Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Vendor Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Vendor Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 44
Vendors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 44
VFCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Warranty Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . .10, 76
106
<PAGE>
No dealer, salesman or other person is authorized to give any information
or to make any representation not contained in this Prospectus and, if given or
made, such information or representation must not be relied upon as having been
authorized by the Trust Depositor or the Underwriter. This Prospectus does not
constitute an offer to sell or a solicitation of any offer to buy any security
other than the Securities offered hereby, nor does it constitute an offer to
sell or a solicitation of an offer to buy any of the Securities to any person in
any jurisdiction in which the person making such offer or solicitation is not
qualified to do so or to anyone whom it is unlawful to make such an offer or
solicitation to such person. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstance create any implication that the
information contained herein is correct as of any date subsequent to the date
hereof.
-----------------
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SUMMARY OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
RISK FACTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
THE CONTRACTS POOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
THE CONTRACTS GENERALLY . . . . . . . . . . . . . . . . . . . . . . . . . .41
PREPAYMENT AND YIELD CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . .47
THE TRUST DEPOSITOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
DESCRIPTION OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . .56
THE SUBORDINATED NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . .72
THE CERTIFICATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
THE INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80
CERTAIN LEGAL ASPECTS OF THE CONTRACTS . . . . . . . . . . . . . . . . . . .85
FEDERAL INCOME TAX CONSEQUENCES. . . . . . . . . . . . . . . . . . . . . . .92
CERTAIN STATE TAX CONSEQUENCES . . . . . . . . . . . . . . . . . . . . . . .96
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
RATING OF THE NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
UNTIL ___________, 199_, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENT OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NEWCOURT RECEIVABLES ASSET
TRUST 1997-1
NEWCOURT RECEIVABLES
CORPORATION II
-----------
---------------------
----------------------------
PROSPECTUS
----------------------------
UNDERWRITERS OF THE CLASS A NOTES
FIRST UNION CAPITAL MARKETS CORP.
DEUTSCHE MORGAN GRENFELL
LEHMAN BROTHERS
BANCAMERICA ROBERTSON STEPHENS
UNDERWRITER OF THE CLASS B AND CLASS C NOTES
FIRST UNION CAPITAL MARKETS CORP.
______________, 199_
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<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.
SEC Registration Fee $ 1,212.12
Printing and Engraving Expenses 45,000.00
Trustee's Fees and Expenses 8,000.00
Legal Fees and Expenses 275,000.00
Blue Sky Fees and Expenses 8,000.00
Accountants' Fees and Expenses 25,000.00
Rating Agency Fees 30,000.00
Miscellaneous Fees 30,000.00
Total $ 422,212.12
- ---------------------------
* 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 Notes in an aggregate principal amount assumed for these purposes to
be equal to $4,000,000 of Notes 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.
Newcourt 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,
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
<PAGE>
Item 16. Exhibits and Financial Statements
Exhibits
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Company
3.2 Bylaws of the Company
4.1 Form of Trust Agreement (including form of Certificates)
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
10.3 Form of Transfer and Sale Agreement
23.1 Consent of Winston & Strawn (included in Exhibit 5.1 and Exhibit 8.1)
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
- ----------------------------------
*Previously filed.
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 November 20, 1997.
NEWCOURT RECEIVABLES CORPORATION II
By: /s/ Scott J. Moore
---------------------------------------
Name: Scott J. Moore
-------------------------------------
Title: Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ ** Chief Executive Officer and November 20, 1997
- ----------------------- Director (Principal Executive
Bradley D. Nullmeyer Officer)
/s/ ** Chief Financial Officer November 20, 1997
- ----------------------- (Principal Financial and
Michel Beland Accounting Officer)
/s/ ** Director November 20, 1997
- -----------------------
Daniel A. Jauernig
/s/ ** Director November 20, 1997
- -----------------------
Robert J. Hicks
/s/ ** Director November 20, 1997
- -----------------------
Peter H. Sorensen
** /s/ Scott J. Moore
------------------
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Company
3.2 Bylaws of the Company
4.1 Form of Trust Agreement (including form of Certificates)
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
10.3 Form of Transfer and Sale Agreement
23.1 Consent of Winston & Strawn (included in Exhibit 5.1 and Exhibit 8.1)
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
- ------------------------
*Previously filed
<PAGE>
EXHIBIT 1.1
NEWCOURT RECEIVABLES CORPORATION II (Trust Depositor)
NEWCOURT FINANCIAL USA INC.(Servicer)
UNDERWRITING AGREEMENT
November __1997
First Union Capital Markets Corp.
Deutsche Morgan Grenfell Inc.
Lehman Brothers Inc.
BancAmerica Robertson Stephens
c/o First Union Capital Markets Corp.
301 South College Street, TW-6
Charlotte, North Carolina 28288-0610
Ladies and Gentlemen:
Newcourt Receivables Corporation II, a Delaware corporation (the
"Trust Depositor"), proposes to cause Newcourt Receivables Asset Trust 1997-1
(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 Manufacturers and Traders Trust
Company 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 and Newcourt Financial USA Inc. as Servicer (the
"Servicer") dated as of _________ __, 1997.
Section 1. REPRESENTATIONS AND WARRANTIES. The Trust Depositor and the
Servicer 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 333-36059),
including a form of prospectus, relating to the Notes.
<PAGE>
First Union Capital Markets Corp. 2
November __, 1997
The registration statement, and any post-effective amendment thereto, each
in the form heretofore delivered to you 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 you, 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 Act and deemed to be
part of the registration statement as of the Effective Time pursuant to
Rule 430A under the 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 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 the 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(b) 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.
<PAGE>
First Union Capital Markets Corp. 3
November __, 1997
(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 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 Newcourt Credit Group Inc. ("Newcourt") 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 Chase Manhattan Bank
Delaware, as Owner Trustee and the Transfer and Sale Agreement between
Newcourt Financial USA Inc. as the Seller, 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 a party or by which the
Servicer or any of its subsidiaries is bound or to which any of the
property or assets of the Servicer or 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
<PAGE>
First Union Capital Markets Corp. 4
November __, 1997
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 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 and 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
<PAGE>
First Union Capital Markets Corp. 5
November __, 1997
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.
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 covenants
and agrees with the Underwriters:
(a) To 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
<PAGE>
First Union Capital Markets Corp. 6
November __, 1997
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 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 obli
gated 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 of the Trust and (iv) all documents filed
with the Commission pursuant to the Exchange Act or any order of the Com
mission 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.
<PAGE>
First Union Capital Markets Corp. 7
November __, 1997
(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 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 Com
mission 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, 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
<PAGE>
First Union Capital Markets Corp. 8
November __, 1997
Documents 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.
(d) (x) [John Stevenson] shall have furnished to the Representative
his written opinion, as [Secretary] to the Servicer, addressed to the
Underwriters and dated the Closing Date, in form and substance reasonably
satisfactory to the Underwriters and (y) Scott M. Moore shall have
furnished to the Representative his written opinion, as General 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 Seller 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 Simpson Thacher &
Bartlett, 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) Hodgson, Russ, Andrews, Woods & Goodyear shall have furnished
to the Representative their written opinion, as 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) Pryon,
Cashman, Sherman & Flynn 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 Underwriters' Information (as defined herein)
from such representation), (iii) the representations and
<PAGE>
First Union Capital Markets Corp. 9
November __, 1997
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 operations or business of the Servicer or 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 Ernst & Young 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
<PAGE>
First Union Capital Markets Corp. 10
November __, 1997
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 Receivables and the proceeds thereof.
(l) Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in 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 and (ii)
no such organization shall have publicly announced 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(m) 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
<PAGE>
First Union Capital Markets Corp. 11
November __, 1997
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 Under
writers may be necessary in the Registration Statement, the Prospectus or in
any other document or arrangement, and the Trust 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 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, the Trust
Depositor and Newcourt 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
<PAGE>
First Union Capital Markets Corp. 12
November __, 1997
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, the Trust Depositor nor Newcourt 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.
(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) 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 written information
furnished to the Trust Depositor through the Representative by or on behalf of
such Underwriter specifically for use therein (the "Underwriters'
Information"), 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
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First Union Capital Markets Corp. 13
November __, 1997
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, the Servicer and Newcourt. 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.
The obligations of the Servicer, the Trust Depositor, Newcourt and
the Underwriters in this Section 10 are in addition to any other liability
which the Servicer, the Trust Depositor, Newcourt 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, the Trust Depositor and Newcourt 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, the Trust Depositor and Newcourt 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, the Trust Depositor and Newcourt
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, the Trust
Depositor and Newcourt 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,
<PAGE>
First Union Capital Markets Corp. 14
November __, 1997
Newcourt 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.
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 Newcourt 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, the Servicer and Newcourt 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 the Owner Trustee and each of their
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
<PAGE>
First Union Capital Markets Corp. 15
November __, 1997
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, Newcourt 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 or
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 Capital Markets Corp., Asset
Securitization Division, 301 South College Street, TW-6, 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; (ii)
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; (iii) if sent to
the Servicer, will be mailed, delivered or telecopied and confirmed to them
at the address of the Servicer set forth in the Registration Statement,
Attention: Vice President and Treasurer and (iv) if sent to Newcourt, will
be mailed, delivered or telecopied and confirmed to them at the address of
Newcourt 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, the
Servicer and Newcourt 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.
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, the Servicer and Newcourt 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, the Servicer and Newcourt hereby irrevocably and
fully waives the defense of an inconvenient forum to the maintenance of such
suit or proceeding. Each of the Trust Depositor, the Servicer and Newcourt
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, the Servicer
or Newcourt. Each of the Trust
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First Union Capital Markets Corp. 16
November __, 1997
Depositor, the Servicer and Newcourt 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, the Servicer and Newcourt hereby irrevocably authorizes and
directs the Process Agent to accept such service. Each of the Trust
Depositor, the Servicer and Newcourt further agrees that service of process
upon the Process Agent and written notice of said service to the Trust
Depositor, the Servicer or Newcourt, 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, the Servicer or Newcourt, 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, the Servicer and Newcourt
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 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.
<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, Newcourt and the several Underwriters.
Very truly yours,
NEWCOURT RECEIVABLES CORPORATION II
By: ____________________________________
Name:
Title:
NEWCOURT FINANCIAL USA INC.
By: _____________________________________
Name:
Title:
NEWCOURT CREDIT GROUP INC.
By: _____________________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date hereof.
FIRST UNION CAPITAL MARKETS CORP., as
Representative of the Underwriters
named in Schedule II hereto
By: _____________________________________
Name:
Title:
<PAGE>
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NEWCOURT RECEIVABLES CORPORATION II
ARTICLE I
The name of the Corporation is Newcourt Receivables Corporation II.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the State of Delaware
is The Corporation Trust Company, 1209 Orange Street, City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in the following activities:
(a) to acquire from time to time any or all right, title and interest in,
to and under receivables generated from time to time under leases, installment
payment agreements, conditional sale agreements, secured and unsecured
promissory notes, and other types of financing agreements relating to various
types of equipment, licenses of computer software and related support
maintenance and consulting services, together with all monies due thereunder,
any related fees and charges, security interests in the machinery, equipment or
other merchandise, if any, financed thereby, and related rights (collectively,
"Receivables");
(b) to purchase, acquire, own, hold, service, sell, assign, pledge and
otherwise deal with the Receivables, collateral securing the Receivables,
related insurance policies and any proceeds or further rights associated with
any of the foregoing (collectively, "Other Assets") and to enter into any
related agreements with any affiliates;
(c) to transfer interests in the Receivables and the Other Assets to one
or more persons and/or transfer Receivables and the Other Assets to one or more
trusts (the "Trusts") pursuant to one or more indentures, pooling and servicing
agreements, sale agreements or other agreements (the "Agreements") to be entered
into by and among, among others, the Corporation, the trustee named therein (the
"Trustee"), in the case of a Trust, certain other persons and any entity acting
as servicer of the Receivables;
<PAGE>
(d) to hold and enjoy any and all of the rights and privileges of any
certificates or notes issued by the Trusts to the Corporation under the related
Agreements and to hold and enjoy all of the rights and privileges of any class
of any series of certificates or notes, including any class of certificates
which may be subordinate to any other class of certificates or notes and except
to the extent otherwise provided in any certificate or notes, or Agreement, to
sell, assign, pledge or otherwise transfer any such certificates or notes or any
interest therein;
(e) to perform its obligations under the Agreements pursuant to which any
Certificates or Notes are issued or serviced;
(f) to invest the proceeds derived from the sale or ownership of the
Receivables as determined by the Corporation's Board of Directors;
(g) to enter into hedging arrangements in connection with the purchase of
any Receivables; and
(h) to engage in any activity and to exercise any powers permitted to
corporations 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
CORPORATION RESTRICTIONS
(a) Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not: (i) take any action, if the effect of
any such action would cause a reduction in the rating that any nationally
recognized statistical rating agency has then given to any outstanding issue of
any series or class of Certificates or Notes issued pursuant to any Agreement;
(ii) dissolve or liquidate, in whole or in part; (iii) merge or consolidate with
any other corporation other than a corporation wholly owned, directly or
indirectly, by Newcourt Credit Group Inc., which corporation is restricted in a
manner similar to the restrictions set forth in Articles III, IV, X, XI XIV and
XVI of this Certificate of Incorporation; or (iv) amend this Certificate of
Incorporation to alter in any manner or delete Article III, this Article IV or
Article XIV.
(b) The Corporation shall conduct its affairs in accordance with the
following provisions: (i) it shall not engage in any business or activity other
than as permitted by Article III hereof; (ii) it shall maintain separate
corporate records and books of account from those of its parent institution;
(iii) at least two (2) directors of the Corporation (the "Independent
Directors") shall not be, and for the twenty four months prior to such
individual's election as director shall not have been, a director, officer or
employee of any entity owning beneficially, directly or indirectly more than 5%
of the outstanding shares of the Corporation's common stock or a director,
officer or employee of such beneficial owner's subsidiaries or affiliates other
than the Corporation and any other corporation the
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<PAGE>
sole purpose and business of which is substantially the same as the business of
the Corporation; (iv) any financial transaction between the Corporation and its
parent institution shall be governed by policies and procedures established from
time to time by a majority of the members of the board of directors, which shall
include the affirmative vote of the Independent Directors; (v) its funds shall
not be commingled with those of its parent institution; and (vi) its board of
directors shall hold meetings, as appropriate, and maintain minutes of each such
meeting.
(c) The Corporation shall not, without the affirmative vote of all of the
members of the board of directors of the Corporation (which shall include the
affirmative vote of the Independent Directors), take any of the actions
described in Article IV(a) above or institute any proceedings to adjudicate the
Corporation a bankrupt or insolvent, consent to the institution of bankruptcy or
insolvency proceedings against the Corporation, file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, 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 or admit its inability to pay its debts
generally as they become due or authorize any of the foregoing to be done or
taken on behalf of the Corporation.
ARTICLE V
CAPITAL STOCK
The total number of shares of capital stock that the Corporation shall have
authority to issue is ten thousand (10,000) shares designated as Common Stock
and the par value of each such share of Common Stock is one cent ($0.01),
amounting in the aggregate to one hundred dollars ($100).
ARTICLE VI
DENIAL OF PREEMPTIVE RIGHTS
No holder of any class of capital stock of the Corporation, whether nor 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.
ARTICLE VII
DIRECTORS PROTECTED
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<PAGE>
A director shall be fully protected in relying in good faith upon the books
of account or other records of the Corporation or statements prepared by any of
its officers or by independent public accountants or by an appraiser selected
with reasonable care by the Board of Directors as to the value and amount of the
assets, liabilities and/or net profits of the Corporation, or any other facts
pertinent to the existence and amount of surplus or other funds from which
dividends might properly be declared and paid, or with which the Corporation's
capital stock might properly be purchased or redeemed.
ARTICLE VIII
CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
ARTICLE IX
NO LIABILITY OF HOLDERS OF CAPITAL
STOCK FOR CORPORATE DEBTS
The holders of the capital stock of the Corporation shall not be personally
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 subject to the
payment of debts of the Corporation to any extent whatsoever.
ARTICLE X
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.
(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, dispose of real estate, real and personal property and any
interest or right therein.
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(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 reserves 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 and any restrictions contained herein
regarding the necessity of an affirmative vote of the Independent Director, have
and may exercise all of 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 such
seal. Such committee or committees shall have such name or names as may be
provided in the By-Laws of the Corporation or as may be determined from time to
time by resolution adopted by a majority of the whole Board of Directors.
(e) To adopt such pension, retirement, deferred compensation or other
employee benefit plans or provisions as may, from time to time, be approved by
it, providing for pensions, retirement income, deferred compensation or other
benefits for officers or employees of the Corporation and of any corporation
which is a subsidiary of the Corporation, or any of them, in consideration for
or in recognition of the services rendered by such officers or employees or as
an inducement to future efforts. No such plan or provision which is not at the
time of adoption unreasonable or unfair shall be invalidated or in any way
affected because any director shall be a beneficiary thereunder or shall vote
for any plan or provision under which he may benefit.
(f) 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 the Corporation.
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 or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if (1) the material
facts as to his relationship or interest as to the contract or transaction are
disclosed or
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are known to the Board of Directors or the committee, and the Board of Directors
or the committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum, or (2) the material facts as to
his relationship or interest and as to the contract or transaction are disclosed
or are known to the stockholders entitled to vote thereon, and contract or
transaction is specifically approved in good faith by 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, in each case, including the affirmative vote of the
Independent Director. 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 which authorizes the contract or transaction.
ARTICLE XII
DIRECTORS LIABILITY
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 Article XII shall
apply to or have any effect on the liability or alleged liability or any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
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 trustee 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
manner as the
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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, 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
recognition shall, if sanctioned by the court to which the said application has
been made, be binding on all the 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
Without the prior written consent of each nationally recognized rating
agency which has been requested by the Corporation to rate any issue of
Certificates or Notes issued pursuant to any Agreement or any series or class of
Certificates or Notes which is then rating such Certificates or notes, the
Corporation shall not amend, alter, change or repeal Article III, Article IV,
Article X, Article XI, this Article XIV or Article XVI. 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
rights of the stockholders herein are granted subject to this reservation.
ARTICLE XV
ELECTION OF DIRECTORS
Elections of directors need not be by any written ballot unless the By-Laws
of the Corporation shall so provide.
ARTICLE XVI
CORPORATE PROCEDURES
(a) The Corporation's assets will not be commingled with those of any
direct or ultimate parent of the Corporation.
(b) The Corporation will maintain separate corporate records and books of
account from those of any direct or ultimate parent of the Corporation.
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(c) The Corporation will conduct its business from an office separate from
any direct or ultimate parent of the Corporation.
ARTICLE XVII
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 XVIII
INCORPORATOR
The name and mailing address of the Incorporator are as follows:
Name Mailing Address
---- ---------------
Scott E. Herbst 2700 Bank One Tower
111 Monument Circle
Indianapolis, IN 46204
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BY-LAWS
OF
NEWCOURT RECEIVABLES CORPORATION II
ARTICLE I
OFFICES
Newcourt Receivables Corporation II (hereinafter called the "Corporation")
may establish or discontinue, from time to time, such offices and places of
business within or without the State of Delaware as the Board of Directors may
deem proper for the conduct of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 ANNUAL MEETING. The annual meeting of the holders of shares
of stock entitled to notice thereof and to vote thereat pursuant to the
provisions of the Certificate of Incorporation (hereafter called the "Annual
Meeting of Stockholders") for the purpose of electing directors and transacting
such other business as may come before it shall be held in each year at such
time, on such day and at such place, within or without the State of Delaware, as
shall be designated by the Board of Directors.
Section 2.2 SPECIAL MEETINGS. In addition to such special meetings as
are provided for by law or by the Certificate of Incorporation, special meetings
of the holders of the Corporation's stock may be called at any time by the Board
of Directors and may be held at such time, on such date and at such place,
within or without the State of Delaware, as shall be designated by the Board of
Directors.
Section 2.3 NOTICE OF MEETINGS. Except as otherwise provided by law,
written notice of each meeting of stockholders shall be given either by
delivering a notice personally or mailing notice to each stockholder of record
entitled to vote thereat. If mailed, the notice shall be directed to the
stockholder in a postage prepaid envelope at his address as it appears on the
stock books of the Corporation unless, prior to the time of mailing, he shall
have filed with the Secretary a written request that notices intended for him be
mailed to some other address, in which case it shall be mailed to the address
designated in such request. Notice of each meeting of stockholders shall be in
such form as is approved by the Board of Directors and shall state the purpose
or purposes for which the meeting is called, the date and time when and the
place where it is to be held, and shall be delivered personally or mailed to
more than sixty (60) days and not less than ten (10) days before the day of the
meeting. Except as otherwise provided by law, the business which may be
transacted at any such meeting of stockholders shall consist of and be limited
to the purpose or purposes so stated in such notice. The Secretary or an
Assistant Secretary of the Corporation shall, after giving such notice, make an
affidavit stating that notice has been given, which shall be filed with the
minutes of such meeting.
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Section 2.4 WAIVER OF NOTICE. Whenever notice is required to be given
under any provision of law or of the Certificate of Incorporation or the
By-Laws, a waiver thereof in writing or by telegraph, cable or other form of
recorded communication, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at meeting of stockholders shall constitute a waiver of
notice of such meeting, except when the person attends such 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
meeting of stockholders need be specified in any waiver of notice unless so
required by the Certificate of Incorporation.
Section 2.5 ORGANIZATION. The Chairman of the Board shall act as
chairman at all meetings of stockholders at which he is present, and as such
chairman shall call such meetings of stockholders to order and preside thereat.
If the Chairman of the Board shall be absent from any meeting of stockholders or
if there be no Chairman of the Board, the duties otherwise provided in this
Section 2.5 to be performed by him at such meeting shall be performed at such
meeting by the officer described in the last sentence of Section 5.6. The
Secretary of the Corporation shall act as secretary at all meetings of the
stockholders, but in his absence the chairman of the meeting may appoint any
person present to act as secretary of the meeting.
Section 2.6 STOCKHOLDERS ENTITLED TO VOTE. The Board of Directors may
fix a date not more than sixty (60) days nor less than ten (10) days prior to
the date of any meeting of stockholders, or prior to the last day on which the
consent or dissent of stockholders may be effectively expressed for any purpose
without a meeting, as a record date for the determination of the stockholders
entitled to notice of and to vote at such meeting and any adjournment thereof,
or to give such consent or express such dissent, and in such case such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to notice of, and to vote at, such meeting
and any adjournment thereof, or to give such consent or express such dissent, as
the case may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid. The Secretary shall
prepare and make or cause to be prepared and made, at least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting, arranged in alphabetical order and showing the address of
each such stockholder and the number of shares registered in the name of each
such stockholder. 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 (10) days prior to the meeting, either at a
place, specified in the notice of the meeting, with the city where the meeting
is to be held, or, if not so specified, at the place where the meeting is to be
held. Such list shall be produced and kept at the time and place of the meeting
during the whole time thereof, and subject to the inspection of any stockholder
who may be present.
Section 2.7 QUORUM AND ADJOURNMENT. Except as otherwise provided by law
or by the Certificate of Incorporation, the holders of a majority of the shares
of stock entitled to vote at the meeting present in person or by proxy shall
constitute a quorum of all meetings of the stockholders. In the absence of a
quorum, the holders of a majority of such shares of stock present in person or
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by proxy may adjourn any meeting, from time to time, until a quorum shall be
present. At any such adjourned meeting at which a quorum may be present, any
business may be transacted which might have been transacted at the meeting as
originally called. No notice of any adjourned meeting need be given other than
by announcement at the meeting that is being adjourned, provided that if the
adjournment is for more than thirty (30) days, or if after the adjournment a new
record date is fixed for the adjourned meeting, then a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 2.8 ORDER OF BUSINESS. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting or as is
otherwise determined by the vote of the holders of a majority of the shares of
stock present in person or by proxy and entitled to vote at the meeting.
Section 2.9 VOTE OF STOCKHOLDERS. Except as otherwise permitted by law
or by the Certificate of Incorporation or the By-Laws, all action by
stockholders shall be taken at a stockholders' meeting. Every stockholder of
record, as determined pursuant to Section 2.6, and who is entitled to vote,
shall be entitled at every meeting of the stockholders to one vote for every
share of stock standing in his name on the books of the Corporation. Every
stockholder entitled to vote or entitled 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 duly appointed by an instrument in writing,
subscribed by such stockholder and executed not more than three (3) years prior
to the meeting, unless the instrument provides for a longer period. The
attendance at any meeting of stockholders of a stockholder who may theretofore
have given a proxy shall not have the effect of revoking such proxy unless such
stockholder shall in writing so notify the secretary of the meeting prior to the
voting of the proxy. Unless otherwise provided by law, no vote, on any question
upon which a vote of the stockholders may be taken need be by written ballot
unless the chairman of the meeting shall determine that it shall be by written
ballot or the holders of a majority of the shares of stock present in person or
by proxy and entitled to participate such vote shall so demand. In a vote by
written ballot each written ballot shall state the number of shares voted and
the name of the stockholder or proxy voting. Except as otherwise provided by
law, by the Certificate of Incorporation or by Section 3.15, all elections of
directors and all questions shall be decided by the vote of the holders of a
majority of the shares of stock present in person or by proxy at the meeting and
entitled to vote in the election or on the question.
Section 2.10 CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as
otherwise provided by law or by the Certificate of Incorporation, any action
required to be taken, or which may be taken, at any meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of shares of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares of stock entitled to vote
thereon were present and voted, provided that prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
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ARTICLE III
BOARD OF DIRECTORS
Section 3.1 TERM. Except as otherwise provided by law or by the
Certificate of Incorporation, and subject to the provisions of Sections 3.13,
3.14 and 3.15, directors shall be elected at the Annual Meeting of Stockholders
to serve until the next Annual Meeting of Stockholders and until their
successors are elected and qualify or until their earlier resignation or
removal.
Section 3.2 QUALIFICATION. A director need not be the record or
beneficial owner of shares of capital stock of the Corporation. Acceptance of
the office of director may be expressed orally or in writing.
Section 3.3 NUMBER. The number of directors which shall constitute the
whole board shall be no more seven. The number may be increased from time to
time by amendment of this by-law by the board of directors or the stockholders.
Section 3.4 GENERAL POWERS. The business, properties and affairs of the
Corporation shall be managed by the Board of Directors, which, without limiting
the generality of the foregoing, shall have power to elect and appoint officers
of the Corporation, to appoint and direct agents, to grant general or limited
authority to officers, employees and agents of the Corporation, to make, execute
and deliver contracts and other instruments and documents in the name and on
behalf of the Corporation and over its seal, without specific authority in each
case, and, by resolution adopted by a majority of the whole Board of Directors,
to appoint committees of the Board of Directors, the membership of which may
consist of one or more directors, and which may advise the Board of Directors
with respect to any matters relating to the conduct of the Corporation's
business. In addition, the Board of Directors may exercise all the powers of
the Corporation and do all lawful acts and things which are not reserved to the
stockholders by law or by the Certificate of Incorporation or by these By-Laws.
Section 3.5 PLACE OF MEETINGS. Meetings of the Board of Directors may
be held at any place, within or without the State of Delaware, from time to time
designated by the Board of Directors.
Section 3.6 ORGANIZATION MEETING. A newly elected Board of Directors
shall meet and organize, and also may transact any other business which might be
transacted at a regular meeting thereof, as soon as practicable after each
Annual Meeting of Stockholders, at the place at which such meeting of
stockholders took place, without notice of such meeting, provided a quorum of
the whole Board of Directors is present. If such a quorum is not present, such
organization meeting may be held at any other time or place which may be
specified in a notice given in the manner provided in Section 3.8 for special
meetings of the Board of Directors, or in a waiver of notice thereof.
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Section 3.7 REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times as may be determined by resolution of the
Board of Directors and no notice shall be required for any regular meeting.
Except as otherwise provided by law, any business may be transacted at any
regular meeting of the Board of Directors.
Section 3.8 SPECIAL MEETINGS; NOTICE AND WAIVER OF NOTICES. Special
meetings of the Board of Directors shall be called by the Secretary on the
request of the Chairman of the Board or the President or on the request in
writing of any two directors stating the purpose or purposes of such meeting.
Notice of any special meeting shall be in form approved by the Chairman of the
Board or the President, as the case may be. Notices of special meetings shall
be mailed to each director, addressed to him at his residence or usual place of
business, no later than two (2) days before the day on which the meeting is to
be held, or shall be sent to him at such place by telegraph, cable or other form
of recorded communication or be delivered personally or by telephone not later
than the day before such day of meeting. Notice of any meeting of the Board of
Directors need not be given to any director if he shall sign a written waiver
thereof either before or after the time stated therein, or if he shall attend a
meeting, except when he attends such 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 special meeting of the Board of
Directors need be specified in any notice or written waiver of notice unless so
required by the Certificate of Incorporation or by the By-Laws. Unless limited
by law, by the Certificate of Incorporation or by the By-Laws, any and all
business may be transacted at any special meeting.
Section 3.9 ORGANIZATION OF MEETINGS. The Chairman of the Board shall
preside at all meetings of the Board of Directors at which he is present. If
the Chairman of the Board shall be absent from any meeting of the Board of
Directors or if there be no Chairman of the Board, the duties otherwise provided
in this Section 3.9 to be performed by him at such meeting shall be performed at
such meeting by the officer prescribed by the last sentence of Section 5.6. If
no such officer is present at such meeting, one of the directors present shall
be chosen by the members of the Board of Directors present to preside at such
meeting. The Secretary of the Corporation shall act as the secretary of all
meetings of the Board of Directors, and in his absence a temporary secretary
shall be appointed by the chairman of the meeting.
Section 3.10 QUORUM AND MANNER OF ACTING QUORUM. Except as otherwise
provided in this Section 3. 10, at every meeting of the Board of Directors three
directors shall constitute a quorum. Except as otherwise provided by law or by
the Certificate of Incorporation, or by Section 3.15, or by Section 4.1 or
Section 4.8, or by Section 5.3, or by Article IX, the unanimous vote of the
directors present at any such 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 any meeting, from time to time, until a quorum is
present. No notice of any adjourned meeting need be given other than by
announcement at the meeting that is being adjourned. Members of the Board of
Directors or any committee thereof may participate in a meeting of the Board of
Directors or of such committee by means of conference telephone or similar
communications equipment by means of which all persons
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participating in the meeting can hear each other, and participation by a member
of the Board of Directors in a meeting pursuant to this Section 3.10 shall
constitute his presence in person at such meeting.
Section 3.11 VOTING. On any question on which the Board of Directors
shall vote, the names of those voting and their votes shall be entered in the
minutes of the meeting if any member of the Board of Directors so requests at
the time.
Section 3.12 ACTION WITHOUT A MEETING. Except as otherwise provided by
law or by the Certificate of Incorporation, any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if prior to such action all members of the Board
of Directors or of such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or the committee.
Section 3.13 RESIGNATIONS. Any director may resign at any time upon
written notice of resignation to the Corporation. Any resignation shall be
effective immediately unless a certain date is specified for it to take effect,
in which event it shall be effective upon such date, and acceptance of any
resignation shall not be necessary to make it effective, irrespective of whether
the resignation is tendered subject to such acceptance.
Section 3.14 REMOVAL OF DIRECTORS. Any director may be removed, either
for or without cause, at any time upon recommendation of the Board of Directors,
by action of the holders of a majority of the outstanding shares of stock
entitled to vote thereon either at a meeting of the holders of such shares or,
whenever permitted by law and the Certificate of Incorporation, without a
meeting by their written consents thereto.
Section 3.15 FILING OF VACANCIES. Except as otherwise provided by law
and the Certificate of Incorporation, in case of any increase in the number of
directors, or of any vacancy in the Board of Directors, the additional director
or directors may be elected, or, as the case may be the vacancy or vacancies may
be filled, either (a) by the Board of Directors at any meeting by affirmative
vote of a majority of the remaining directors though the remaining directors be
less than the quorum provided in Section 3.10, or by a sole remaining director,
or (b) by the holders of capital stock of the Corporation entitled to vote
thereon, either at an Annual Meeting of Stockholders or at a special meeting of
such holders called for that purpose. The directors so chosen shall hold office
until the next Annual Meeting of Stockholders and until their successors are
elected and qualify or until their earlier resignation or removal.
Section 3.16 DIRECTORS' COMPENSATION. Any or all directors may receive
such reasonable compensation for their services as such, whether in the form of
salary or a fixed fee for attendance at meetings, with expenses, if any, as the
Board of Directors may from time to time determine. Nothing herein contained
shall be construed to preclude any director from serving the Corporation or any
affiliate thereof in any other capacity and receiving compensation therefor.
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ARTICLE IV
COMMITTEES
Section 4.1 CONSTITUTION AND POWERS. The Board of Directors may, by
resolution adopted by affirmative vote of a majority of the whole Board of
Directors, appoint one or more committees of the Board of Directors consisting
of one or more directors of the Corporation, which committees shall, except as
otherwise provided by law, have such powers and duties as the Board of Directors
shall properly determine.
Section 4.2 PLACE OF MEETINGS. Meetings of any committee of the Board
of Directors may be held at any place, within or without the State of Delaware,
as may be designated from time to time by the Board of Directors or such
committee.
Section 4.3 MEETINGS; NOTICE AND WAIVER OF NOTICE. Regular meetings of
any committee of the Board of Directors shall be held at such times as may be
determined by resolution either of the Board of Directors or of such committee
and no notice shall be required for any regular meeting. Special meetings of
any committee shall be called by the secretary thereof upon request of any
member thereof. Notice of any special meeting of any committee shall be in form
approved by the Chairman of the Board or the President, as the case may be.
Notices of special meetings shall be mailed to each member, addressed to him at
his residence or usual place of business, not later than two (2) days before the
day on which the meeting is to be held, or shall be sent to him at such place by
telegraph, cable or any other form of recorded communication or be delivered
personally or by telephone not later from the day before such day of meeting.
Neither the business to be transacted at, nor the purpose of, any special
meeting of any committee need be specified in any notice or written waiver of
notice unless so required by the Certificate of Incorporation or the By-Laws.
Notices of any such meeting need not be given to any member of any committee,
however, if waived by him as provided in Section 3.8. The provisions of such
Section 3.8 with respect to waiver of notice of meetings of the Board of
Directors shall apply to meetings of any committee as well.
Section 4.4 ORGANIZATION OF MEETINGS. The most senior officer of the
Corporation present, if any be members of the committee, and, if not, the
director present who has served the longest as a director, except as otherwise
expressly provided by the Board of Directors or the committee, shall preside at
all meetings of any committee. The Secretary of the Corporation, except as
otherwise expressly provided by the Board of Directors, shall act as secretary
at all meetings of any committee and in his absence a temporary secretary shall
be appointed by the chairman of the meeting.
Section 4.5 QUORUM AND MANNER OF ACTING. One-third (1/3) but in no
event fewer than two (2) of the members of any committee then in office shall
constitute a quorum for the transaction of business, and the vote of a majority
of those present at any meeting at which a quorum is present shall be the act of
such committee. In the absence of a quorum, a majority of the members of any
committee present, may adjourn any meeting, from time to time, until a quorum is
present. No
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notice of any adjourned meeting need be given other than by announcement at the
meeting that is being adjourned. The provisions of Section 3.10 with respect to
participating in a meeting of a committee of the Board of Directors and the
provisions of Section 3.12 with respect to action taken by a committee of the
Board of Directors without a meeting shall apply to participation in meetings of
and action taken by any committee.
Section 4.6 VOTING. On any question on which any committee shall vote,
the names of those voting and their votes shall be entered in the minutes of the
meeting if any member of such committee so requests.
Section 4.7 RECORDS. All committees shall keep minutes of their acts
and proceedings, which shall be submitted at the next regular meeting of the
Board of Directors unless sooner submitted at an organization or special meeting
of the Board of Directors, and any action taken by the Board of Directors with
respect thereto shall be entered in the minutes of the Board of Directors.
Section 4.8 VACANCIES. Any vacancy among the appointed members of any
committee of the Board of Directors may be filled by affirmative vote of a
majority of the whole Board of Directors.
Section 4.9 MEMBERS' COMPENSATION. Members of all committees may
receive such reasonable compensation for their services as such, whether in the
form of salary or a fixed fee for attendance at meetings, with expenses, if any,
as the Board of Directors may from time to time determine. Nothing herein
contained shall be construed to preclude any member of any committee from
serving the Corporation or any affiliate thereof in any other capacity and
receiving compensation therefor.
ARTICLE V
THE OFFICERS
Section 5.1 OFFICERS -- QUALIFICATIONS. The elected officers of the
Corporation shall be a President, a Secretary and a Treasurer. A Chairman of
the Board may also be elected at the option of the Board of Directors. The
elected officers shall be elected by the Board of Directors. The Chairman of
the Board (if any) and the President shall be selected from the directors. The
Board of Directors may elect one or more Vice Presidents and elect or appoint
such other officers as may be deemed necessary. Assistant Secretaries,
Assistant Treasurers and other officers and agents may be appointed by the Board
of Directors or may be appointed pursuant to Section 5.6.
Section 5.2 TERM OF OFFICE; VACANCIES. So far as is practicable, all
elected officers shall be elected at the organization meeting of the Board of
Directors in each year and, except as otherwise provided in Sections 5.3 and
5.4, and subject to the provisions of Section 5.6, shall hold office until the
organization meeting of the Board of Directors in the next subsequent year and
until their respective successors are elected and qualify or until their earlier
resignation or removal. All
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appointed officers shall hold office during the pleasure of the Board of
Directors and the Chairman of the Board. If any vacancy shall occur in any
office, the Board of Directors may elect or appoint a successor to fill such
vacancy for the remainder of the term.
Section 5.3 REMOVAL OF ELECTED OFFICERS. Any elected officer may be
removed at any time, either for or without cause, by affirmative vote of a
majority of the whole Board of Directors, at any regular meeting or at any
special meeting called for the purpose.
Section 5.4 RESIGNATIONS. Any officer may resign at any tune upon
written notice of resignation to the Corporation. Any resignation shall be
effective immediately unless a certain date is specified for it to take effect,
in which event it shall be effective upon such date, and acceptance of any
resignation shall not be necessary to make it effective, irrespective of whether
Section 5.5 OFFICERS HOLDING MORE THAN ONE OFFICE. Any officer may hold
two or more offices the duties of which can be consistently performed by the
same person.
Section 5.6 THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall
be the chief executive officer of the Corporation. He shall direct, coordinate
and control the Corporation's business and activities and its operating expenses
and capital expenditures and shall have general authority to exercise all the
powers necessary for the chief executive officer of the Corporation, all in
accordance with basic policies established by and subject to the control of the
Board of Directors. He shall be responsible for the employment or appointment
of employees, agents and officers (except officers to be elected by the Board of
Directors pursuant to Section 5.1) as may be required for the conduct of the
business and the attainment of the objectives of the Corporation, and he shall
have authority to fix compensation as provided in Section 5.12. He shall have
authority to suspend or to remove any employee, agent or appointed officer of
the Corporation. He shall have general authority to execute bonds, deeds and
contracts in the name and on behalf of the Corporation. As provided in Section
2.5, he shall act as chairman at all meetings of the stockholders at which he is
present, and, as provided in Section 3.9, he shall preside at all meetings of
the Board of Directors at which he is present. In the absence of the Chairman
of the Board or if there be no Chairman of the Board, his duties shall be
performed and his authority may be exercised by the President, and, in the
absence of the Chairman of the Board and the President or if there be no such
officer, such duties shall be performed by such officer as may have been the
resignation is tendered subject to such acceptance designated by the most senior
officer of the Corporation who has made any such designation, with the right
reserved to the Board of Directors to make the designation or supersede any
designation so made.
Section 5.7 THE PRESIDENT. The President shall be the chief
administrative officer of the Corporation. He shall implement the general
directives, plans and policies and shall establish operating and administrative
plans and policies and direct and coordinate the Corporation's organizational
components, within the scope of the authority delegated to him by the Board of
Directors. He shall have general authority to execute bonds, deeds and
contracts in the name and on behalf of the Corporation and responsibility for
the employment or appointment of such employees, agents and officers (except
officers to be elected by the Board of Directors pursuant to
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Section 5.1) as may be required to carry on the operations of the business, and
he shall have authority to fix the compensation of such employees, agents and
officers as provided in Section 5.12. He shall have authority to suspend or to
remove any employee or agent of the Corporation (other than officers). As
provided in Section 5.6, in the absence of the Chairman of the Board or if there
be no Chairman of the Board, the President shall perform all the duties AND
exercise the authority of the Chairman of the Board. In the absence of the
President, his duties shall be performed and his authority may be exercised by
such officer as may have been designated by the most senior officer of the
Corporation who has made any such designation, with the right reserved to the
Board of Directors to make the designation or supersede any designation so made.
Section 5.8 THE VICE PRESIDENTS. The several Vice Presidents, if any,
shall perform such duties and may exercise such authority as may from time to
time be conferred upon them by the Board of Directors, the Chairman of the Board
or the President.
Section 5.9 THE SECRETARY. The Secretary shall attend to the giving of
notice of all meetings of stockholders and of the Board of Directors and
committees thereof, and, as provided in Section 2.5 and Section 3.9, shall keep
minutes of all proceedings at meetings of the stockholders and of the Board of
Directors at which he is present, as well as of all proceedings at all meetings
of committees of the Board of Directors which he has served as secretary, and
where some other person has served as secretary thereto, the Secretary shall
maintain custody of the minutes of such proceedings. As provided in Section
7.2, he shall have charge of the corporate seal and shall have authority to
attest any and all instruments or writings to which the same may be affixed. He
shall keep and account for all books, documents, papers and records of the
Corporation, except those for which some other officer or agent is properly
accountable. He shall generally perform all the duties usually appertaining to
the office of secretary of a corporation. In the absence of the Secretary, an
Assistant Secretary, if any, or such person as shall be designated by the
Chairman of the Board shall perform his duties.
Section 5.10 THE TREASURER. The Treasurer shall have the care and
custody of all the funds of the Corporation and shall deposit the same in such
banks or other depositories as the Board of Directors or any officer or
officers, or any officer and agent jointly, thereunto duly authorized by the
Board of Directors, shall, from time to time, direct or approve. He shall keep
full and accurate account of all moneys received and paid on account of the
Corporation and shall render a statement of his accounts whenever the Board of
Directors shall require. Except as otherwise provided by the Board of Directors
or in the Corporation's plan of organization, he shall perform all other
necessary acts and duties in connection with the administration of the financial
affairs of the Corporation and shall generally perform all the duties usually
appertaining to the office of the treasurer of a corporation. Whenever required
by the Board of Directors he shall give bonds for the faithful discharge of his
duties in such sums and with such sureties as the Board of Directors shall
approve. In the absence of the Treasurer, an Assistant Treasurer, if any, or
such person as shall be designated by the Chairman of the Board shall perform
his duties.
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Section 5.11 ADDITIONAL DUTIES AND AUTHORITY. In addition to the
foregoing specifically enumerated duties and authority, the several officers of
the Corporation shall perform such other duties and may exercise such further
authority as the Board of Directors may, from time to time, determine or as may
be assigned to them by any superior officer.
Section 5.12 COMPENSATION. Except as fixed or controlled by the Board of
Director or otherwise, compensation of all officers and employees shall be fixed
by the Chairman of the Board, or by the President within limits approved by the
Chairman of the Board, or by other officers of the Corporation exercising
authority granted to them under the plan of organization of the Corporation.
Section 5.13 VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice President and any
such officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any Corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
ARTICLE VI
STOCK AND TRANSFERS OF STOCK
Section 6.1 STOCK CERTIFICATES. The capital stock of the corporation
shall be represented by certificates signed by, or in the name of, the
Corporation by the Chairman of the Board or the President, and by the Secretary
or an Assistant Secretary, or by the Treasurer or an Assistant Treasurer, and
scaled with the seal of the Corporation. Such seal may be a facsimile, engraved
or printed. In case any such officer who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued by the Corporation, it may
nevertheless be issued by the Corporation with the same effect as if such
officer had not ceased to be such at the date of its issue. The certificates
representing the capital stock of the Corporation shall be in such form as shall
be approved by the Board of Directors.
Section 6.2 TRANSFERS OF STOCK. Transfers of stock shall be made on the
books of the Corporation by the person named in the certificate, or by an
attorney lawfully constituted in writing, upon surrender and cancellation of a
certificate or certificates for a like number of shares of the same class or
series of stock, duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, with such proof of the authenticity of the
signatures as the Corporation or its agents may reasonably require and with all
required stock transfer tax stamps affixed thereto and canceled or accompanied
by sufficient funds to pay such taxes.
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Section 6.3 LOST CERTIFICATES. In case any certificate of stock shall
be lost, stolen or destroyed, the Board of Directors, in its discretion, or any
officer or officers thereunder duly authorized by the Board of Directors, may
authorize the issuance of a substitute certificate in place of the certificate
so lost, stolen or destroyed; provided, however, that in each such case the
applicant for a substitute certificate shall furnish evidence to the
Corporation, which it determines in its discretion is satisfactory, of the loss,
theft or destruction of such certificate and of the ownership thereof, and also
such security or indemnity as may be required by it.
Section 6.4 DETERMINATION OF HOLDERS OF RECORD FOR CERTAIN PURPOSES. In
order to determine the stockholders or other holders of securities entitled to
receive payment of any dividend or other distribution or allotment or any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of capital stock or other securities or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date not
more from sixty (60) days prior to the date of payment of such rights or the
date when any such rights in respect of any change, conversion or exchange of
stock or securities may be exercised, and in such case only holders of record on
the date so fixed shall be entitled to receive payment of such dividend or other
distribution or to receive such allotment of rights, or to exercise such rights,
notwithstanding any transfer of any stock or other securities on the books of
the Corporation after any such record date fixed as aforesaid.
ARTICLE VII
CORPORATE SEAL
Section 7.1 SEAL. The seal of the Corporation shall be in the form of a
circle and shall bear the name of the Corporation and in the center of the
circle the words "Corporate Seal Delaware" and the figures representing the year
of the organization of the Corporation.
Section 7.2 AFFIXING AND ATTESTING. The seal of the Corporation shall
be in the custody of the Secretary, who shall have power to affix it to the
proper corporate instruments and documents, and who shall attest it. In his
absence, it may be affixed and attested by an Assistant Secretary, or by the
Treasurer or an Assistant Treasurer, or by any other person or persons as may be
designated by the Board of Directors.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 FISCAL YEAR. The fiscal year of the Corporation shall end
on December 31 of each year and the succeeding fiscal year shall begin on the
day next succeeding the last day of the preceding fiscal year.
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Section 8.2 SIGNATURES ON NEGOTIABLE INSTRUMENTS. All bills, notes,
checks or other instruments for the payment of money shall be signed or
countersigned by such officers or agents and in such manner as, from time to
time, may be prescribed by resolution (whether general or special) of the Board
of Directors, or may be prescribed by any officer or officers, or any officer
and agent jointly, thereunder duly authorized by the Board of Directors.
Section 8.3 REFERENCES TO ARTICLES AND SECTION NUMBERS AND TO THE BY-
LAWS AND THE CERTIFICATE OF INCORPORATION. Whenever in the By-Laws reference is
made to an Article or Section number, such reference is to the number of an
Article or Section of the By-Laws. Whenever in the By-Laws reference is made to
the By-Laws, such reference is to these By-Laws of the Corporation, as amended,
and whenever reference is made to the Certificate of Incorporation, such
reference is to the Certificate of Incorporation of the Corporation, as amended,
including all documents deemed by the General Corporation Law of the State of
Delaware to constitute a part thereof.
Section 8.4 DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
ARTICLE IX
AMENDMENTS
The By-Laws may be altered, amended, or repealed at any Annual Meeting of
Stockholders, or at any special meeting of holders of shares of stock entitled
to vote thereon, provided that notice of such proposed alteration, amendment or
repeal be included in the notice of meeting, by a vote of the holders of a
majority of the shares of stock present in person or by proxy at the meeting and
entitled to vote thereon, or (except as otherwise expressly provided in any
By-Law adopted by the stockholders) by the Board of Directors at any valid
meeting by affirmative vote of a majority of the whole Board of Directors or by
the written consent of all members of the whole Board of Directors.
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TRUST AGREEMENT
by and between
NEWCOURT RECEIVABLES CORPORATION II
as Trust Depositor,
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
Dated as of November 1, 1997
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TABLE OF CONTENTS
ARTICLE ONE Page
----
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.01. CAPITALIZED TERMS . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS . . . . . . . . . . . . . .3
SECTION 1.03. USAGE OF TERMS. . . . . . . . . . . . . . . . . . . . . .3
SECTION 1.04. SECTION REFERENCES. . . . . . . . . . . . . . . . . . . .3
SECTION 1.05. ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . .3
ARTICLE TWOORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.01. NAME. . . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.02. OFFICE. . . . . . . . . . . . . . . . . . . . . . . . . .3
SECTION 2.03. PURPOSES AND POWERS . . . . . . . . . . . . . . . . . . .3
SECTION 2.04. APPOINTMENT OF OWNER TRUSTEE. . . . . . . . . . . . . . .4
SECTION 2.05. CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. . . . . . . .4
SECTION 2.06. DECLARATION OF TRUST. . . . . . . . . . . . . . . . . . .4
SECTION 2.07. LIABILITY OF TRUST DEPOSITOR. . . . . . . . . . . . . . .5
SECTION 2.08. TITLE TO TRUST PROPERTY . . . . . . . . . . . . . . . . .5
SECTION 2.09. SITUS OF TRUST. . . . . . . . . . . . . . . . . . . . . .5
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE TRUST DEPOSITOR . .5
SECTION 2.11. FEDERAL INCOME TAX TREATMENT. . . . . . . . . . . . . . .6
ARTICLE THREETRUST CERTIFICATE AND TRANSFER OF INTEREST. . . . . . . . . . . .6
SECTION 3.01. OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 3.02. THE TRUST CERTIFICATE . . . . . . . . . . . . . . . . . .7
SECTION 3.03. AUTHENTICATION AND DELIVERY OF TRUST CERTIFICATE. . . . .7
SECTION 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . .7
SECTION 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES .8
SECTION 3.06. PERSONS DEEMED OWNERS . . . . . . . . . . . . . . . . . .8
SECTION 3.07. ACCESS TO LIST OF CERTIFICATEHOLDER'S NAME AND ADDRESSES.8
SECTION 3.08. MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . .8
SECTION 3.09. APPOINTMENT OF PAYING AGENT . . . . . . . . . . . . . . .8
SECTION 3.10. OWNERSHIP BY TRUST DEPOSITOR OF TRUST CERTIFICATE . . . .9
ARTICLE FOUR . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
ACTIONS BY OWNER TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . .9
Section 4.01. Prior Notice to Certificateholder with Respect to
Certain Matters . . . . . . . . . . . . . . . . . . . . .9
SECTION 4.02. ACTION BY OWNER WITH RESPECT TO CERTAIN MATTERS . . . . .9
SECTION 4.03. ACTION BY OWNER WITH RESPECT TO BANKRUPTCY. . . . . . . 10
SECTION 4.04. RESTRICTIONS ON OWNER'S POWER . . . . . . . . . . . . . 10
ARTICLE FIVEAPPLICATION OF TRUST FUNDS;CERTAIN DUTIES. . . . . . . . . . . . 10
SECTION 5.01. ESTABLISHMENT OF TRUST ACCOUNT. . . . . . . . . . . . . 10
SECTION 5.02. APPLICATION OF TRUST FUNDS. . . . . . . . . . . . . . . 10
SECTION 5.03. METHOD OF PAYMENT . . . . . . . . . . . . . . . . . . . 11
SECTION 5.04. NO SEGREGATION OF MONEYS; NO INTEREST . . . . . . . . . 11
SECTION 5.05. ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDER, THE
INTERNAL REVENUE SERVICE AND OTHERS . . . . . . . . . . 11
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SECTION 5.06. SIGNATURE ON RETURNS; TAX MATTERS PARTNER . . . . . . . 11
ARTICLE SIXAUTHORITY AND DUTIES OF OWNER TRUSTEE . . . . . . . . . . . . . . 11
SECTION 6.01. GENERAL AUTHORITY . . . . . . . . . . . . . . . . . . . 11
SECTION 6.02. GENERAL DUTIES. . . . . . . . . . . . . . . . . . . . . 11
SECTION 6.03. ACTION UPON INSTRUCTION . . . . . . . . . . . . . . . . 12
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.06. RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE SEVENCONCERNING THE OWNER TRUSTEE. . . . . . . . . . . . . . . . . . 13
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES . . . . . . . . . . . . 13
SECTION 7.02. FURNISHING OF DOCUMENTS . . . . . . . . . . . . . . . . 14
SECTION 7.03. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . 14
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL . . . . . . . . . . . . . . 15
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY . . . . . . . . . . . 15
SECTION 7.06. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATE, NOTES
OR CONTRACTS. . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.07. OWNER TRUSTEE MAY OWN TRUST CERTIFICATE AND NOTES . . . 15
ARTICLE EIGHTCOMPENSATION OF OWNER TRUSTEE . . . . . . . . . . . . . . . . . 16
SECTION 8.01. OWNER TRUSTEE'S FEES AND EXPENSES . . . . . . . . . . . 16
SECTION 8.02. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.03. PAYMENTS TO THE OWNER TRUSTEE . . . . . . . . . . . . . 16
ARTICLE NINETERMINATION OF TRUST AGREEMENT . . . . . . . . . . . . . . . . . 16
SECTION 9.01. TERMINATION OF TRUST AGREEMENT. . . . . . . . . . . . . 16
SECTION 9.02. DISSOLUTION UPON BANKRUPTCY OF TRUST DEPOSITOR OR
WITHDRAWAL OR REMOVAL OF TRUST DEPOSITOR. . . . . . . . 17
ARTICLE TENSUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES. . . . . . 17
SECTION 10.01. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. . . . . . . 17
SECTION 10.02. RESIGNATION OR REMOVAL OF OWNER TRUSTEE . . . . . . . . 17
SECTION 10.03. SUCCESSOR OWNER TRUSTEE . . . . . . . . . . . . . . . . 18
SECTION 10.04. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. . . . . . . . 18
SECTION 10.05. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE . . . . . 18
ARTICLE ELEVENMISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 11.01. SUPPLEMENTS AND AMENDMENTS. . . . . . . . . . . . . . . 19
SECTION 11.02. NO LEGAL TITLE TO TRUST ESTATE IN OWNER . . . . . . . . 20
SECTION 11.03. LIMITATIONS ON RIGHTS OF OTHERS . . . . . . . . . . . . 20
SECTION 11.04. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 11.05. SEVERABILITY OF PROVISIONS. . . . . . . . . . . . . . . 21
SECTION 11.06. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.07. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . 22
SECTION 11.09. NO PETITION . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.10. NO RECOURSE . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.11. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.13. TRUST CERTIFICATE TRANSFER RESTRICTIONS . . . . . . . . 22
SECTION 11.14. TRUST DEPOSITOR PAYMENT OBLIGATION. . . . . . . . . . . 23
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EXHIBITS
Exhibit A - Form of Certificate of Trust. . . . . . . . . . . . . .A-1
Exhibit B - Form of Trust Certificate . . . . . . . . . . . . . . .B-1
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This TRUST AGREEMENT dated as of November 1, 1997, is between NEWCOURT
RECEIVABLES CORPORATION II, a Delaware corporation, as Trust Depositor (the
"TRUST DEPOSITOR"), and CHASE MANHATTAN BANK DELAWARE, 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 that the Trust Agreement
shall be amended and restated as follows:
ARTICLE ONE
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
Newcourt USA, as administrator.
"AGREEMENT" means this Trust Agreement, as the same may be amended and
supplemented from time to time.
"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 $8,025,000.
"CERTIFICATE DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 5.01.
"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 register (or any successor thereto) appointed pursuant to
Section 3.04.
"CERTIFICATEHOLDER" or "HOLDER" means with respect to a Trust Certificate
the Person in whose name the Trust Certificate is registered in the Certificate
Register.
"CLOSING DATE" means November 26, 1997.
"CODE" means the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
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"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.
"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 Manufacturers and Traders Trust Company, as Indenture Trustee.
"NEWCOURT USA" means Newcourt Financial USA Inc., a Delaware corporation.
"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 B Notes,
the Class C Notes and the Class D Notes, in each case issued pursuant to the
Indenture.
"OWNER" means the Holder of the Trust Certificate.
"OWNER TRUSTEE" means Chase Manhattan Bank Delaware, a Delaware banking
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 1201 Market Street, Wilmington, Delaware 19801, 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 Newcourt USA.
"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, limited liability company, joint stock company, trust
(including any beneficiary thereof) unincorporated organization or government or
any agency or political subdivision thereof.
"RECORD DATE" means, with respect to any Distribution Date, the last
Business Day of the preceding calendar month.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of the date hereof, among the Trust, the Trust Depositor, Newcourt USA,
as Servicer 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.
"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.
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"TRUST" means the trust established by this Agreement.
"TRUST CERTIFICATE" means the trust certificate evidencing the beneficial
equity interest of the Owner in the Trust, substantially in the form of EXHIBIT
B hereto.
"TRUST DEPOSITOR" means Newcourt Receivables Corporation II 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 Trustee and
the Trust pursuant to the Sale and Servicing Agreement and the Administration
Agreement.
"UNDERWRITERS" means First Union Capital Markets Corp. Deutsche Morgan
Grenfell, Lehman Brothers Inc. and Banc America Robertson Stephens.
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 TWO
ORGANIZATION
SECTION 2.01. NAME. The Trust created hereby shall be known as "NEWCOURT
RECEIVABLES ASSET TRUST 1997-1", 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 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:
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(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;
(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 this Section 2.03. 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 this
Section 2.03.
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 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
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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 purposes of this Trust as set
forth in 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 the Trust Depositor shall not be liable
for any losses incurred by the 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.
(b) Other than to the extent set forth in Section 2.07(a), the Owner,
solely by virtue of its being the Holder of the Trust Certificate, shall not
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 New York. All bank accounts maintained
by the Owner Trustee on behalf of the Trust shall be located in the State of New
York 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 New
York and payments will be made by the Trust only from Delaware or New York. The
only office of the Trust will be at the 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:
(i) 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.
(ii) 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.
(iii) 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
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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.
(iv) 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.
(v) 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.
(vi) 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 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.
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ARTICLE THREE
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, prior to such transfer the Owner Trustee shall have received (i) a Tax
Opinion, and (ii) a certificate from the proposed transferee certifying that
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 with an original Certificate balance 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, upon authentication pursuant to Section 3.03, shall be deemed to
have been validly issued when so executed and authenticated. 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 the authentication and delivery 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, $127,067,000, (ii) Class A-2
Notes, $88,278,000, (iii) Class-A-3 Notes $107,004,000, (iv) Class A-4 Notes
$167,194,000, (v) Class B Notes, $18,726,000, (vi) Class C Notes, $10,700,000
and (vii) Class D Notes, $16,051,000. 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 authentication 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 in which, subject to such reasonable regulations as it may
prescribe, it shall provide for the registration of Trust Certificate and
transfers and exchanges of the Trust Certificate as provided herein. The Chase
Manhattan Bank is hereby initially appointed Certificate Registrar for the
purpose of registering the Trust Certificate and transfers and exchanges of the
Trust
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Certificate as herein provided. In the event that, subsequent to the Closing
Date, the Owner Trustee notifies the Servicer that the Chase Manhattan Bank
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
Indianapolis, Indiana, 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, 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 the 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.
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 the City of New York, New York, an office or offices or agency or
agencies where the Trust Certificate may be surrendered for
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registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificate and the Transaction
Documents may be served. The Owner Trustee initially designates the the Chase
Manhattan Bank, 55 Water Street, New York, New York 10041 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. 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 The Chase Manhattan Bank, and any co-paying agent chosen by the Paying Agent
that is acceptable to the 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 The Chase Manhattan Bank 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 3.10. 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 FOUR
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);
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(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required
and such amendment materially and adversely affects the interest of
the Owner;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement
any provision in a manner 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 assigned by the Owner.
SECTION 4.03. ACTION BY OWNER WITH RESPECT TO BANKRUPTCY. 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. Neither the Administrator
nor the Owner shall 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 FIVE
APPLICATION OF TRUST FUNDS;
CERTAIN DUTIES
SECTION 5.01. ESTABLISHMENT OF TRUST ACCOUNT. The Owner Trustee, for the
benefit of the Certificateholder, shall maintain in the name of the Trust a
segregated corporate trust account with a Qualified Institution, (the
"CERTIFICATE DISTRIBUTION ACCOUNT"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholder.
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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 institution with the Certificate Distribution Account is established ceases
to be a Qualified Institution, 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 with
a Qualified Institution 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 Owner Trustee 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 Owner Trustee 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 Owner Trustee 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 Owner
Trustee 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 Trust 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 or as otherwise requested in
writing by such Holder.
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.
SECTION 5.05. ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDER, THE
INTERNAL REVENUE SERVICE AND OTHERS. The Owner Trustee 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
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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 SIX
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 (in each case, in such form as approved by
the Trust Depositor), 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. 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 Newcourt USA in connection with any claims paying
procedure as part of an insolvency or receivership proceeding involving Newcourt
USA. 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) The 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
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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 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.
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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 the Owner Trustee, would result in
the Trust's becoming taxable as a corporation for federal or state income tax
purposes. Neither the Administrator nor the Owner shall not direct the Owner
Trustee to take actions that would violate the provisions of this Section.
ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the 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 the 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 the 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 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
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(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
the Owner has offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right
of the Owner Trustee to perform any discretionary act enumerated in
this Agreement or in any 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 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
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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, Chase Manhattan Bank
Delaware 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 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 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; 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 EIGHT
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
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(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; PROVIDED, HOWEVER, 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; PROVIDED, FURTHER, that the liability of the Trust
Depositor under this Section shall be limited to the assets of the Trust
Depositor. 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. 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.
ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. TERMINATION OF TRUST AGREEMENT.
(a) This Agreement (other than Article Eight) and the Trust shall
terminate and be of no further force or effect 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 termination 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 such 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 Certificate, 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 the 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
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the Certificateholder concerning surrender of its Trust Certificate, and the
cost thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. 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 its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
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 TEN
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 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
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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.
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:
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<PAGE>
(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.
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 ELEVEN
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 and
the Certificateholder, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Noteholders or 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
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<PAGE>
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.
(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 and the other Transaction Documents,
and that all conditions precedent to the execution and delivery of such
amendment as set forth in Transaction Documents have been satisfied. 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
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:
Newcourt Financial USA, Inc.
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<PAGE>
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Attention: Scott Herbst
Fax No.: (317) 592-1116
(ii) If to the Trust Depositor:
Newcourt Receivables Corporation II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Attention: Scott Herbst
Fax No.: (317) 592-1116
(iii) If to the Indenture Trustee:
Manufacturers and Traders Trust Company
1 M&T Plaza, 7th Floor
Buffalo, New York 14203
Attention: Kathy E. Puccio
Fax No.: (716) 842-4474
(iv) If to the Owner Trustee:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801-1167
Attention: Corporate Trust Administration
Department
Fax No.: (302) 984-4903
(vii) If to the Underwriters:
First Union Capital Markets Corp.
One First Union Center, TW-6
301 South College Street
Charlotte, North Carolina 28288-0610
Attention: Asset Securitization Division
Fax No.: (704) 374-3254
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.
-22-
<PAGE>
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 the Owner and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by the Owner shall bind the successors and assigns of such
Owner.
SECTION 11.08. COVENANTS OF THE TRUST DEPOSITOR. In the event that (a)
the Certificate Balance shall be reduced by realized losses and (b) 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.
SECTION 11.09. NO PETITION.
(a) The Trust Depositor will not at any time institute against the
Trust 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.
(b) 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 11.10. NO RECOURSE. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificate
represents beneficial interests in the Trust only and does not represent
interests in or obligations of the Trust Depositor, the Servicer, the Seller,
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.
SECTION 11.11. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. 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
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<PAGE>
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 11.14. TRUST DEPOSITOR PAYMENT OBLIGATION. The Trust Depositor
shall be responsible for payment of the Administrator's compensation pursuant to
Section 3 of the Administration Agreement and shall reimburse the Administrator
for all expenses and liabilities of the Administrator incurred thereunder.
[remainder of this page intentionally left blank]
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<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.
NEWCOURT RECEIVABLES CORPORATION II,
as Trust Depositor
By:
---------------------------------
Printed Name:
--------------------
Title:
---------------------------
By:
---------------------------------
Printed Name:
--------------------
Title:
---------------------------
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
By:
------------------------------
Printed Name:
-----------------
Title
-------------------------
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<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
This Certificate of Trust of Newcourt Receivables Asset Trust 1997-1 (the
"TRUST"), dated August 21, 1997, is being duly executed and filed by Chase
Manhattan Bank Delaware, 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 Newcourt
Receivables Asset Trust 1997-1.
2. DELAWARE TRUSTEE. The name and business address of the Owner
Trustee of the Trust in the State of Delaware is Chase Manhattan Bank Delaware,
1201 Market Street, Wilmington, Delaware 19801 (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.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as
Owner Trustee
By:
----------------------------------------
Printed Name:
---------------------------
Title:
---------------------------------
A-1
<PAGE>
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
NEWCOURT RECEIVABLES CORPORATION II, NEWCOURT FINANCIAL USA, 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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1 CLASS E RECEIVABLE-BACKED CERTIFICATE
NO. 1 Trust Certificate
Principal Balance $[___________]
THIS CERTIFIES THAT Newcourt Receivables Corporation II is the registered
owner of $[________________] of a nonassessable, fully-paid, fractional
undivided equity interest in the Newcourt Receivables Asset Trust 1997-1 (the
"TRUST") formed by Newcourt Receivables Corporation II, a Delaware corporation
(the "TRUST DEPOSITOR").
The Trust was created pursuant to a Trust Agreement, dated as of November
1, 1997 (as amended, restated and/or supplemented from time to time, the "TRUST
AGREEMENT"), among Newcourt Receivables Corporation II, as Trust Depositor (the
"TRUST DEPOSITOR"), and Chase Manhattan Bank Delaware, 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 November 1, 1997 (the "SALE
AND SERVICING AGREEMENT"), among the Trust, Newcourt Receivables Corporation II,
as depositor (the "TRUST DEPOSITOR"), Newcourt Financial USA, Inc. ("NEWCOURT
USA"), as Servicer (in such capacity, the "SERVICER") and Manufacturers and
Traders Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") or (iii)
the Indenture, dated as of November 1, 1997 (the "INDENTURE"), between the Trust
and the Indenture Trustee.
This Trust Certificate is the duly authorized Trust Certificate designated
as "NEWCOURT RECEIVABLES ASSET TRUST CLASS E RECEIVABLE-BACKED CERTIFICATE" (the
"TRUST CERTIFICATE"). Also issued under the Indenture are seven classes of
notes designated as "[________]% NEWCOURT RECEIVABLES ASSET TRUST CLASS A-1
RECEIVABLE- BACKED NOTES" and "[_____________]% NEWCOURT RECEIVABLES ASSET TRUST
CLASS A-2 RECEIVABLE-BACKED NOTES" and "[_____________]% NEWCOURT RECEIVABLES
ASSET TRUST CLASS A-3 RECEIVABLE-BACKED NOTES" and "[_____________]% NEWCOURT
RECEIVABLES ASSET TRUST CLASS A-4 RECEIVABLE-BACKED NOTES" and "[_________]%
NEWCOURT RECEIVABLES ASSET TRUST CLASS B RECEIVABLE-BACKED NOTES", and
"[_________]% NEWCOURT RECEIVABLES ASSET TRUST CLASS C RECEIVABLE-BACKED NOTES"
and "[________]% NEWCOURT RECEIVABLES ASSET TRUST CLASS D 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
<PAGE>
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 monies due or to become due in
payment of such Contracts on and after the related Cutoff Date, but excluding
any Scheduled Payments due prior to the related Cutoff Date) and all interests
in the Equipment related thereto.
Under the Trust Agreement, there will be distributed on the twentieth
(20th) day of each month or if such day is not a Business Day the next
succeeding Business Day commencing December 22, 1997 (each, a "DISTRIBUTION
DATE"), and ending no later than the Distribution Date in May 2005 to the Person
in whose name this Trust Certificate is registered at the close of business on
the 1st 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 Seller, 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 the 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.
The 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 New York.
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.
2
<PAGE>
[REVERSE OF CERTIFICATE]
The Trust Certificate does not represent an obligation of, or an interest
in the Trust Depositor, Newcourt USA, as the Seller 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 registration of transfer hereof or in exchange therefor 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 this 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 The City of New York, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon a new Trust Certificate evidencing the
same aggregate certificate principal balance 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, this Trust Certificate is
issuable only as a registered Trust Certificate without coupons. No service
charge will be made for any registration of transfer of this 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, 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 the 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.
This Trust Certificate may not be acquired by a Benefit Plan. By accepting
and holding this Trust Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not a Benefit Plan and is not acquiring
this Trust Certificate for the account of such an entity.
3
<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: [______], 1997 NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee
By:
-----------------------------------------------
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Trust Certificate referred to in the within-mentioned Trust
Agreement.
Chase Manhattan Bank Delaware,
not in its individual capacity but solely
as Owner Trustee
By:
-------------------------------------------
Authorized Signatory
4
<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:
- ------------------------------------- --------------------------------------
NOTICE: Signature(s) must be NOTICE: The signature to this
guaranteed by an eligible guarantor assignment must correspond with the
institution. 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.
5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NEWCOURT RECEIVABLES ASSET TRUST 1997-1,
as Issuer,
and
MANUFACTURER'S AND TRADER'S TRUST COMPANY,
not in its individual capacity but solely in its capacity
as Indenture Trustee
-----------------------------------
INDENTURE
Dated as of November 1, 1997
-----------------------------------
$127,067,000 Class A-1 Receivable-Backed Notes
$88,278,000 Class A-2 Receivable-Backed Notes
$107,004,000 Class A-3 Receivable-Backed Notes
$167,194,000 Class A-4 Receivable-Backed Notes
$18,726,000 Class B Receivable-Backed Notes
$10,700,000 Class C Receivable-Backed Notes
$16,051,000 Class D Receivable-Backed Notes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONEDEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. . . . . 5
SECTION 1.03. RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . 6
ARTICLE TWOTHE NOTES
SECTION 2.01. FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY . . . . . . . . . . 7
SECTION 2.03. TEMPORARY NOTES. . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE;
TRANSFER RESTRICTION . . . . . . . . . . . . . . . . . . . 8
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES . . . . . . . . 9
SECTION 2.06. PERSONS DEEMED OWNER . . . . . . . . . . . . . . . . . . . 9
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST. . . 9
SECTION 2.08. CANCELLATION . . . . . . . . . . . . . . . . . . . . . . .10
SECTION 2.09. BOOK-ENTRY NOTES.. . . . . . . . . . . . . . . . . . . . .10
SECTION 2.10. NOTICES TO CLEARING AGENCY . . . . . . . . . . . . . . . .11
SECTION 2.11. DEFINITIVE NOTES.. . . . . . . . . . . . . . . . . . . . .11
SECTION 2.12. RELEASE OF COLLATERAL. . . . . . . . . . . . . . . . . . .11
SECTION 2.13. TAX TREATMENT. . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE THREECOVENANTS; REPRESENTATIONS AND WARRANTIES
SECTION 3.01. PAYMENT OF PRINCIPAL AND INTEREST. . . . . . . . . . . . .12
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . .12
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST . . . . . . . . . .12
SECTION 3.04. EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . . .13
SECTION 3.05. PROTECTION OF COLLATERAL . . . . . . . . . . . . . . . . .13
SECTION 3.06. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . .14
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF CONTRACTS.. . . .14
SECTION 3.08. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . .15
SECTION 3.09. ISSUER MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS . . . .15
SECTION 3.10. SUCCESSOR OR TRANSFEREE. . . . . . . . . . . . . . . . . .16
SECTION 3.11. NO OTHER BUSINESS. . . . . . . . . . . . . . . . . . . . .17
SECTION 3.12. NO BORROWING . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 3.13. NOTICE OF EVENTS OF DEFAULT. . . . . . . . . . . . . . . .17
SECTION 3.14. FURTHER INSTRUMENTS AND ACTS . . . . . . . . . . . . . . .17
SECTION 3.15. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . .17
SECTION 3.16. AMENDMENTS OF TRUST AGREEMENT. . . . . . . . . . . . . . .17
SECTION 3.17. REMOVAL OF ADMINISTRATOR . . . . . . . . . . . . . . . . .17
SECTION 3.18. REPRESENTATIONS AND WARRANTIES OF ISSUER . . . . . . . . .17
ARTICLE FOURSATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. . . . . . . . . .19
SECTION 4.02. APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . . .20
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT . . . . . . . . .20
ARTICLE FIVEREMEDIES
SECTION 5.01. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . .21
SECTION 5.02. RIGHTS UPON EVENT OF DEFAULT; NOTICE.. . . . . . . . . . .22
i
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SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE; AUTHORITY OF INDENTURE TRUSTEE. . . . .22
SECTION 5.04. REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . .24
SECTION 5.05. OPTIONAL PRESERVATION OF THE CONTRACTS . . . . . . . . . .24
SECTION 5.06. PRIORITIES.. . . . . . . . . . . . . . . . . . . . . . . .24
SECTION 5.07. LIMITATION OF SUITS. . . . . . . . . . . . . . . . . . . .27
SECTION 5.08. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST . . . . . . . . . . . . . . . . . .27
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . .27
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE . . . . . . . . . . . . . .28
SECTION 5.11. DELAY OR OMISSION NOT A WAIVER . . . . . . . . . . . . . .28
SECTION 5.12. CONTROL BY NOTEHOLDERS . . . . . . . . . . . . . . . . . .28
SECTION 5.13. WAIVER OF PAST DEFAULTS. . . . . . . . . . . . . . . . . .28
SECTION 5.14. UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . . .28
SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS . . . . . . . . . . . . .29
SECTION 5.16. ACTION ON NOTES. . . . . . . . . . . . . . . . . . . . . .29
SECTION 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.. . . .29
ARTICLE SIXTHE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE. . . . . . . . . . . . . . . .30
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE. . . . . . . . . . . . . . . .31
SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE . . . . . . . . . .31
SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . .31
SECTION 6.05. NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . .32
SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS. . . . . . . . . .32
SECTION 6.07. COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . .32
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE . . . . . . . . . . . . .32
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. . . . . . . . . . .33
SECTION 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE
INDENTURE TRUSTEE. . . . . . . . . . . . . . . . . . . . .33
SECTION 6.11. ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER . . . . .35
SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE. . . .35
ARTICLE SEVENNOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF NOTEHOLDERS . . . . . . . . . . . . . . . . .36
SECTION 7.02. PRESERVATION OF INFORMATION: COMMUNICATION
TO NOTEHOLDERS . . . . . . . . . . . . . . . . . . . . . .36
SECTION 7.03. REPORTS BY ISSUER. . . . . . . . . . . . . . . . . . . . .36
SECTION 7.04. REPORTS BY INDENTURE TRUSTEE.. . . . . . . . . . . . . . .36
ARTICLE EIGHTACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEY. . . . . . . . . . . . . . . . . . . .38
SECTION 8.02. TRUST ACCOUNTS.. . . . . . . . . . . . . . . . . . . . . .38
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS. . . . . . . . . . .40
SECTION 8.04. RELEASE OF COLLATERAL. . . . . . . . . . . . . . . . . . .41
SECTION 8.05. OPINION OF COUNSEL . . . . . . . . . . . . . . . . . . . .41
ARTICLE NINESUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.. .42
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. . . .42
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES . . . . . . . . . . .44
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE . . . . . . . . . . . . .44
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. . . . . . . . . . . .44
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. . . . . . .44
ii
<PAGE>
ARTICLE TENREDEMPTION OF NOTES
SECTION 10.01. REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 10.02. FORM OF REDEMPTION NOTICE. . . . . . . . . . . . . . . . .45
SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE . . . . . . . . . . . . .45
ARTICLE ELEVENMISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. . . . . . . . .46
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE . . . . .47
SECTION 11.03. ACTS OF NOTEHOLDERS. . . . . . . . . . . . . . . . . . . .47
SECTION 11.04. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 11.05. NOTICES TO NOTEHOLDERS; WAIVER . . . . . . . . . . . . . .48
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS. . . . . . . . . .48
SECTION 11.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS . . . . . . . . .49
SECTION 11.08. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . .49
SECTION 11.09. SEPARABILITY . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 11.10. BENEFITS OF INDENTURE. . . . . . . . . . . . . . . . . . .49
SECTION 11.11. LEGAL HOLIDAYS . . . . . . . . . . . . . . . . . . . . . .49
SECTION 11.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .49
SECTION 11.13. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . .49
SECTION 11.14. RECORDING OF INDENTURE . . . . . . . . . . . . . . . . . .49
SECTION 11.15. TRUST OBLIGATION . . . . . . . . . . . . . . . . . . . . .49
SECTION 11.16. NO PETITION. . . . . . . . . . . . . . . . . . . . . . . .50
SECTION 11.17. INSPECTION . . . . . . . . . . . . . . . . . . . . . . . .50
SECTION 11.18. CONFLICT WITH TRUST INDENTURE ACT. . . . . . . . . . . . .50
SECTION 11.19. COMMUNICATION BY NOTE OWNERS WITH OTHER NOTE OWNERS. . . .50
SECTION 11.20. LISTING RESTRICTIONS . . . . . . . . . . . . . . . . . . .50
iii
<PAGE>
EXHIBITS
Exhibit A - Form of Sale and Servicing Agreement . . . . . . . . . . A-1
Exhibit B - Form of Class A-1 Note . . . . . . . . . . . . . . . . . B-1
Exhibit C-1 - Form of Class A-2 Note . . . . . . . . . . . . . . . . C-1-1
Exhibit C-2 - Form of Class A-3 Note . . . . . . . . . . . . . . . . C-2-1
Exhibit C-3 - Form of Class A-4 Note . . . . . . . . . . . . . . . . C-3-1
Exhibit D - Form of Class B Note . . . . . . . . . . . . . . . . . . D-1
Exhibit E - Form of Class C Note . . . . . . . . . . . . . . . . . . E-1
Exhibit F - Form of Class D Note . . . . . . . . . . . . . . . . . . F-1
Exhibit G - Form of Note Assignment. . . . . . . . . . . . . . . . . G-1
Exhibit H - Form of Note Depository Agreement. . . . . . . . . . . . H-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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.04
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.03
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.05, 7.03
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.03
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.03
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.18
v
<PAGE>
This Indenture, dated as of November 1, 1997 (this "INDENTURE"), is between
Newcourt Receivables Asset Trust 1997-1, a Delaware business trust (the
"ISSUER") and Manufacturer's and Trader's Trust Company, 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") and [ ]% Class D Receivable-Backed
Notes (the "CLASS D NOTES"; and, together with the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and Class C 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 Transferred 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 ONE
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.
"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 Newcourt Financial USA 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
1
<PAGE>
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 cities of Indianapolis, Indiana, Wilmington,
Delaware 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 E 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.
"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 1 M&T Plaza, 7th Floor, Buffalo, New York 14203; 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 Employment Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" shall have the meaning specified in Section 5.01.
"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
2
<PAGE>
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.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TRUSTEE" means Manufacturer's and Trader's Trust Company, 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 Seller 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 Seller or any of
their respective Affiliates, and (iii) is not connected with the Issuer, any
such other obligor, the Seller 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 B Interest Rate, the Class C
Interest Rate, and the Class D 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 H hereto.
"NOTE OWNER" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency) 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.
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"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, the Seller 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
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, the Seller 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 Chase Manhattan Bank Delaware, 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.
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"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 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, the Servicer
and the Indenture Trustee, substantially in the form of EXHIBIT A hereto.
"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
Certificates; 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.
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"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Indenture Trustee.
"OBLIGOR" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. 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.
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ARTICLE TWO
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 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 $127,067,000, (ii) Class A-2 Notes in an aggregate principal amount of
$88,278,000, (iii) Class A-3 Notes in an aggregate principal amount of
$107,004,000, (iv) Class A-4 Notes in an aggregate principal amount of
$167,194,000, (v) Class B Notes in an aggregate principal amount of $18,726,000,
(vi) Class C Notes in an aggregate principal amount of $10,700,000, and (vii)
Class D Notes in an aggregate principal amount of $16,051,000. 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.
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 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.
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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 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 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 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
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addition, neither the Indenture Trustee nor the Note Registrar shall effect the
registration of any transfer of the Class D Notes if, following such transfer,
there would be more than 100 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 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 (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. 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.
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(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 Collateral 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 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
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;
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(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 Note Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.
SECTION 2.10. 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 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, holders of 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 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.
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ARTICLE THREE
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, and (vii) for the benefit of the Class D Notes, to
the Class D 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.
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 to so 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;
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(iv) immediately resign as a Paying Agent and forthwith pay
to the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met by
a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect
to the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
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
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financing statements, continuation statements, instruments of further assurance
and other instruments, all as prepared by the Servicer and delivered to the
Issuer, and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the
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.
(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.
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(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller 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; or
(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 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;
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(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
(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
(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.
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(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 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
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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 Seller, the Servicer,
the Indenture Trustee and the Rating Agencies.
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ARTICLE FOUR
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
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.05 and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section 3.03)
have been delivered to the Indenture Trustee for cancellation;
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the applicable
Maturity Date within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Indenture Trustee for
the giving of notice of redemption by the Indenture Trustee in
the name, and at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States (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 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.
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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.
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ARTICLE FIVE
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. "EVENT OF DEFAULT," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) failure to pay on each Distribution Date the full
amount of accrued interest on any Class A Note,
Class B Note or Class C 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 the Seller to make any
payment or deposit required under the Sale and
Servicing Agreement or Transfer and Sale Agreement
within three Business Days after the date the
payment or deposit is required to be made, or
(ii) failure on the part of the Seller, 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
Transfer and Sale Agreement, 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 Seller 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 the Seller 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 the Seller,
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 the Seller 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 Seller has repurchased the
related Contracts through the Trust Depositor
during such period in accordance with the
provisions of the Sale and Servicing Agreement and
the Transfer and Sale Agreement;
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(e) the occurrence of an Insolvency Event relating to
the Seller, 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.
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, the Seller, 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, 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.
(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.
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(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;
(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
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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.
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, 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 or 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.
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
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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 following order
and priority:
FIRST, so much of such payment as shall be required to
reimburse the Indenture Trustee for any tax, fee, expense,
charge or other loss incurred by the Indenture Trustee (to
the extent not previously reimbursed), (including, without
limitation, the expense of sale, taking or other proceeding,
attorneys' fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made by
the Indenture Trustee in the protection, exercise or
enforcement of any right, power or remedy or any damages
sustained by the Indenture Trustee, liquidated or otherwise,
upon the Event of Default giving rise to such expenditures
or advances) shall be applied by the Indenture Trustee in
reimbursement of such expenses;
SECOND, so much of such payment remaining as shall be
required to reimburse the Noteholders in full for certain
indemnity payments, if any, made by such Noteholders to the
Indenture Trustee (to the extent not previously reimbursed)
shall be distributed to the Noteholders, and, if the
aggregate amount remaining shall be insufficient to
reimburse all such payments in full, it shall be distributed
ratably, without priority of any Noteholder over any other,
in the proportion that the aggregate amount of such
unreimbursed indemnity payments made by each such Noteholder
bears to the aggregate amount of such unreimbursed indemnity
payments made by all Noteholders;
THIRD, so much of such payment remaining as shall be
required to pay in full the aggregate amount of all accrued
but unpaid interest to the date of distribution on the Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes and the Class A-
4 Notes shall be distributed to the Class A-1 Noteholders,
Class A-2 Noteholders, Class A-3 Noteholders and the Class
A-4 Noteholders, and, if the aggregate amount remaining
shall be insufficient to pay all such amounts in full, it
shall be distributed ratably, without priority of any one
Class A Note and over any other Class A Note, in the
proportion that the aggregate amount of all accrued but
unpaid interest to the date of distribution on each Class A-
1 Note, Class A-2 Note, Class A-3 Note or Class A-4 Note
bears to the aggregate amount of all accrued but unpaid
interest to the date of distribution on all Class A Notes;
FOURTH, so much of such payment remaining as shall be
required to pay in full the aggregate amount of all accrued
but unpaid interest to the date of distribution on the Class
B Notes shall be distributed to the Class B Noteholders,
and, if the aggregate amount remaining shall be insufficient
to pay all such amounts in full, it shall be distributed
ratably, without priority of any one Class B Note over any
other Class B Note, in the proportion that the aggregate
amount of all accrued but unpaid interest to the date of
distribution on each Class B Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class B Notes;
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FIFTH, so much of such payment remaining as shall be
required to pay in full the aggregate amount of all accrued
but unpaid interest to the date of distribution on the Class
C Notes shall be distributed to the Class C Noteholders,
and, if the aggregate amount remaining shall be insufficient
to pay all such amounts in full, it shall be distributed
ratably, without priority of any one Class C Note over any
other Class C Note, in the proportion that the aggregate
amount of all accrued but unpaid interest to the date of
distribution on each Class C Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class C Notes;
SIXTH, so much of such payment remaining as shall be
required to pay in full the aggregate amount of all accrued
but unpaid interest to the date of distribution on the Class
D Notes shall be distributed to the Class D Noteholders,
and, if the aggregate amount remaining shall be insufficient
to pay all such amounts in full, it shall be distributed
ratably, without priority of any one Class D Note over any
other Class D Note, in the proportion that the aggregate
amount of all accrued but unpaid interest to the date of
distribution on each Class D Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class D Notes;
SEVENTH, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class A-1
Noteholders to pay in full the Class A-1 Principal Payment
then due pursuant to or in respect of the Class A-1 Notes,
and if the aggregate amount remaining shall be insufficient
to pay all such amounts in full, it shall be distributed
ratably, without priority of any one Class A-1 Note over any
other Class A-1 Note, in the proportion that the aggregate
unpaid principal amount of each Class A-1 Note bears to the
aggregate unpaid principal amount of all Class A-1 Notes;
EIGHTH, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class A-2
Noteholders to pay in full the Class A-2 Principal Payment
Amount, then due pursuant to or in respect of the Class A-2
Notes, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class A-2
Note over any other Class A-2 Note, in the proportion that
the aggregate unpaid principal amount of each Class A-2 Note
bears to the aggregate unpaid principal amount of all Class
A-2 Notes;
NINTH, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class A-3
Noteholders to pay in full the Class A-3 Principal Payment
Amount, then due pursuant to or in respect of the Class A-3
Notes, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class A-3 Note
over any other Class A-3 Note, in the proportion that the
aggregate unpaid principal amount of each Class A-3 Note bears to
the aggregate unpaid principal amount of all Class A-3 Notes;
TENTH, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class A-4
Noteholders to pay in full the Class A-4 Principal Payment
Amount, then due pursuant to or in respect of the Class A-4
Notes, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class A-4 Note
over any other Class A-4 Note, in the proportion
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that the aggregate unpaid principal amount of each Class A-4 Note
bears to the aggregate unpaid principal amount of all Class A-4 Notes;
ELEVENTH, the balance, if any, of such payment
remaining thereafter shall be distributed ratably to the
Class B Noteholders to pay in full the Class B Principal
Payment Amount, then due pursuant to or in respect of the
Class B Notes, and if the aggregate amount remaining shall
be insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class B
Note over any other Class B Note, in the proportion that the
aggregate unpaid principal amount of each Class B Note bears
to the aggregate unpaid principal amount of all Class B
Notes;
TWELFTH, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class C
Noteholders to pay in full the Class C Principal Payment
Amount, then due pursuant to or in respect of the Class C
Notes, and if the aggregate amount remaining shall be
insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class C
Note over any other Class C Note, in the proportion that the
aggregate unpaid principal amount of each Class C Note bears
to the aggregate unpaid principal amount of all Class C
Notes; and
THIRTEENTH, the balance, if any, of such payment
remaining thereafter shall be distributed ratably to the
Class D Noteholders to pay in full the Class D Principal
Payment Amount, then due pursuant to or in respect of the
Class D Notes, and if the aggregate amount remaining shall
be insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class D
Note over any other Class D Note, in the proportion that the
aggregate unpaid principal amount of each Class D Note bears
to the aggregate unpaid principal amount of all Class D
Notes.
(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):
(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
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(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
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;
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(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
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
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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
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.
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ARTICLE SIX
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
(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.
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(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.
(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 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.
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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. The parties hereto agree and acknowledge
that, notwithstanding anyting to the contrary, all payments required to be made
pursuant to this Section 6.07 shall not be made from the Trust Assets.
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,
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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 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.
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(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 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 Trust
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.
(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.
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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.
(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.
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(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.
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ARTICLE SEVEN
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 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;
(iv) file with the Indenture Trustee reports in compliance with TIA
Section 314(a) and TIA Section 314(b).
(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, 1998, 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).
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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.
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ARTICLE EIGHT
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.
(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 following order of priority:
FIRST, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class A-1 Notes shall be distributed to
the Class A-1 Noteholders ratably, without priority of any one
Class A-1 Note over any other Class A-1 Note, in the proportion
that the aggregate amount of all accrued but unpaid interest to
the date of distribution on each Class A-1 Note bears to the
aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class A-1 Notes;
SECOND, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class A-2 Notes shall be distributed to
the Class A-2 Noteholders ratably, without priority of any one
Class A-2 Note over any other Class A-2 Note, in the proportion
that the aggregate amount of all accrued but unpaid interest to
the date of distribution on each Class A-2 Note bears to the
aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class A-2 Notes;
THIRD, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then
due on or in respect of the Class A-3 Notes shall be distributed
to the Class A-3 Noteholders ratably, without priority of any
one Class A-3 Note over any other Class A-3 Note, in the
proportion that the aggregate amount of all accrued
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but unpaid interest to the date of distribution on each Class A-3
Note bears to the aggregate amount of all accrued but unpaid
interest to the date of distribution on all Class A-3 Notes;
FOURTH, so much of such installment or payment as shall
be required to pay in full the aggregate amount of interest then
due on or in respect of the Class A-4 Notes shall be distributed
to the Class A-4 Noteholders ratably, without priority of any one
Class A-4 Note over any other Class A-4 Note, in the proportion
that the aggregate amount of all accrued but unpaid interest to
the date of distribution on each Class A-4 Note bears to the
aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class A-4 Notes;
FIFTH, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class B Notes shall be distributed to the
Class B Noteholders ratably, without priority of any one Class B
Note over any other Class B Note, in the proportion that the
aggregate amount of all accrued but unpaid interest to the date
of distribution on each Class B Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class B Notes;
SIXTH, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class C Notes shall be distributed to the
Class C Noteholders ratably, without priority of any one Class C
Note over any other Class C Note, in the proportion that the
aggregate amount of all accrued but unpaid interest to the date
of distribution on each Class C Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class C Notes;
SEVENTH, so much of such installment or payment as shall be
required to pay in full the aggregate amount of interest then due
on or in respect of the Class D Notes shall be distributed to the
Class D Noteholders ratably, without priority of any one Class D
Note over any other Class D Note, in the proportion that the
aggregate amount of all accrued but unpaid interest to the date
of distribution on each Class D Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class D Notes;
EIGHTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class
A-1 Noteholders to pay in full the aggregate amount of the Class
A-1 Principal Payment then due pursuant to or in respect of the
Class A-1 Notes, without priority of any one Class A-1 Note over
any other Class A-1 Note, in the proportion that the aggregate
unpaid principal amount of each Class A-1 Note bears to the
aggregate unpaid principal amount of all Class A-1 Notes;
NINTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class
A-2 Noteholders to pay in full the aggregate amount of the Class
A-2 Principal Payment then due pursuant to or in respect of the
Class A-2 Notes, without priority of any one Class A-2 Note over
any other Class A-2 Note, in the proportion that the aggregate
unpaid principal amount of each Class A-2 Note bears to the
aggregate unpaid principal amount of all Class A-2 Notes;
TENTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class
A-3 Noteholders to pay in full the
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aggregate amount of the Class A-3 Principal Payment then due
pursuant to or in respect of the Class A-3 Notes, without
priority of any one Class A-3 Note over any other Class A-3 Note,
in the proportion that the aggregate unpaid principal amount of
each Class A-3 Note bears to the aggregate unpaid principal
amount of all Class A-3 Notes;
ELEVENTH, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to
the Class A-4 Noteholders to pay in full the aggregate amount of
the Class A-4 Principal Payment then due pursuant to or in
respect of the Class A-4 Notes, without priority of any one
Class A-4 Note over any other Class A-4 Note, in the proportion
that the aggregate unpaid principal amount of each Class A-
4 Note bears to the aggregate unpaid principal amount of all
Class A-4 Notes;
TWELVTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class B
Noteholders to pay in full the aggregate amount of the Class B
Principal Payment then due pursuant to or in respect of the
Class B Notes, without priority of any one Class B Note over any
other Class B Note, in the proportion that the aggregate unpaid
principal amount of each Class B Note bears to the aggregate
unpaid principal amount of all Class B Notes;
THIRTEENTH, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to the
Class C Noteholders to pay in full the aggregate amount of the
Class C Principal Payment then due pursuant to or in respect of
the Class C Notes, without priority of any one Class C Note over
any other Class C Note, in the proportion that the aggregate
unpaid principal amount of each Class C Note bears to the
aggregate unpaid principal amount of all Class C Notes; and
FOURTEENTH, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to the
Class D Noteholders to pay in full the aggregate amount of the
Class D Principal Payment then due pursuant to or in respect of
the Class D Notes, without priority of any one Class D Note over
any other Class D Note, in the proportion that the aggregate
unpaid principal amount of each Class D Note bears to the
aggregate unpaid principal amount of all Class D Notes.
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Trust Accounts shall be
invested in 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.
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(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.
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.
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ARTICLE NINE
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 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.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to each Rating Agency, and with the consent of a
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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, that, no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or the Redemption 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 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 Note Owner
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 Note Owners 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.
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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.
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.
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ARTICLE TEN
REDEMPTION OF NOTES
SECTION 10.01. REDEMPTION.
(a) In the event that the Seller pursuant to Section 7.08 of the Sale
and Servicing Agreement purchases (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. Seller, 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.
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.
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ARTICLE ELEVEN
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 Section 314(c),
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to enable
such signatory to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any 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 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
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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 twelve months, commencing December 1998 Distribution Date, an
Officer's Certificate stating that all the dispositions of Collateral described
in clauses (A) or (B) that occurred during the preceding twelve 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 representations by, an officer or officers of the Servicer, the
Seller or the Issuer, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Seller 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.
49
<PAGE>
(b) 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.
(c) 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.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.04. NOTICES. 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.
50
<PAGE>
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 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.
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
51
<PAGE>
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 Seller, the Issuer or any General Partner, or join in any
institution against the Seller, 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 NOTE OWNERS WITH OTHER NOTE OWNERS. Note
Owners may communicate with other Note Owners with respect to their rights under
this Indenture or the Notes pursuant to Section 312(b) of the TIA. Every Note
Owner, by receiving and holding the 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 Note Owners 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
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.
52
<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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee under the Trust
Agreement
By:
-----------------------------------------
Printed Name:
---------------------
Title:
----------------------------
MANUFACTURERS AND TRADERS TRUST COMPANY, not in its
individual capacity but solely as Indenture Trustee
By:
----------------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
53
<PAGE>
STATE OF_____ )
) ss
COUNTY OF _________ )
On __________________ 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 such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
-------------------------
54
<PAGE>
STATE OF _____ )
) ss
COUNTY OF _________ )
On _________________ 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 such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
-------------------------
55
<PAGE>
EXHIBIT A
FORM OF SALE AND SERVICING AGREEMENT
A-1
<PAGE>
EXHIBIT B
FORM OF CLASS A-1 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.
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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
[ ]% CLASS A-1 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. __________
Newcourt Receivables Asset Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($____) 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 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-1
<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: [ ] NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:
------------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
B-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------------
Authorized Signatory
B-3
<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 November 1, 1997 (the
"INDENTURE"), between the Issuer and Manufacturers and Traders Trust Company, 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 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 New York.
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.
B-4
<PAGE>
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 (and each
Noteholder by acceptance 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.
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 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-5
<PAGE>
EXHIBIT C-1
FORM OF CLASS A-2 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.
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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
[ ]% CLASS A-2 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Receivables Asset Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
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 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-1-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:
------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
C-1-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------------
Authorized Signatory
C-1-3
<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 November 1, 1997 (the
"INDENTURE"), between the Issuer and Manufacturers and Traders Trust Company, 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 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 New
York.
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01 of the Indenture, in whole, but not in part, at the option of the Seller,
on any Distribution Date on or after the date on which the ADCB of all Contracts
then in the Contracts Pool is less than 10% of the initial ADCB of Contracts in
the Contracts Pool as of the Initial Cutoff Date.
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
C-1-4
<PAGE>
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 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.
C-1-5
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-1-6
<PAGE>
EXHIBIT C-2
FORM OF CLASS A-3 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.
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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
[ ]% CLASS A-3 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Receivables Asset Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
payable on the earlier of [ ], 2005 (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 and Class A-2 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 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-2-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:
------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
C-2-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------------
Authorized Signatory
C-2-3
<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 November 1, 1997 (the
"INDENTURE"), between the Issuer and Manufacturers and Traders Trust Company, 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 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 New
York.
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01 of the Indenture, in whole, but not in part, at the option of the Seller,
on any Distribution Date on or after the date on which the ADCB of all Contracts
then in the Contracts Pool is less than 10% of the initial ADCB of Contracts in
the Contracts Pool as of the Initial Cutoff Date.
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
C-2-4
<PAGE>
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 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.
C-2-5
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-2-6
<PAGE>
EXHIBIT C-3
FORM OF CLASS A-4 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.
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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
[ ]% CLASS A-4 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Receivables Asset Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
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 Class A-2 and Class A-3 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 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-3-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:
------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
C-3-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------------
Authorized Signatory
C-3-3
<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 November 1, 1997 (the
"INDENTURE"), between the Issuer and Manufacturers and Traders Trust Company, 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 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 New
York.
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01 of the Indenture, in whole, but not in part, at the option of the Seller,
on any Distribution Date on or after the date on which the ADCB of all Contracts
then in the Contracts Pool is less than 10% of the initial ADCB of Contracts in
the Contracts Pool as of the Initial Cutoff Date.
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
C-3-4
<PAGE>
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 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.
C-3-5
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-3-6
<PAGE>
EXHIBIT D
FORM OF CLASS B 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.
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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
[ ]% CLASS B RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Receivables Asset Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($_________)
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.
After the occurrence of an Event of Default or Restricting Event (as defined in
the Sale and Servicing Agreement), no payments of principal of the Class B Notes
shall be made until the principal on the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes and Class A-4 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.
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-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ], 1997 NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:
------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
D-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------------
Authorized Signatory
D-3
<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 November 1, 1997 (the
"INDENTURE"), between the Issuer and Manufacturers and Traders Trust Company, 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 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
[ ].
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01 of the Indenture, in whole, but not in part, at the option of the Seller,
on any Distribution Date on or after the date on which the ADCB of all Contracts
then in the Contracts Pool is less than 10% of the initial ADCB of Contracts in
the Contracts Pool as of the Initial Cutoff Date.
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
D-4
<PAGE>
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 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.
D-5
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
D-6
<PAGE>
EXHIBIT E
FORM OF CLASS C 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.
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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
[ ]% CLASS C RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Receivables Asset Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($_________)
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.
After the occurrence of an Event of Default or Restricting Event (as defined in
the Sale and Servicing Agreement), no payments of principal of the Class C Notes
shall be made until the principal on the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes and Class B 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 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-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ], 1997 NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:
------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
E-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------------
Authorized Signatory
E-3
<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 November 1, 1997 (the
"INDENTURE"), between the Issuer and Manufacturers and Traders Trust Company, 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 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
[ ].
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01 of the Indenture, in whole, but not in part, at the option of the Seller,
on any Distribution Date on or after the date on which the ADCB of all Contracts
then in the Contracts Pool is less than 10% of the initial ADCB of Contracts in
the Contracts Pool as of the Initial Cutoff Date.
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
E-4
<PAGE>
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 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.
E-5
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
E-6
<PAGE>
EXHIBIT F
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 NEWCOURT RECEIVABLES CORPORATION II (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
$250,000, 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
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 D
F-1
<PAGE>
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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
[ ]% CLASS D RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Newcourt Receivables Asset Trust 1997-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to [ ]., or its
registered assigns, the principal sum of [ ] Dollars ($_________)
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.
After the occurrence of an Event of Default or Restricting Event (as defined in
the Sale and Servicing Agreement), no payments of principal of the Class D Notes
shall be made until the principal on the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes, Class A-4 Notes, Class B Notes and Class C 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 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: [ ], 1997 NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, 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.
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------------
Authorized Signatory
F-4
<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 November 1, 1997 (the
"INDENTURE"), between the Issuer and Manufacturers and Traders Trust Company, 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
[ ].
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01 of the Indenture, in whole, but not in part, at the option of the Seller,
on any Distribution Date on or after the date on which the ADCB of all Contracts
then in the Contracts Pool is less than 10% of the initial ADCB of Contracts in
the Contracts Pool as of the Initial Cutoff Date.
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
F-5
<PAGE>
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 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.
F-6
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
F-7
<PAGE>
EXHIBIT G
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 Notice: The signature(s) on
by an eligible guarantor this assignment must
institution which is a correspond with the name(s) as
participant in the Securities it appears on the face of the
Transfer Agent's Medallion within Note in every
Program (STAMP) or similar particular, without alteration
signature guarantee program. or enlargement or any change
whatsoever.
(Authorized Officer)
G-1
<PAGE>
EXHIBIT H
FORM OF NOTE DEPOSITORY AGREEMENT
H-2
<PAGE>
November 19, 1997
Newcourt Receivables Corporation II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Re: Newcourt Receivables Asset Trust 1997-1
Class A-1 Receivable-Backed Notes, Series 1997-1,
Class A-2 Receivable-Backed Notes, Series 1997-1,
Class A-3 Receivable-Backed Notes, Series 1997-1,
Class A-4 Receivable-Backed Notes, Series 1997-1,
Class B Receivable-Backed Notes, Series 1997-1 and
Class C Receivable-Backed Notes, Series 1997-1
(collectively the "NOTES")
Ladies and Gentlemen:
We have acted as special counsel to Newcourt Receivables Corporation
II (the "TRUST DEPOSITOR"), as trust depositor of the Newcourt Receivables Asset
Trust 1997-1 (the "TRUST") in connection with the filing by Trust Depositor of
the registration statement on Form S-1 (File No. 333-36059) (such registration
statement, together with the exhibits and any amendments thereto, the
"REGISTRATION STATEMENT"), registering 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 Trust Depositor, 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.
<PAGE>
Newcourt Receivables Corporation II
November 19, 1997
Page 2
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 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 Trust Depositor 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 amount, price, interest rate and other principal terms
of the Notes have been duly approved by Board of Directors of the Trust
Depositor, (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.
<PAGE>
Newcourt Receivables Corporation II
November 19, 1997
Page 3
This opinion letter is limited to the laws of the United States of
America, the State of New York and Title 12, Chapter 38 of the Delaware Code,
and we express no opinion with respect to the laws of any state or other
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,
/s/ Winston & Strawn
<PAGE>
Exhibit 8.1
Form of Opinion of Winston & Strawn
with respect to Tax Matters
November 19, 1997
Re: Newcourt Receivables Corporation II
REGISTRATION STATEMENT ON FORM S-1(REG. NO. 333-36059)
Ladies and Gentlemen:
We have acted as special federal tax counsel to Newcourt Receivables
Corporation II, a Delaware corporation (the "Registrant"), in connection with
the proposed issuance and sale of its Class A-1 Receivable-Backed Notes,
Series 1997-1, Class A-2 Receivable-Backed Notes, Series 1997-1, Class A-3
Receivable-Backed Notes, Series 1997-1, Class A-4 Receivable-Backed Notes,
Series 1997-1, Class B Receivable-Backed Notes, Series 1997-1, and Class C
Receivable-Backed Notes, Series 1997-1 (collectively the "Notes") to be
issued from the Newcourt Receivables Asset Trust 1997-1, a limited purpose
Delaware business trust (the "Trust"). The property of the Trust will
include certain conditional sale agreements, finance leases, installment
payment 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.
We have advised the Registrant with respect to the material federal
income tax consequences of the proposed issuance of the Notes to the holders
thereof. This advice is described under the headings "Summary of
Terms--Federal Income Tax Considerations" and "Federal Income Tax
Consequences" in the prospectus relating to the Notes (the "Prospectus"),
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 September 22, 1997, under the Securities Act of
1933, as amended (the "Act"), for the registration of the Notes under the
Act. Such description does not purport to discuss all possible federal
income tax ramifications of the proposed
<PAGE>
issuance of the Notes to the holders thereof in light of their own investment
or tax circumstances, but with respect to those tax consequences that are
discussed, in our opinion, the description fairly summarizes the federal
income tax considerations that are likely to be material to a holder of
Notes. Furthermore, we hereby confirm, as specified in the Prospectus, that
for federal income tax purposes (i) the Trust will not be treated as an
association (or publicly traded partnership) taxable as a corporation and
(ii) the Notes will be treated as indebtedness.
Our opinion is based upon the current provisions 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 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 or the rules
and regulations of the Commission issued thereunder, with respect to any part
of the Registration Statement, including this exhibit.
Very truly yours,
/s/ Winston & Strawn
<PAGE>
- --------------------------------------------------------------------------------
SALE AND SERVICING AGREEMENT
among
NEWCOURT RECEIVABLES ASSET TRUST 1997-1,
as Issuer,
NEWCOURT RECEIVABLES CORPORATION II,
as Trust Depositor,
NEWCOURT FINANCIAL USA, INC.,
as Servicer
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Indenture Trustee
Dated as of November 1, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. USAGE OF TERMS.. . . . . . . . . . . . . . . . . . . 24
SECTION 1.03. SECTION REFERENCES.. . . . . . . . . . . . . . . . . 24
SECTION 1.04. CALCULATIONS.. . . . . . . . . . . . . . . . . . . . 24
SECTION 1.05. ACCOUNTING TERMS.. . . . . . . . . . . . . . . . . . 24
ARTICLE TWOESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS . . . . . . . . . 25
SECTION 2.01. CREATION AND FUNDING OF TRUST; TRANSFER
OF TRUST ASSETS. . . . . . . . . . . . . . . . . . . 25
SECTION 2.02. CONDITIONS TO THE CLOSING. . . . . . . . . . . . . . 25
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE. . . . . . . . . . . . . 26
SECTION 2.04. CONVEYANCE OF SUBSEQUENT CONTRACTS.. . . . . . . . . 26
SECTION 2.05. RELEASE OF EXCLUDED AMOUNTS. . . . . . . . . . . . . 28
SECTION 2.06. DELIVERY OF INSTRUMENTS. . . . . . . . . . . . . . . 28
ARTICLE THREEREPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 29
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING
THE TRUST DEPOSITOR. . . . . . . . . . . . . . . . . 29
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING
THE SERVICER.. . . . . . . . . . . . . . . . . . . . 30
ARTICLE FOURPERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS. . 32
SECTION 4.01. CUSTODY OF CONTRACTS.. . . . . . . . . . . . . . . . 32
SECTION 4.02. FILING.. . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.03. NAME CHANGE OR RELOCATION. . . . . . . . . . . . . . 33
SECTION 4.04. COSTS AND EXPENSES.. . . . . . . . . . . . . . . . . 33
ARTICLE FIVE SERVICING OF CONTRACTS. . . . . . . . . . . . . . . . . . . . 34
SECTION 5.01. APPOINTMENT AND ACCEPTANCE; RESPONSIBILITY
FOR CONTRACT ADMINISTRATION. . . . . . . . . . . . . 34
SECTION 5.02. GENERAL DUTIES.. . . . . . . . . . . . . . . . . . . 34
SECTION 5.03. CONSENT TO ASSIGNMENT OR REPLACEMENT.. . . . . . . . 34
SECTION 5.04. DISPOSITION UPON TERMINATION OF CONTRACT.. . . . . . 34
SECTION 5.05. SUBSERVICERS.. . . . . . . . . . . . . . . . . . . . 35
SECTION 5.06. FURTHER ASSURANCE. . . . . . . . . . . . . . . . . . 35
SECTION 5.07. NOTICE TO OBLIGORS.. . . . . . . . . . . . . . . . . 35
SECTION 5.08. COLLECTION EFFORTS; MODIFICATION OF CONTRACTS. . . . 35
SECTION 5.09. PREPAID CONTRACT.. . . . . . . . . . . . . . . . . . 35
SECTION 5.10. ACCELERATION.. . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11. TAXES AND OTHER AMOUNTS. . . . . . . . . . . . . . . 36
SECTION 5.12. SUITS BY SERVICER. . . . . . . . . . . . . . . . . . 36
SECTION 5.13. REMITTANCES. . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.14. SERVICER ADVANCES. . . . . . . . . . . . . . . . . . 36
SECTION 5.15. REALIZATION UPON DEFAULTED CONTRACT. . . . . . . . . 36
SECTION 5.16. MAINTENANCE OF INSURANCE POLICIES. . . . . . . . . . 36
SECTION 5.17. OTHER SERVICER COVENANTS.. . . . . . . . . . . . . . 37
SECTION 5.18. SERVICING COMPENSATION.. . . . . . . . . . . . . . . 37
SECTION 5.19. PAYMENT OF CERTAIN EXPENSES BY SERVICER. . . . . . . 37
SECTION 5.20. RECORDS. . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.21. INSPECTION.. . . . . . . . . . . . . . . . . . . . . 38
i
<PAGE>
SECTION 5.22. TRUSTEES TO COOPERATE IN RELEASES. . . . . . . . . . 38
ARTICLE SIX COVENANTS OF THE TRUST DEPOSITOR . . . . . . . . . . . . . . . 39
SECTION 6.01. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . 39
SECTION 6.02. CONTRACTS NOT TO BE EVIDENCED BY
PROMISSORY NOTES. . . . . . . . . . . . . . . . . . 39
SECTION 6.03. SECURITY INTERESTS. . . . . . . . . . . . . . . . . 39
SECTION 6.04. DELIVERY OF COLLECTIONS. . . . . . . . . . . . . . 39
SECTION 6.05. REGULATORY FILINGS. . . . . . . . . . . . . . . . . 39
SECTION 6.06. COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . 39
SECTION 6.07. ACTIVITIES. . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.08. INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . 39
SECTION 6.09. GUARANTEES. . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.10. INVESTMENTS. . . . . . . . . . . . . . . . . . . . 40
SECTION 6.11. MERGER; SALES. . . . . . . . . . . . . . . . . . . 40
SECTION 6.12. DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . 40
SECTION 6.13. OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . 40
SECTION 6.14. SEPARATE CORPORATE EXISTENCE. . . . . . . . . . . . 40
SECTION 6.15. LOCATION; RECORDS. . . . . . . . . . . . . . . . . 41
SECTION 6.16. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES. . . . . . 41
SECTION 6.17. BANKRUPTCY LIMITATIONS.. . . . . . . . . . . . . . . 42
SECTION 6.18 LIMITATION ON LIABILITY OF TRUST DEPOSITOR
AND OTHERS.. . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.19. CHIEF EXECUTIVE OFFICE.. . . . . . . . . . . . . . . 42
ARTICLE SEVEN ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND . . . 43
SECTION 7.01. TRUST ACCOUNTS; COLLECTIONS. . . . . . . . . . . . . 43
SECTION 7.02. RESERVE FUND.. . . . . . . . . . . . . . . . . . . . 43
SECTION 7.03. TRUST ACCOUNT PROCEDURES. . . . . . . . . . . . . . 43
SECTION 7.04. SECURITYHOLDER DISTRIBUTIONS.. . . . . . . . . . . . 44
SECTION 7.05. ALLOCATIONS AND DISTRIBUTIONS. . . . . . . . . . . . 44
SECTION 7.06. REPURCHASES OF, OR SUBSTITUTION FOR, CONTRACTS
FOR BREACH OF REPRESENTATIONS AND WARRANTIES.. . . . 49
SECTION 7.07. REASSIGNMENT OF REPURCHASED OR
SUBSTITUTED CONTRACTS. . . . . . . . . . . . . . . . 49
SECTION 7.08. SELLER'S AND TRUST DEPOSITOR'S REPURCHASE OPTION.. . 50
ARTICLE EIGHT SERVICER DEFAULT; SERVICE TRANSFER . . . . . . . . . . . . . 51
SECTION 8.01. SERVICER DEFAULT.. . . . . . . . . . . . . . . . . . 51
SECTION 8.02. SERVICER TRANSFER. . . . . . . . . . . . . . . . . . 51
SECTION 8.03. APPOINTMENT OF SUCCESSOR SERVICER; RECONVEYANCE;
SUCCESSOR SERVICER TO ACT .. . . . . . . . . . . . . 52
SECTION 8.04. NOTIFICATION TO SECURITYHOLDERS. . . . . . . . . . . 53
SECTION 8.05. EFFECT OF TRANSFER.. . . . . . . . . . . . . . . . . 53
SECTION 8.06. DATABASE FILE. . . . . . . . . . . . . . . . . . . . 53
SECTION 8.07. SUCCESSOR SERVICER INDEMNIFICATION.. . . . . . . . . 53
SECTION 8.08. RESPONSIBILITIES OF THE SUCCESSOR SERVICER.. . . . . 53
SECTION 8.09. RATING AGENCY CONDITION FOR SERVICER TRANSFER. . . . 54
ARTICLE NINE REPORTS. .. . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.01. MONTHLY REPORTS. . . . . . . . . . . . . . . . . . . 55
SECTION 9.02. OFFICER'S CERTIFICATE. . . . . . . . . . . . . . . . 55
SECTION 9.03. OTHER DATA.. . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.. . . . . . . . . . . . 55
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER.. . . . 55
SECTION 9.06. ANNUAL SUMMARY STATEMENT.. . . . . . . . . . . . . . 56
ii
<PAGE>
ARTICLE TEN TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.01. SALE OF TRUST ASSETS.. . . . . . . . . . . . . . . . 57
ARTICLE ELEVENMISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.01. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.02. PROTECTION OF TITLE TO TRUST.. . . . . . . . . . . . 59
SECTION 11.03. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 59
SECTION 11.04. NOTICES. . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.05. SEVERABILITY OF PROVISIONS.. . . . . . . . . . . . . 61
SECTION 11.06. THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . 61
SECTION 11.07. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . 61
SECTION 11.08. HEADINGS.. . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.09. NO BANKRUPTCY PETITION. . . . . . . . . . . . . . . 61
SECTION 11.10. JURISDICTION. . . . . . . . . . . . . . . . . . . . 61
SECTION 11.11. TAX CHARACTERIZATION. . . . . . . . . . . . . . . . 62
SECTION 11.12. INDEMNIFICATION. . . . . . . . . . . . . . . . . . 62
iii
<PAGE>
SCHEDULES
Schedule 1 Contract Files Maintained by Third Parties . . . . .S-1
EXHIBITS
Exhibit A Form of Assignment . . . . . . . . . . . . . . . . . . . . .A-1
Exhibit B Form of Closing Certificate of Trust Depositor . . . . . . .B-1
Exhibit C Form of Closing Certificate of Seller. . . . . . . . . . . .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 Certificateholder.I-1
Exhibit J Seller's Representations and Warranties . . . . . . . . . .J-1
Exhibit K [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . .K-1
Exhibit L [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . .L-1
Exhibit M Form of Subsequent Transfer Agreement. . . . . . . . . . . .M-1
iv
<PAGE>
This SALE AND SERVICING AGREEMENT, dated as of November 1, 1997, is among
Newcourt Receivables Asset Trust 1997-1 (together with its successors and
assigns, the "ISSUER" or the "TRUST"), Newcourt Receivables Corporation II
(together with its successor and assigns, the "TRUST DEPOSITOR"), Manufacturers
and Traders Trust Company (solely in its capacity as the Indenture Trustee,
together with its successors and assigns, the "INDENTURE TRUSTEE") and Newcourt
Financial USA, Inc. (together with its successors and assigns, "NEWCOURT USA"
and, solely in its capacity as the Servicer, together with its successor and
assigns, the "SERVICER").
WHEREAS the Trust Depositor desires to fund the Trust by selling, conveying
and assigning a designated pool of Contracts (as defined herein) together with
certain related security therefor and other related rights and property as
further described herein, which Contracts were originated by Newcourt USA, or
acquired by purchase and assignment by Newcourt USA from the owner thereof, and
subsequently sold by Newcourt USA to the Trust Depositor pursuant to the
Transfer and Sale Agreement (as defined herein);
WHEREAS the Trust is willing to purchase and accept assignment of the
Contracts, together with such related rights and property, 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 ONE
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:
"ACCRUAL PERIOD" means 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 Subsequent Contract transferred to the Trust after such last day, the
Discounted Contract Balance on the applicable Subsequent Cutoff Date for such
Contract.
"ADDITIONAL CONTRACT" means a Contract transferred to the Trust under
Section 2.04 with respect to which a related Addition Event has occurred with
respect to a Contract or Contracts then held in the Contracts Pool and
identified in the related Addition Notice.
"ADDITION EVENT" means, with respect to any transfer of an Additional
Contract to the Trust under Section 2.04, a prepayment of one or more related
Contracts, identified in the corresponding Addition Notice, in full by the
related Obligor.
"ADDITION NOTICE" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.04 (and the Trust Depositor's
corresponding prior purchase of such Contracts from the Seller), a notice, which
shall be given at least five days prior to the related Subsequent Transfer Date,
identifying the Subsequent Contracts to be
<PAGE>
transferred, the ADCB of such Subsequent Contracts and the related Addition
Event or Substitution Event (with respect to an identified Contract or Contracts
then in the Contracts Pool) to which such Subsequent Contract relates, with such
notice to be signed both by the Trust Depositor, and the Seller.
"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, "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 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
hereto (in the case of an Assignment executed by the Trust Depositor) and in the
form of EXHIBIT A to the Transfer and Sale Agreement (in the case of an
Assignment executed by the Seller), relating to an assignment, transfer and
conveyance of Contracts and related property to the applicable assignee.
"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 and payments received from
Vendors pursuant to Vendor Agreements 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 as well as Expired Lease Proceeds, (iii) Investment Earnings
credited to the Collection Account, and (iv) Late Charges received on or before
the last day of such Collection Period.
"BUSINESS DAY" means any day which is neither a Saturday or a Sunday, nor
another day on which banking institutions in the cities of Indianapolis,
Indiana, 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 the first day of each calendar month.
"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 DISTRIBUTION ACCOUNT" has the meaning specified in the Trust
Agreement.
"CERTIFICATE REGISTER" has the meaning specified in the Trust Agreement.
"CERTIFICATEHOLDER" has the meaning specified in the Trust Agreement.
"CERTIFICATE" means the Class E Certificate.
2
<PAGE>
"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, or the Class E Certificate.
"CLASS A NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes.
"CLASS A PERCENTAGE" means the ratio (expressed as a percentage) that the
sum of the Initial Class A-2 Principal Amount, Initial Class A-3 Principal
Amount and Initial Class A-4 Principal Amount bears to the sum of the Initial
Class A-2 Principal Amount, Initial Class A-3 Principal Amount, Initial Class
A-4 Principal Amount, Initial Class B Principal Amount, Initial Class C
Principal Amount and Initial Class D Principal Amount.
"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 December 1998 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 $127,067,000 aggregate initial principal amount
of Class A-1 Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS A-1 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-1 Notes, the lesser of (a) the Principal
Amount of the Class A-1 Notes and (b) (i) prior to the occurrence of any Event
of Default, or prior to the occurrence and during the continuance of a
Restricting Event, the Total Principal Payment Amount and (ii) following the
occurrence of an Event of Default, or following the occurrence and during the
continuance of a Restricting Event, all remaining Available Amounts after
payment has been made in accordance with Sectin 7.05(b)(i)-(vii).
"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 May 2005 Distribution Date.
"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 $88,278,000 aggregate initial principal amount
of Class A-2 Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS A-2 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-2 Notes, (a) $0 until the Principal Amount of
the Class A-1 Notes has been paid in full, and (b) thereafter, the lesser of (i)
the Principal Amount of the Class A-2 Notes and (ii)(A) prior to the occurrence
of any Event of Default, or prior to the occurrence and during the continuance
of a Restricting Event, the difference between (1) the Principal Amount of all
Class A Notes immediately prior to such Distribution Date, and (2) the product
of (x) the Class A Percentage and (y) the ADCB for all Contracts held by the
Trust as of the last day of the Collection Period immediately preceding such
Distribution Date and (B) following the occurrence of an Event of Default, or
following the occurrence and during the continuance of a Restricting Event, all
remaining Available Amounts after payment has been made in accordance with
Section 7.05(b)(i)-(viii).
"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 May 2005 Distribution Date.
3
<PAGE>
"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 $107,004,000 aggregate initial principal
amount of Class A-3 Receivable-Backed Notes, Series 1997-1 issued pursuant to
the Indenture.
"CLASS A-3 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-3 Notes, (a) $0 until the Principal Amount of
the Class A-1 Notes and Class A-2 Notes has been paid in full, and (b)
thereafter, the lesser of (i) the Principal Amount of the Class A-3 Notes and
(ii)(A) prior to the occurrence of any Event of Default, or prior to the
occurrence and during the continuance of a Restricting Event, the difference
between (1) the Principal Amount of all Class A Notes immediately prior to such
Distribution Date, and (2) the product of (x) the Class A Percentage and (y) the
ADCB for all Contracts held by the Trust as of the last day of the Collection
Period immediately preceding such Distribution Date and (B) following the
occurrence of an Event of Default, or following the occurrence and during the
continuance of a Restricting Event, all remaining Available Amounts after
payment has been made in accordance with Section 7.05(b)(i)-(ix).
"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 May 2005 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 $167,194,000 aggregate initial principal amount
of Class A-4 Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS A-4 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-4 Notes, (a) $0 until the Principal Amount of
the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes has been paid in full,
and (b) thereafter, the lesser of (i) the Principal Amount of the Class A-4
Notes and (ii)(A) prior to the occurrence of any Event of Default, or prior to
the occurrence and during the continuance of a Restricting Event, the difference
between (1) the Principal Amount of all Class A Notes immediately prior to such
Distribution Date, and (2) the product of (x) the Class A Percentage and (y) the
ADCB for all Contracts held by the Trust as of the last day of the Collection
Period immediately preceding such Distribution Date and (B) following the
occurrence of an Event of Default, or following the occurrence and during the
continuance of a Restricting Event, all remaining Available Amounts after
payment has been made in accordance with Section 7.05(b)-(x).
"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 May 2005 Distribution Date.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered in the Note Register.
"CLASS B NOTES" means the $18,726,000 aggregate initial principal amount of
Class B Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS B PERCENTAGE" means the ratio (expressed as a percentage) that the
Initial Class B Principal Amount bears to (a) until the Principal Amount of all
Class A Notes has been paid in full, the sum of the Initial Class A-2 Principal
Amount, Initial Class A-3 Principal Amount, Initial Class A-4 Principal Amount,
Initial Class B Principal Amount, Initial Class C Principal Amount and Initial
Class D Principal Amount; and (b) thereafter, the sum of the Initial Class B
Principal Amount, Initial Class C Principal Amount and Initial Class D Principal
Amount.
4
<PAGE>
"CLASS B PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date and the Class B Notes, (a) $0 until the Principal Amount of the Class A-1
Notes has been paid in full, and (b) thereafter, the lesser of (i) the Principal
Amount of the Class B Notes and (ii)(A) prior to the occurrence of any Event of
Default, or prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of the Class B Notes
immediately prior to such Distribution Date, and (2) the product of (x) the
Class B Percentage and (y) the ADCB for all Contracts held by the Trust as of
the last day of the Collection Period immediately preceding such Distribution
Date and (B) following the occurrence of an Event of Default, or following the
occurrence and during the continuance of a Restricting Event, (1) until the
Principal Amount of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes has
been paid in full, $0 and (2) thereafter, all remaining Available Amounts after
payment has been made in accordance with Section 7.05(b)(i)-(xi).
"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 May 2005 Distribution Date.
"CLASS C NOTEHOLDER" means the Person in whose name a Class C Note is
registered in the Note Register.
"CLASS C NOTES" means the $10,700,000 aggregate initial principal amount
of Class C Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS C PERCENTAGE" means the ratio (expressed as a percentage) that the
Initial Class C Principal Amount bears to (a) until the Principal Amount of all
Class A Notes has been paid in full, the sum of the Initial Class A-2 Principal
Amount, Initial Class A-3 Principal Amount, Initial Class A-4 Principal Amount,
Initial Class B Principal Amount, Initial Class C Principal Amount and Initial
Class D Principal Amount; (b) after the Principal Amount of all Class A Notes
has been paid in full and until the Principal Amount of the Class B Notes has
been paid in full, the sum of the Initial Class B Principal Amount, Initial
Class C Principal Amount and Initial Class D Principal Amount, and (c)
thereafter, the sum of the Initial Class C Principal Amount and Class D
Principal Amount.
"CLASS C PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date and the Class C Notes, (a) $0 until the Principal Amount of the Class A-1
Notes has been paid in full, and (b) thereafter, the lesser of (i) the Principal
Amount of the Class C Notes and (ii)(A) prior to the occurrence of any Event of
Default, or prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of the Class C Notes
immediately prior to such Distribution Date, and (2) the product of (x) the
Class C Percentage and (y) the ADCB for all Contracts held by the Trust as of
the last day of the Collection Period immediately preceding such Distribution
Date and (B) following the occurrence of an Event of Default, or following the
occurrence and during the continuance of a Restricting Event, (1) until the
Principal Amount of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and
Class B Notes has been paid in full, $0 and (2) thereafter, all remaining
Available Amounts after payment has been made in accordance with Section
7.05(b)(i)-(xii).
"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 May 2005 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 $16,051,000 aggregate initial principal amount
Newcourt Receivables Asset Trust Class D Receivable-Backed Notes, issued
pursuant to the Indenture.
5
<PAGE>
"CLASS D PERCENTAGE" means the ratio (expressed as a percentage) that the
Initial Class D Principal Amount bears to (a) until the outstanding principal of
all Class A Notes has been paid in full, the sum of the Initial Class A-2
Principal Amount, Initial Class A-3 Principal Amount, Initial Class A-4
Principal Amount, Initial Class B Principal Amount, Initial Class C Principal
Amount and Initial Class D Principal Amount; (b) after the outstanding principal
of all Class A Notes has been paid in full and until the outstanding principal
of the Class B Notes has been paid in full, the sum of the Initial Class B
Principal Amount, Initial Class C Principal Amount and Initial Class D Principal
Amount, (c)after the Principal Amount of the Class A Notes and Class B Notes has
been paid in full and until the Principal Amount of the Class C Notes has been
paid in full, the sum of the Initial Class C Principal Amount and Initial Class
D Principal Amount; and (d) thereafter, 100%.
"CLASS D PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date and the Class D Notes, (a) $0 until the Principal Amount of the Class A-1
Notes has been paid in full, and (b) thereafter, the lesser of (i) the Principal
Amount of the Class D Notes and (ii)(A) prior to the occurrence of any Event of
Default, or prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of the Class D Notes
immediately prior to such Distribution Date, and (2) the product of (x) the
Class D Percentage and (y) the ADCB for all Contracts held by the Trust as of
the last day of the Collection Period immediately preceding such Distribution
Date and (B) following the occurrence of an Event of Default, or following the
occurrence and during the continuance of a Restricting Event, (1) until the
Principal Amount of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class
B Notes and Class C Notes has been paid in full, $0 and (2) thereafter, all
remaining Available Amounts after payment has been made in accordance with
Section 7.05(b)(i)-(xiii).
"CLASS E CERTIFICATEHOLDER" means the Person in whose name a Class E
Certificate is registered in the Certificate Register.
"CLASS E CERTIFICATE" means the $8,025,000 initial principal amount of
Class E Certificate, representing the beneficial equity interest in the Trust
and issued pursuant to the Trust Agreement.
"CLASS E MATURITY DATE" means the May 2005 Distribution Date.
"CLOSING DATE" means November 26, 1997.
"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 first day of a calendar
month and ending on, but not 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, but not 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) in the Vendor Agreements, but excluding
any Excluded Amounts.
"COMMISSION" means the United States Securities and Exchange Commission.
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"COMPUTER DISK" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the Seller
in selecting the Contracts conveyed to the Trust Depositor pursuant to the
Transfer and Sale Agreement (and any Subsequent Purchase Agreement), 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" means any of the Initial Contract Assets or Subsequent
Contract Assets.
"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 Seller or held by the Servicer with respect to any Contract.
"CONTRACTS POOL" as of any date means the Initial Contracts and the
Subsequent 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 Seller, pursuant to Section 7.07 hereof and Section 5.03 of the
Transfer and Sale Agreement, 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 11.04.
"CPR" means a conditional payment rate which assumes that a fraction of the
outstanding Contracts Pool is prepaid on each Distribution Date and also assumes
that all Contracts have the same initial principal balance and amortize at the
same rate.
"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 Seller's or Servicer's computer
master file of Contracts (without regard to the effective date of such
recordation).
"DEFAULTED CONTRACT" means a Contract in the Contracts Pool with respect to
which there has occurred one or more of the following: (i) all or some portion
of any Scheduled Payment under the Contract is more than 120 days 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 was
not yet available (pursuant to the contractual terms thereof) or had not yet
been paid by the Vendor prior to the end of such 120 day period, then at such
time thereafter as the Vendor shall have failed to pay such defaulted amount in
accordance with the provisions of the Program Agreement, Vendor Assignment or
other agreement with the Vendor providing such recourse), (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; or (iii) the End User under such Contract becomes
the subject of an Insolvency Event.
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"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,
Class A-2 Interest Rate, Class A-3 Interest Rate, Class A-4 Interest Rate (each
weighted at (x) the Initial Principal Amount applicable to each Class of Notes
and (y) the expected weighted average life of each Class of Notes assuming a CPR
of 11%) 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 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 Subsequent 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.
"DISTRIBUTION DATE" shall mean the twentieth (20th) day of each calendar
month or, if such twentieth (20th) day is not a Business Day, the next
succeeding Business Day, with the first such Distribution Date hereunder being
December 22, 1997.
"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 the Transfer and Sale
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 Seller (and by the Trust Depositor following the
transfer by the Seller) free and clear of any adverse claim, other than
with respect to any Residual Investment;
(c) the Contract did not have a Scheduled Payment that was a
delinquent payment for more than 60 days, and the Contract is not a
Defaulted Contract;
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(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 Seller'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
(other than Residual Investments which are not Guaranteed Residual
Investments) have not been sold, transferred, assigned or pledged by the
Seller 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 Seller (except for Permitted Liens), and
(ii) either (A) such Contract is secured by a fully perfected lien of the
first priority in favor of the Seller 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 a Vehicle, within 30 calendar days of the
origination or acquisition of such Contract by the Seller all applicable
federal registration or recording procedures were initiated, and the
Seller's interest will be so noted or recorded within 180 days of such
acquisition or origination or a certificate of title or similar evidence of
recordation on which the Seller's interest has been noted has been
obtained;
(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 Seller's ownership interest in the Contract, and the Seller'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 UCC financing
statement filings with respect to Equipment or Applicable Security which
name the Seller 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 Seller's interest in Applicable Security in
each jurisdiction where a related Vendor is located);
(k) the Obligor is not, to the Seller's knowledge, subject to
bankruptcy or other insolvency proceedings;
(l) the Obligor's billing address is in the United States and the
Contract is a U.S. dollar-denominated obligation;
(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 Subsequent
Contract);
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(n) either (x) the obligations of the related Obligor under such
Contract are irrevocable and unconditional and non-cancelable (as
distinguished from contractually prepayable) or, if not irrevocable and
unconditional, have the benefit of a Vendor Guarantee 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 Seller is
unconditionally obligated to a repurchase such lease from the Seller 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 the Transfer and Sale Agreement, the Seller that sold such
Lease to the Trust Depositor has indemnified the Trust Depositor against
such cancellation in an amount at least equal to the Discounted Contract
Balance of such Lease (as of the date or 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;
(t) if such Contract is a Lease, the Lessee thereunder has
represented to the related Vendor or Seller that such Lessee has accepted
the related Equipment and has had a reasonable opportunity to inspect and
test such Equipment and the Vendor or Seller has not been notified of any
defects therein;
(u) the Contract is not subject to any guarantee by the Seller, nor
has the Seller 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 Seller
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
(y) such Contract is not an obligation of the United States of
America or an agency, department, or instrumentality of the United States
of America;
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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 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 the 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;
(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 having
otherwise been approved in writing by each Rating Agency;
(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
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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 Seller 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 Seller has a duly perfected first priority lien; and
(iii) the transfer of the Seller's security interest in such Secondary
Contract and the proceeds thereof to the Trust Depositor is effective to
create in favor of the Trust Depositor a lien therein and such lien 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 the
Originator.
"EQUIPMENT" means the tangible assets including new and used information
technology equipment (such as mainframe and mini computers, computer work
stations, personal computers, data storage devices and other computer related
peripheral equipment), communications equipment (such as telephone switching and
networking systems), commercial business and industrial equipment (such as
printing presses, machine tools and other manufacturing equipment, photocopiers,
facsimile machines and other office equipment, energy savings and control
equipment, automotive diagnostic and automated testing equipment), medical
equipment (such as diagnostic and therapeutic examination equipment for
radiology, nuclear medicine and ultrasound and laboratory analysis equipment),
resources equipment (such as feller-bunchers and grapplers), transportation
equipment and construction equipment (such as heavy and medium duty trucks and
highway trailers, school buses, bulldozers, loaders, graters, excavators,
forklifts and other materials handling equipment, golf carts and other road and
off-road machinery) 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 7.06 at such time as there
shall have been discovered a breach of any of the representations and warranties
set forth in Section 3.05 of the Transfer and Sale Agreement, the removal of
which pursuant to Section 7.06 hereof and the Seller's repurchase thereof or
substitution of a Substitute Contract therefor pursuant to Section 5.01 of the
Transfer and Sale Agreement, 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, and (ii) any
collections representing reimbursements of insurance premiums or payments for
services that were not financed by the Seller.
"EXPIRED LEASE" means any Lease that has terminated other than on its
scheduled expiration date.
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"EXPIRED LEASE PROCEEDS" means any and all cash proceeds or rents realized
from the sale or re-lease of Equipment under an Expired Lease (net of
Liquidation Expenses).
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"FINAL TRUST TERMINATION DATE" means [ ].
"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 Seller.
"FINANCING AGREEMENT" means each financing agreement covering Financed
Items other than a CSA, a Secured Note, a Lease or an IPA.
"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.
"GUARANTEED RESIDUAL INVESTMENT" means each Residual Investment that is
made in the form of a full recourse loan to a Vendor or to the related Obligor
on an End-User Contract constituting a Lease.
"HIGHEST REQUIRED INVESTMENT CATEGORY" means (i) with respect to ratings
assigned by S&P, A-1+ for short-term instruments and AAA for long-term
instruments, and (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.
"HOLDER" means (i) with respect to the Certificate, the Person in whose
name the 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
Issuer and the Indenture Trustee, as amended, supplemented or otherwise modified
from time to time.
"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 Issuer, the Trust Depositor or the
Servicer, (ii) is not a director, officer or employee of any Affiliate of the
Issuer, the Trust Depositor or the Servicer, (iii) is not a person related to
any officer or director of the Issuer, 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 Issuer, the Trust
Depositor or the Servicer or any of their respective Affiliates, and (v) is not
connected with the Issuer, 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 7.06.
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"INITIAL CLASS A-1 PRINCIPAL AMOUNT" means $127,067,000.
"INITIAL CLASS A-2 PRINCIPAL AMOUNT" means $88,278,000.
"INITIAL CLASS A-3 PRINCIPAL AMOUNT" means $107,004,000.
"INITIAL CLASS A-4 PRINCIPAL AMOUNT" means $167,194,000.
"INITIAL CLASS B PRINCIPAL AMOUNT" means $18,726,000.
"INITIAL CLASS C PRINCIPAL AMOUNT" means $10,700,000.
"INITIAL CLASS D PRINCIPAL AMOUNT" means $16,051,000.
"INITIAL CLASS E PRINCIPAL AMOUNT" means $8,025,000.
"INITIAL CONTRACT ASSETS" has the meaning assigned in Section 2.01 of the
Transfer and Sale Agreement.
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on the
Closing Date.
"INITIAL CUTOFF DATE" means October 31, 1997.
"INITIAL PRINCIPAL AMOUNT" means, when used in the context of a reference
to an individual Class of Securities, the initial principal amount applicable to
such Class as defined above.
"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.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
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"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 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 or semiannual
payments.
"ISSUER" means the Newcourt Receivables Asset Trust 1997-1, a Delaware
business trust.
"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.
"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 Subsequent 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 (including pursuant
to prepayment), 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 and/or 5.09 hereof, as applicable.
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"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 REPORT" has the meaning specified in Section 9.01.
"MOODY'S" means Moody's Investors Service, Inc., or any successor thereto.
"NEWCOURT USA" has the meaning assigned such term in the preamble hereto.
"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.
"NOTEHOLDER" means any registered holder of a Note.
"OBLIGOR" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
"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, with respect to each Contract, the party that is the
original lessor or financing party thereunder.
"OUTSTANDING" has the meaning given such term in the Indenture.
"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 any Person described as such 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
pursuant to the Transfer and Sale Agreement 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:
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(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
pursuant to the Transfer and Sale Agreement and transferred to the Owner
Trustee pursuant hereto, (iv) Liens in favor of the Trust created pursuant
to this Agreement; (v) Liens 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 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, limited
liability company, 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
November [ ], 1997, between First Union Capital Markets Corp., as Agent
thereunder, the Trust Depositor and Newcourt USA, with respect to the private
placement of the Class D Notes.
"PLACEMENT AGENT" means First Union Capital Markets Corp., 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 on such due date, 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, amounts received in respect
of Transfer Deposit Amounts and payments upon an optional termination of the
Trust pursuant to Section 7.08.
"PRINCIPAL AMOUNT" means, with respect to a Class of Notes or the
Certificate, as applicable, 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 or, as applicable, the Certificate
Distribution Account, if any, for the Certificate established in accordance with
the Trust Agreement, and to be applied in reduction of such principal amount in
accordance with such Indenture or Trust Agreement.
"PROGRAM AGREEMENT" means each vendor finance program agreement pursuant to
which End-User Contracts originated by a Vendor are assigned to the Seller.
"PROSPECTUS" has the meaning given such term in the Underwriting Agreement.
"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)
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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 the State of New York, 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 the
State of New York) 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 Owner 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 S&P and Moody's, so long as such Persons
maintain a rating on the Notes; and if either S&P or Moody's no longer maintains
a rating on the Notes; 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 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 any Distribution Date, the last
Business 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.
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"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 holding Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and/or Class A-4 Notes 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, Holders of Class B
Notes holding Class B Notes 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, Holders of Class C Notes
holding Class C Notes evidencing more than 66 2/3% of the Aggregate Principal
Amount of all Class C Notes Outstanding, and (iv) from and after the payment in
full of the Class C Notes Outstanding, Holders of Class D Notes holding Class D
Notes evidencing more than 66 2/3% of the Aggregate Principal Amount of all
Class D 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).
"RESERVE FUND" means the Reserve Fund established and maintained pursuant
to Section 7.01 hereof.
"RESERVE FUND AMOUNT" means, initially as of the Closing Date, $8,025,000
(representing the Reserve Fund Initial Deposit) and thereafter, at any date of
determination, means an amount equal to the lesser of (a) the Reserve Fund
Initial Deposit, and (b) the Aggregate Principal Amount of the Notes as of such
date of determination.
"RESERVE FUND INITIAL DEPOSIT" means $8,025,000 which is equal to 1.50% of
the ADCB of the Contracts Pool at the Initial Cutoff Date.
"RESIDUAL INVESTMENT" means, with respect to certain Leases, any funds that
the Seller 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) 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 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.
"RESTRICTING EVENT" means any of the following events:
(a) As of any Distribution Date, the weighted average ADCB of all
Contracts in respect of which, during the three preceding
Collection Periods, a scheduled payment is more than 60 days past
due exceeds 3.0% of the weighted average ADCB of all Contracts in
the Contracts Pool during such three Collection Periods;
(b) As of any Distribution Date, the product of (i) two multiplied by
(ii) the difference between (x) the ADCB of) all that became
Defaulted
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Contracts during the six preceding Collection Periods and (y)
Recoveries received during the six preceding Collection Periods
on account of all Defaulted Contracts, exceeds 3.0% of the
weighted average ADCB of Contracts in the Contracts Pool during
such six Collection Periods;
(c) As of any Distribution Date, after giving effect to the
allocations to be made on such date, (i) until the Principal
Amount of all Class A Notes has been paid in full, the sum of (a)
the amount on deposit in the Reserve Fund plus (b) the difference
between (1) the ADCB for all Contracts in the Contracts Pool as
of the last day of the Collection Period immediately preceding
such Distribution Date, and (2) the Principal Amount of all Class
A Notes is less than the lesser of (A) the Principal Amount of
all Class A Notes and (B) $10,700,395; and (ii) thereafter, the
amount on deposit in the Reserve Fund is less than the Reserve
Fund Amount;
(d) A Servicer Default or an Event of Default has occurred and is
continuing.
"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.
"SELLER" means Newcourt USA in its capacity as the Seller of a Contract
under the Transfer and Sale Agreement (including in respect of a Subsequent
Contract pursuant to a Subsequent Purchase Agreement).
"SERVICER" means initially Newcourt USA, 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.
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"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 0.60%.
"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.
"S&P" means, Standard & Poor's Ratings Services, a division of The McGraw
Hill Companies, or any successor thereto.
"SUBSEQUENT CONTRACT" means any Contracts conveyed, assigned and
transferred by the Trust Depositor to the Trust pursuant to Section 2.04 (and
which have been acquired by the Trust Depositor from the Seller pursuant to
Section 2.04 of the Transfer and Sale Agreement), whether an Additional Contract
or a Substitute Contract.
"SUBSEQUENT CONTRACT ASSETS" has the meaning assigned in Section 2.04 of
the Transfer and Sale Agreement.
"SUBSEQUENT CONTRACT QUALIFICATION CONDITIONS" means, with respect to any
Subsequent Contract being transferred to the Trust pursuant to Section 2.04, the
accuracy of each of the following statements as of the related Cutoff Date for
such Contract:
(a) the Discounted Contract Balance of such Subsequent Contract is
not less than that of the related Contract or Contracts identified on the
related Addition Notice (whether a Contract or Contracts with respect to
which there has occurred an Addition Event, or a Substitution Event); and
(b) for each separate Collection Period which corresponds to a
Collection Period in which a payment would have been owing on the related
Contract or Contracts identified on the related Addition Notice, the amount
in respect of Scheduled Payments receivable (assuming Scheduled Payments
are paid and received when due) on the Subsequent Contract in such
Collection Period is not less than that of such related Contract or
Contracts; and
(c) if, instead of such Subsequent Contract being added to the
Contracts Pool on the related Subsequent Transfer Date, such Subsequent
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
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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 Seller 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; and
(d) no adverse selection procedure shall have been employed in the
selection of such Subsequent Contract from the Seller's portfolio; and
(e) all actions or additional actions (if any) necessary to perfect
the security interest and assignment of such Subsequent 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
Subsequent Contract will be on or prior to the November 2004 Distribution
Date or, to the extent the final payment on such Contract is due after the
November 2004 Distribution Date, only scheduled payments due on or prior to
such date will be included in the Discounted Contract Balance of such
Subsequent Contract.
"SUBSEQUENT CUTOFF DATE" means the date specified as such for Subsequent
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 Subsequent
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.
"SUBSEQUENT PURCHASE AGREEMENT" means, with respect to any Subsequent
Contracts, the agreement between the Seller and the Trust Depositor pursuant to
which the Seller will transfer the Subsequent Contracts to the Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as EXHIBIT B.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in Section
2.04 hereof.
"SUBSEQUENT TRANSFER DATE" means any date on which Subsequent 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.
"SUBSTITUTE CONTRACT TRANSFER CONDITION" means, with respect to any
Substitute Contract being transferred to the Trust pursuant to Section 2.04 in
respect of a related Contract or Contracts identified on the related Addition
Notice which is of a type described in clause (a) or (b) of the definition of
Substitution Event (a "TYPE"), the condition that after giving effect to such
transfer, the ADCB of all Substitute Contracts transferred to the Trust since
the Closing Date in respect of related Contracts of the same Type shall not
exceed 10% of the ADCB of the Initial Contracts as of the Initial Cutoff Date.
"SUBSTITUTION EVENT" means, with respect to any transfer of a related
Substitute Contract to the Trust under Section 2.04, the occurrence of any of
the following: (a) one or more Contracts then held in the Trust and identified
in the related Addition Notice has become a Defaulted Contract, (b) one or more
Contracts then held in the Trust and identified in the related Addition Notice
has been subjected to a Material Modification, or (c) one or more Contracts then
held in the Trust and identified in the related Addition Notice is the subject
of a breach of a representation or warranty under the Transfer and Sale
Agreement or other provision which breach or other provision, in the absence of
a substitution of a Substitute Contract for such Contract or Contracts, would
require the payment of a Transfer Deposit Amount to the Trust in respect of such
Contract.
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"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.
"TOTAL PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date, the difference between (a) the aggregate outstanding principal of all
Classes of Notes and (b) the ADCB for all Contracts held by the Trust as of the
last day of the Collection Period immediately preceding such Distribution Date.
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer and Sale
Agreement, the Indenture, the Trust Agreement, the Administration Agreement, the
Note Depository 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 AND SALE AGREEMENT" means the Transfer and Sale Agreement dated
as of November 1, 1997 by and between the Seller and the Trust Depositor, as
amended, supplemented or otherwise modified from time to time.
"TRANSFER DATE" means the Business Day immediately preceding each
Distribution Date.
"TRANSFER DEPOSIT AMOUNT" means, with respect to Ineligible Contracts or
Excess Contracts, on any date of determination, the sum of the Discounted
Contract Balances of such Contracts, together with accrued interest thereon
through such date of determination at the Discount Rate in effect at the time
such Contracts was transferred to the Trust, and any outstanding Servicer
Advances thereon.
"TRANSFERRED ASSETS" means all right, title and interest of the
transferring party in, to and under the following:
(i) the Initial Contracts and Subsequent Contracts, and all
monies due or to become due in payment of such Contracts on and after the
related 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 Vendor Agreements
with the Seller and under any guarantee or similar credit enhancement with
respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
(vi) rights of the Trust Depositor under the Transfer and Sale
Agreement, including, without limitation, in respect of the obligation of
the Seller to repurchase or substitute for Contracts under certain
circumstances as specified therein;
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(vii) each Assignment; and
(viii) all income from and proceeds of the foregoing;
PROVIDED, that Transferred Assets shall not include any Residual Investment
other than the Guaranteed Residual Investment.
"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, as
amended, supplemented or otherwise modified from time to time.
"TRUST ASSETS" has the meaning given to such term in Section 2.01(b) (and
in Section 2.04(a) in respect of Subsequent 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 Indiana; 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 Indiana, 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 Indiana and Delaware and each
other State in which the Seller/Servicer maintains the Contract Files related to
Contracts in the Contracts Pool (as of the Closing Date, the State of Texas, 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).
"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.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated November
[ ], 1997, among First Union Capital Markets Corp. (as an underwriter
thereunder and as Representative of the underwriters), the Trust Depositor, and
Newcourt USA.
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"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.
"VEHICLE" means any motor vehicle.
"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 the Seller.
"VENDOR GUARANTEE" means the irrevocable obligation of a Vendor to pay to
the Seller the aggregate oustanding principal amount of a Contract which has
been cancelled by the related Obligor pursuant to the terms of such Contract.
"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 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.
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ARTICLE TWO
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. CREATION AND FUNDING OF TRUST; TRANSFER OF TRUST 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) On the Closing Date, the Trust Depositor shall sell, transfer, assign,
set over and otherwise convey to the Trust by execution of an Assignment
substantially in the form of EXHIBIT A hereto, without recourse other than as
expressly provided herein, (i) all the right, title and interest of the Trust
Depositor in and to the Transferred Assets, (ii) the remittances, deposits and
payments made into the Trust Accounts from time to time and amounts in the Trust
Accounts from time to time (and any investments of such amounts), and (iii) all
proceeds and products of the foregoing (the property in clauses (i)-(iii) above,
the corpus of the Trust, being the "TRUST ASSETS"). Although the Trust
Depositor and the Owner Trustee agree that such transfer is intended to be a
sale, conveyance and transfer of ownership of the Trust Assets, rather than the
granting of a security interest to secure a borrowing, and that the Trust Assets
shall not be property of the Trust Depositor, in the event such transfer is
deemed to be of a mere security interest to secure a borrowing, the Trust
Depositor shall be deemed to have granted the Trust a perfected first priority
security interest in such Trust Assets and this Agreement shall constitute a
security agreement under applicable law, securing 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 thereto.
SECTION 2.02. CONDITIONS TO THE CLOSING. On or before the Closing Date,
the Trust Depositor shall deliver or cause to be delivered the following
documents to the Owner Trustee and Indenture Trustee:
(a) 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 hereto (along
with delivery of any instruments required under Section 2.06).
(b) A certificate of an officer of the Seller substantially in the
forms of EXHIBITS C-1 and C-2 hereto and of an officer of the Trust
Depositor substantially in the form of EXHIBIT B hereto.
(c) Opinions of counsel for the Seller and the Trust Depositor
substantially in the form of EXHIBITS D, E and F hereto (and including as
an addressee thereof each Rating Agency).
(d) A letter from Ernst & Young LLP, or another nationally recognized
accounting firm, addressed to the Seller and 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.
(e) Copies of resolutions of the Board of Directors of the Seller,
the Servicer and the Trust Depositor or of the Executive Committee of the
Board of Directors of the Seller, 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
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thereunder, certified in each case by the Secretary or an Assistant
Secretary of the Seller, the Servicer and the Trust Depositor.
(f) Officially certified, recent evidence of due incorporation and
good standing of each of the Seller and the Trust Depositor under the laws
of Delaware.
(g) Evidence of proper filing with appropriate officers in the UCC
Filing Locations of UCC financing statements executed by the Seller, 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.
(h) An Officer's Certificate listing the Servicer's Servicing
Officers.
(i) Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Contracts after the Initial Cutoff
Date to the Closing Date, together with an Officer's Certificate from the
Servicer to the effect that such amount is correct.
(j) Evidence of deposit in the Reserve Fund of the Reserve Fund
Initial Deposit by the Trust Depositor.
(k) A fully executed Transfer and Sale Agreement.
(l) A fully executed Trust Agreement.
(m) A fully executed Administration Agreement.
(n) A fully executed Indenture.
(o) An opinion of Winston & Strawn to the effect that (i) for federal
income tax purposes, 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 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 Indiana
income tax purposes, the characterization of the Trust will correspond to
its characterization for federal income tax purposes and 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 be characterized as debt for state income tax purposes.
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE. On the Closing Date, upon
receipt of an Opinion of Counsel to the effect that the conditions set forth in
Section 2.02 have been satisfied, the Owner Trustee shall issue on behalf of the
Trust to, or upon the order of, the Trust Depositor the Certificate representing
ownership of a beneficial interest in 100% of the Trust and the Owner Trustee
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 SUBSEQUENT CONTRACTS. (a) Subject to the
conditions set forth in paragraph (b) 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
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the Subsequent Contracts listed on the Subsequent List of Contracts (including,
without limitation, all rights to receive payments which are collected pursuant
thereto on or after the related Subsequent Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto prior to such Subsequent Cutoff Date), and
(ii) all other rights and property interests consisting of Transferred Assets
related to such Subsequent Contracts (the property in clauses (i)-(ii) above,
upon such transfer, becoming part of the Trust Assets). Although the Trust
Depositor and the Owner Trustee agree that such transfer is intended to be a
sale of ownership, rather than the granting of a security interest to secure a
borrowing, and that the Trust Assets following such transfer shall not be
property of the Trust Depositor, in the event such transfer is deemed to be of a
mere security interest to secure a borrowing, the Trust Depositor shall be
deemed to have granted the Trust a perfected first priority security interest in
such Trust Assets and this Agreement shall constitute a security agreement under
applicable law, securing 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.
(b) The Trust Depositor shall transfer to the Trust the Subsequent
Contracts and the other property and rights related thereto described in
paragraph (a) 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 Seller, 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
Subsequent Contract, a corresponding Addition Event or Substitution Event
with respect to one or more Contracts then in the Contracts Pool;
(iii) the Subsequent Contract(s) being conveyed to the Trust,
satisfy the Subsequent Contract Qualification Conditions;
(iv) if such Subsequent Contracts include Substitute Contracts,
after giving effect to the conveyance, the Substitute Contract Transfer
Condition shall remain satisfied;
(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 M hereto (the
"SUBSEQUENT TRANSFER AGREEMENT"), which shall include a Subsequent List of
Contracts listing the Subsequent Contracts;
(vi) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all Collections received with respect
to the Subsequent Contracts on or after the related Subsequent Cutoff Date;
(vii) as of each Subsequent Transfer Date, neither the Seller 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 Seller or the Trust
Depositor to be adverse to the interests of the Noteholders or
Certificateholder shall have been utilized in selecting the Subsequent
Contracts;
(ix) each of the representations and warranties made by the
Seller pursuant to Article III of the Transfer and Sale Agreement
applicable to the Subsequent Contracts shall be true and correct as of the
related
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Subsequent Transfer Date, and the Seller shall have performed all
obligations to be performed by them hereunder or thereunder on or prior to
such Subsequent Transfer Date; and
(x) the Seller shall, at its own expense, on or prior to the
Subsequent Transfer Date, indicate in its Computer Disk that the Subsequent
Contracts identified on the Subsequent List of Contracts in the Subsequent
Transfer Agreement have been sold to the Issuer through the Trust Depositor
pursuant to this Agreement and the Transfer and Sale Agreement.
SECTION 2.05. RELEASE OF EXCLUDED AMOUNTS. The Indenture Trustee hereby
agrees to release to the Trust from the Transferred Assets, and the Trust hereby
agrees to release to the Trust Depositor, an amount equal to the Excluded
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 in writing by the Trust
Depositor. Upon such release, such Excluded Amounts shall not constitute and
shall not be included in the Transferred Assets.
SECTION 2.06. DELIVERY OF INSTRUMENTS. 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 and which it has received pursuant to Section 2.06 of the
Transfer and Sale Agreement to the Owner Trustee on the Closing Date (or, if
applicable, on the relevant Subsequent Transfer Date). Pursuant to Section 3.05
of the Indenture the Owner Trustee is required to deliver such instruments to
the Indenture Trustee as pledgee under the Indenture. Accordingly, the Owner
Trustee hereby authorizes and directs the Trust Depositor to deliver possession
of any such instruments to the Indenture Trustee on behalf of and for the
account of the Owner Trustee, and agrees that such delivery shall satisfy the
condition set forth in the first sentence of this Section 2.06 above.
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ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Seller under the Transfer and Sale Agreement has made, and upon
execution of each Subsequent Purchase Agreement is deemed to remake, each of the
representations and warranties set forth in EXHIBIT J hereto and has consented
to the assignment by the Trust Depositor to the Issuer of the Trust Depositor's
rights with respect thereto. 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
Subsequent Contracts, but shall survive the sale, transfer and assignment of the
Contracts to the Trust. Pursuant to Section 2.01 of this Agreement, the Trust
Depositor has sold, assigned, transferred and conveyed to the Issuer as part of
the Trust Assets its rights under the Transfer and Sale Agreement, including
without limitation, the representations and warranties of the Seller therein as
set forth in EXHIBIT J attached hereto, together with all rights of the Trust
Depositor with respect to any breach thereof including any right to require the
Seller to repurchase or substitute for any Contract in accordance with the
Transfer and Sale Agreement. It is understood and agreed that the
representations and warranties set forth or referred to in this Section shall
survive delivery of the Contract Files to the Owner Trustee or any custodian.
The Trust Depositor hereby represents and warrants to the Issuer that it
has entered into the Transfer and Sale Agreement with the Seller, that the
Seller has made the representations and warranties in the Transfer and Sale
Agreement as set forth in EXHIBIT J hereto, that such representations and
warranties run to and are for the benefit of the Trust Depositor, and that
pursuant to Section 2.01 of this Agreement the Trust Depositor has transferred
and assigned to the Issuer all rights of the Trust Depositor to cause the Seller
under the Transfer and Sale Agreement to repurchase or substitute for Contracts
in the event of a breach of such representations and warranties.
SECTION 3.01. 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 Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the Certificateholder that:
(a) SELLER'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in EXHIBIT J are true and correct.
(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
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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 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 transactions under this Agreement do not and will
not render the Trust Depositor insolvent.
(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 11.04 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 Subsequent Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
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SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER. The
Servicer represents and warrants to the Issuer, 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 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.
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ARTICLE FOUR
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 Issuer as the
owner thereof; provided, however, that the contents of each Contract File
identified on Schedule 1 hereto shall be held in the custody of the Person(s) as
set forth in Schedule 1.
(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; provided, however, that the Contract Files
identified on Schedule 1 hereto will be maintained by third parties identified
on Schedule 1 at the locations listed on Schedule 1. 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 and the Issuer 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 Issuer 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 or the Person(s) identified on Schedule 1
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 or at the locations
set forth on Schedule 1 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 Issuer 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;
(v) indicate in the appropriate computer records that the
Contracts as of the Closing Date (or Subsequent Transfer Date, as the case
may be) have been transferred to the Trust and that a security interest in
such Contracts has been granted to the Indenture Trustee; and
(vi) within ninety (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 Subsequent Contracts, need be only of the Contract Files
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related to such Subsequent 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, the Issuer 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, the Issuer 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, the Issuer 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 Servicer shall
cause the UCC financing statement(s) referred to in Section 2.02(g) 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, neither the Servicer nor the Trust Depositor shall change, nor shall
the Trust Depositor permit the Seller to change, its name, identity or structure
or relocate its chief executive office without first giving at least 30 days'
prior written notice to the Owner Trustee and the Indenture Trustee. Within
five (5) days after the Servicer becomes aware of, or receives written notice of
a change in the location at which any of the Contract Files identified on
Schedule 1 are maintained, the Servicer shall give written notice of such change
to the Owner Trustee and Indenture Trustee.
(b) If any change in either the Servicer's, the Seller's or the Trust
Depositor's name, identity or structure or other action would make any financing
or continuation statement or notice of lien seriously misleading within the
meaning of applicable provisions of the UCC or any title statute, the Servicer,
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 the Seller, the
Servicer nor the Trust Depositor shall change its place of business (within the
meaning of Article 9 of the UCC), or change or permit a change in the locations
in which Contract Files are maintained, from the locations specified in Section
11.04 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 and the Indenture Trustee stating
that, in the opinion of such counsel, all financing statements or amendments
necessary to preserve and protect the interests of the Issuer and Indenture
Trustee in the Trust Corpus have been filed, and reciting the details of such
filing.
SECTION 4.04. 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 Trust's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Equipment related thereto).
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ARTICLE FIVE
SERVICING OF CONTRACTS
SECTION 5.01. APPOINTMENT AND ACCEPTANCE; RESPONSIBILITY FOR CONTRACT
ADMINISTRATION. Newcourt USA is hereby appointed as Servicer and custodian (as
contemplated in Article IV hereof) pursuant to this Agreement. Newcourt USA
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 Servicer 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 Eight.
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 in its
discretion, 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 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 written 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
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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 and any Expired Lease Proceeds of any such
disposition 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 execute and deliver to the Servicer, and the Servicer will prepare
and 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 the Transfer and Sale Agreement
or 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 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. 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.
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, without the
consent of each Rating Agency, have the effect of accelerating (except as
provided in Sections 5.09 and 5.10), delaying, reducing or extending the date
for payment of Scheduled Payments with respect to such Contract, [PROVIDED
FURTHER, that 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 [ ] 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 [ ]% of the ADCB for the Contracts
Pool as of the Initial Cutoff Date, and (ii) such Skipped Payment is deferred to
no later than the last day of the Collection Period related to the Distribution
Date that is twelve months prior to the [ ]. The Servicer may also
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. 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 an
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 Determination Date immediately prior to the
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date of such prepayment plus 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 Seller 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 Seller also to be considered a
"PREPAYMENT AMOUNT").
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 Seller'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. SUITS BY SERVICER. Notwithstanding anything herein to the
contrary, the Servicer (other than in its capacity as the Seller) does not have
any obligation pursuant to this Agreement to appear in, prosecute or defend any
legal action which is not incidental to its servicing duties under this
Agreement.
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 may 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. The Servicer will deposit any Servicer
Advances into the Collection Account on or prior to 11:00 a.m. (Indianapolis
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.
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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.
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.
(f) LOCATION OF CONTRACT FILES. Except for those Contract Files
identified on Schedule 1 hereto, 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
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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.
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 Nine 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 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.
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ARTICLE SIX
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, 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 after
receipt) 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 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 Contracts to other Persons in securitization
transactions involving Newcourt USA.
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
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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.
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
pursuant to the Transfer and Sale Agreement or purchases of Contracts permitted
by Section 6.07, or (ii) for investments in Eligible Investments in accordance
with the terms of this Agreement.
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.
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 the purchase and sale of Contracts 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.
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.
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(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.
(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 "nonsubstantive 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 Indiana, 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 (and shall
not move or permit any Person to move the location of the Contract Files
identified on Schedule 1 from the location(s) listed therein), without
forty-five (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 Indiana 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 Issuer,
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 Issuer, not including any taxes asserted with respect
to, and as of the date of, the sale of the Contracts to the Issuer 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 Issuer,
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.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
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.
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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 by 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 Issuer's violation of
federal or state securities laws in connection with the offering and sale of the
Notes and the Certificate.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation; PROVIDED,
HOWEVER, that the indemnification under this Section, notwithstanding anything
to the contrary, is limited to the assets of the Trust Depositor. 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.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee or the Indenture Trustee, as the case may be, and the
termination of this Agreement.
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 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.
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ARTICLE SEVEN
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, Certificate 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 a segregated corporate trust 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 two 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 Date and through and including
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.
(a) On the Closing Date, the Trust Depositor, shall deposit the Reserve
Fund Initial Deposit into the Reserve Fund from the net proceeds of the
Securities.
(b) If on any Distribution Date, the amounts on deposit in the Reserve
Fund (after giving effect to all deposits thereto or withdrawals therefrom on
such Distribution Date) is greater than the Reserve Fund Amount, the Indenture
Trustee shall distribute the excess of the amount on deposit in the Reserve Fund
over the Reserve Fund Amount to the Holder of the Certificate.
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
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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 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 OR A
RESTRICTING EVENT. On each Determination Date prior to an Event of Default or a
Restricting Event, 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 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 (PROVIDED, HOWEVER, that upon the occurrence and during the
continuance of an Obligor Event, the Servicing Fee shall instead be paid
after the allocation described in clause (xiii) below);
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders an amount equal to interest accrued in respect of the related
Class A-1 Notes at the Class A-1 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
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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 the Holder of each Class A-1 Note PRO RATA based upon the
outstanding Principal Amount thereof;
(iv) pay to the Indenture Trustee on behalf of the Class A-2
Noteholders an amount equal to interest accrued in respect of the related
Class A-2 Notes at the Class A-2 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 allocated, such remaining Available Amounts shall
be allocated to the Holder of each Class A-2 Note PRO RATA based upon the
outstanding Principal Amount thereof;
(v) pay to the Indenture Trustee on behalf of the Class A-3
Noteholders an amount equal to interest accrued in respect of the related
Class A-3 Notes at the Class A-3 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 allocated, such remaining Available Amounts shall
be allocated to the Holder of each Class A-3 Note PRO RATA based upon the
outstanding Principal Amount thereof
(vi) pay to the Indenture Trustee on behalf of the Class A-4
Noteholders an amount equal to interest accrued in respect of the related
Class A-4 Notes at the Class A-4 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 allocated, such remaining Available Amounts shall
be allocated to the Holder of each Class A-4 Note PRO RATA based upon the
outstanding Principal Amount thereof
(vii) 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 the Holder of each Class B Note
PRO RATA based on the outstanding Principal Amount thereof;
(viii) 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 the Holder of each Class C
Note PRO RATA based on the outstanding Principal Amount thereof;
(ix) 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 the Holder of each Class D
Note PRO RATA based on the outstanding principal amount thereof;
(x) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the Class A-1 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be
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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
and (ii) if the amount to be allocated pursuant to this clause exceeds the
amount needed to repay outstanding Class A-1 Note principal in full, then
such excess shall be applied in repayment of principal on the Class A-2
Notes;
(xi) pay to the Indenture Trustee, on behalf of the Class A-2
Noteholders, the Class A-2 Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-2 Note principal in full, then such
excess shall be applied in repayment of principal on the Class A-3 Notes;
(xii) pay to the Indenture Trustee, on behalf of the Class A-3
Noteholders, the Class A-3 Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-3 Note principal in full, then such
excess shall be applied in repayment of principal on the Class A-4 Notes;
(xiii) pay to the Indenture Trustee, on behalf of the Class A-4
Noteholders, the Class A-4 Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-4 Note principal in full, then such
excess shall be applied in repayment of principal on the Class B Notes;
(xiv) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Class B Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class B Note principal in full, then such
excess shall be applied in repayment of principal on the Class C Notes;
(xv) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Class C Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class C Note principal in full, then such
excess shall be applied in repayment of principal on the Class D Notes;
(xvi) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Class D Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding
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Class D Note principal in full, then such excess shall be applied in
accordance with the priorities in clauses (xvii) and (xviii) below;
(xvii) 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
(xviii) pay any remaining Available Amounts to the Holder of the
Class E Certificate.
Prior to the occurrence of an Event of Default or Restricting Event, 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)(i)-(ix), 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. In addition, to the extent Available Amounts are insufficient to
provide for the repayment in full of the Class A-1 Notes on the Class A-1
Maturity Date (or, following the repayment in full of the Class A-1 Notes, to
the extent such Available Amounts are insufficient to provide for the repayment
in full of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B
Notes, Class C Notes, Class D Notes or Class E Certificate on their respective
Maturity Dates, in such order of priority), then amounts held in the Reserve
Fund shall be withdrawn and applied to repay principal of such Notes or
Certificate in such order of priority on such respective Maturity Dates until
the Reserve Fund is exhausted.
(b) ALLOCATIONS AND PAYMENTS AFTER AN EVENT OF DEFAULT OR A RESTRICTING
EVENT. On each Determination Date after the occurrence of an Event of Default
or on each Determination Date after the occurrence, but only during the
continuance, of a Restricting Event, 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 Section
5.06(a)(i) of the Indenture;
(ii) pay to the Servicer, the amount of any Unreimbursed Servicer
Advances;
(iii) pay to the Servicer 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;
(iv) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and the 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 respective Class A-1 Interest Rate, Class A-2 Interest Rate, Class A-3
Interest Rate and Class A-4 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 allocated, such remaining Available Amounts shall
be allocated to the Holders of the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes and Class A-4 Notes PRO RATA based upon the then-outstanding
Principal Amounts thereof;
(v) 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
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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 the Holder of each Class B Note PRO RATA based on the outstanding
Principal Amount thereof;
(vi) 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 the Holder of each Class C
Note PRO RATA based on the outstanding Principal Amount thereof;
(vii) 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 the Holder of each Class D
Note 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-1 Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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 and (ii) if
the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-1 Note principal in full, then such
excess shall be applied in repayment of principal on Class A-2 Notes;
(ix) pay to the Indenture Trustee, on behalf of the Class A-2
Noteholders, the Class A-2 Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-2 Note principal in full, then such
excess shall be applied in repayment of principal on the Class A-3 Notes;
(x) pay to the Indenture Trustee, on behalf of the Class A-3
Noteholders, the Class A-3 Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-3 Note principal in full, then such
excess shall be applied in repayment of principal on the Class A-4 Notes;
(xi) pay to the Indenture Trustee, on behalf of the Class A-4
Noteholders, the Class A-4 Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-4 Note principal in full, then such
excess shall be applied in repayment of principal on the Class B Notes;
(xii) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Class B Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be
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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,
and (ii) if the amount to be allocated pursuant to this clause exceeds the
amount needed to repay outstanding Class B Note principal in full, then
such excess shall be applied in repayment of principal on the Class C
Notes;
(xiii) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Class C Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class C Note principal in full, then such
excess shall be applied in repayment of principal on the Class D Notes;
(xiv) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Class D Principal Payment Amount for such Distribution
Date; PROVIDED (i) 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, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class D Note principal in full, then such
excess shall be applied in repayment of principal on the Class E
Certificate; and
(xv) pay all other remaining Available Amounts to the Holder of
the Class E Certificate.
Following the occurrence and during the continuance of an Event of Default
or Restricting Event, 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)-(xiv), amounts held in the Reserve Fund shall be withdrawn in order
for any of such payments or allocations to be made (in the same order of
priority) and such amounts will be considered as Available Amounts for such
purpose only. In addition, to the extent Available Amounts are insufficient to
provide for the repayment in full of the Class A-1 Notes on the Class A-1
Maturity Date (or, following the repayment in full of the Class A-1 Notes, to
the extent such Available Amounts are insufficient to provide for the repayment
in full of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes,
Class C Notes, Class D Notes or Class E Certificate on their respective Maturity
Dates, in such order of priority), then amounts held in the Reserve Fund shall
be withdrawn and applied to repay principal of such Notes or Certificate in such
order of priority on such respective Maturity Dates until the Reserve Fund is
exhausted.
SECTION 7.06. 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
Seller as set forth in EXHIBIT J hereto or as made or deemed made in any
Addition Notice or any Subsequent Purchase Agreement relating to Subsequent
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 of the Transfer
and Sale Agreement, 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 Seller of any of such
representations or warranties. The Seller, as provided in the Transfer and
Sale Agreement and in accordance with this Section 7.06, shall repurchase each
such Ineligible Contract or Excess Contract, at a repurchase price equal to the
Transfer Deposit Amount, not later than thirty (30) days following the date the
Seller 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 Seller is able to effect a substitution for any such Ineligible Contract or
Excess Contract in compliance with Section 2.04, the Seller may, in lieu of
repurchasing such Contract, effect a substitution for such
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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 Seller 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 Seller under the Transfer and
Sale Agreement and described in this Section 7.06 shall not terminate or be
deemed released by any party hereto upon a Servicer Transfer pursuant to Article
Eight. The repurchase obligation described in this Section 7.06 is in no way to
be satisfied with monies in the Reserve Fund.
SECTION 7.07. REASSIGNMENT OF REPURCHASED OR SUBSTITUTED CONTRACTS. Upon
receipt by the Indenture Trustee for deposit in the Collection Account of the
Transfer Deposit Amount as described in Section 7.06 (or upon the Subsequent
Transfer Date related to a Substitute Contract described in Section 7.06) or the
repurchase price set forth in Section 7.08, 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 Seller all of the Trust's right, title and interest
in the repurchased or substituted Contract and related Trust Assets without
recourse, representation or warranty, and 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 7.08. SELLER'S AND TRUST DEPOSITOR'S REPURCHASE OPTION. As
provided in the Transfer and Sale Agreement, on written notice to the Indenture
Trustee at least twenty (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 Seller, through
the Trust Depositor, may (but is not required to) repurchase from the Trust on
that Distribution Date all outstanding Contracts at a price equal to the sum of
(a) aggregate outstanding Principal Amount of the Securities (other than the
Class E Certificate) as of the current Distribution Date thereon, and (b) the
amount of unreimbursed Servicer Advances (if any) as well as accrued and unpaid
monthly Servicing Fees to the date of such repurchase. Such price is to be
deposited in the Collection Account one Business Day before such Distribution
Date, against the Owner Trustee's and Indenture Trustee's and Trust Depositor's
release of the Contracts and the Contract Files to the Seller.
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ARTICLE EIGHT
SERVICER DEFAULT; SERVICE 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 the
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.
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 rights and obligations
under this Agreement.
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(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 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 Seller, 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 Certificate) 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 Seller).
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
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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 Transfer shall be deemed expenses reimbursable from Available Amounts
after an Event of Default pursuant to Section 7.05(b)(i) hereof and Section
5.06(a)(i) of the Indenture.
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 11.04 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 11.04, 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 rights or obligations under this
Agreement, including, without limitation, 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 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 3.02. Notwithstanding anything to
the contrary, the indemnification provided by this Section 8.07 shall survive
(a) a Service Transfer and/or (b) the termination of this Agreement.
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
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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 warranty 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.
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ARTICLE NINE
REPORTS
SECTION 9.01. MONTHLY REPORTS. With respect to each Distribution Date and
the related Collection Period, the Servicer will provided to each Trustee, and
each Rating Agency, on the related Determination Date, a monthly statement (a
"MONTHLY REPORT") substantially in the form of EXHIBIT I hereto. On each
Distribution Date, the Indenture Trustee will forward to each Noteholder a copy
of the Monthly Report for the related Collection Period.
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
chartered 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,
1998 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 Independent
Accountants have, at the request of the Servicer, reviewed certain documents and
records relating to the servicing of the Contracts in the Contracts Pool
(including but not limited to the Monthly Reports for such year), and based on
such review, which was performed in accordance with generally accepted standards
for review engagements and which consisted primarity of inquiry, analytical
procedures and discussion related to information supplied to such Independent
Accountants, no matters came to the attention of such Independent Accountants
that caused them to believe that (i) such servicing was not conducted in
compliance with Section Five of this Agreement or (ii) the Monthly Reports for
such year were not prepared in accordance with Section 9.01. A copy of such
report (the "REVIEW ENGAGEMENT 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 Review Engagement 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.
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, 1998, 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
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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, 1998, 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.
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ARTICLE TEN
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, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
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ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. AMENDMENT.
(a) This Agreement may be amended by the Trust Depositor, the Servicer,
the Indenture Trustee and the Issuer, 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 Trust
Depositor, the Servicer, the Indenture Trustee and the Issuer, 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 amendment, or (iii) make any Note or
Certificate payable in money other than Dollars, without the consent of the
Holders of all Notes and the Certificate of the relevant affected Class then
outstanding.
(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
Indenture Trustee, 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 the Certificateholder
pursuant to Section 11.01(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 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 and that all conditions precedent to such execution
as set forth in the Transaction Documents have been satisfied. 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 11.01, 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.
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SECTION 11.02. 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 Issuer, 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.
(b) Neither the Seller, 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 Section 9-402(7)
of the UCC, unless it shall have given the Issuer, 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 Seller, the Trust Depositor and the Servicer shall give the
Issuer, the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of the principal executive office of the
Seller, 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
Issuer and the Indenture Trustee in such Contract and that such Contract is
owned by the Issuer and has been pledged to the Indenture Trustee. Indication
of the Issuer'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 11.03. GOVERNING LAW. This Agreement 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, except that the duties of the Owner Trustee shall be
governed by the laws of the State of Delaware.
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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 as follows:
(i) If to the Servicer or Seller:
Newcourt Financial USA, Inc.
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Attention: Scott Herbst
Fax No.: (317) 592-1116
Telephone No.: (317) 767-0077
(ii) If to the Trust Depositor:
Newcourt Receivables Corporation II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Attention: Scott Herbst
Fax No.: (317) 592-1116
Telephone No.: (317) 767-0077
(iii) If to the Indenture Trustee:
Manufacturers and Traders Trust Company
1 M&T Plaza, 7th Floor
Buffalo, New York 14203
Attention: Kathy E. Puccio
Fax No.: (716) 842-4474
Telephone No.: (716) 842-5223
(iv) If to the Owner Trustee:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801-1167
Attention: Corporate Trust Administration Department
Fax No.: (302) 984-4903
Telephone No.: (302) 428-3378
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(v) If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
Telecopier No.: (212) 553-0344
(vi) If to S&P:
Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies
25 Broadway
New York, New York 10004
Attention: Structured Finance Ratings
Fax No.: (212) 208-1582
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 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 Notes or
Certificate or the rights of the Holders thereof.
SECTION 11.06. 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 11.07. 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 11.08. 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 11.09. NO BANKRUPTCY PETITION. Each of 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 11.09 will
survive the termination of this Agreement.
SECTION 11.10. JURISDICTION. Any legal action or proceeding with respect
to this Agreement may be brought in the courts of the United States for the
Southern District of New York, 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
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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 11.11. 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 Indiana income tax purposes.
SECTION 11.12. INDEMNIFICATION. The Servicer will indemnify the Trust
Depositor, the Trust, the Owner Trustee and the Indenture Trustee and any of
their officers, directors, employees or agents (each an "INDEMNIFIED PARTY")
from and against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments and any other costs, fees and expenses
that any Indemnified Party may sustain in connection with claims asserted by
third parties against such Indemnified Party which result from any act or
omission on the part of the Servicer with respect to the Trust pursuant to this
Agreement except where such claims arise out of any willful misconduct, gross
negligence or bad faith on the part of such Indemnified Party. Indemnification
under this Section shall survive the resignation or removal of the Owner Trustee
or Indenture Trustee, as the case may be, and the termination of this Agreement.
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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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in
its individual capacity but solely as
Owner Trustee on behalf of the Trust
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
NEWCOURT RECEIVABLES CORPORATION II, as Trust
Depositor
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
NEWCOURT FINANCIAL USA, INC., as Servicer
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
MANUFACTURERS AND TRADERS TRUST COMPANY,
not in its individual capacity but solely as
Indenture Trustee
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
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EXHIBIT A
[Form of Assignment]
In accordance with the Sale and Servicing Agreement (the "SALE AND
SERVICING AGREEMENT") dated as of November 1, 1997 made by and between the
undersigned, as Trust Depositor ("TRUST DEPOSITOR"), Newcourt Financial USA,
Inc., as Servicer, Manufacturers and Traders Trust Company as Indenture Trustee
and the Newcourt Receivables Asset Trust 1997-1 (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 Scheduled Payments due prior to the Initial
Cutoff Date and any Excluded Amounts), and (ii) all other Transferred 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 [ ] day of November, 1997.
NEWCOURT RECEIVABLES CORPORATION II
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
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EXHIBIT B
[Form of Closing Certificate of Trust Depositor]
NEWCOURT RECEIVABLES CORPORATION II
OFFICER'S CERTIFICATE
The undersigned certifies that he/she is [________] of Newcourt Receivables
Corporation II, 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 [ ], 1997 (the "EFFECTIVE DATE") by and
among the Trust Depositor, [ ] (the "INDENTURE TRUSTEE"), as Indenture
Trustee, Newcourt Financial USA, Inc. ("NEWCOURT USA"), as Servicer, and the
Newcourt Receivables Asset Trust 1997-1 ("ISSUER") (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 [ ], 1997 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 [ ], 1997, 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 Transfer and Sale
Agreement dated as of the Effective Date among the Trust Depositor and
Newcourt USA; the Amended and Restated Trust Agreement dated as of the
Effective Date between the Trust Depositor and [ ] (the "OWNER
TRUSTEE"), as Owner Trustee; the Administration Agreement dated as of the
Effective Date among the Trust Depositor, the Issuer, the Indenture
Trustee, and Newcourt USA, 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 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.
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(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 and agreements evidencing the purchase and sale of Contracts
permitted by Section 6.07 of the Agreement). Neither the Seller's 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 Certificate
and the Notes, nor the execution and delivery 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 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-2
<PAGE>
IN WITNESS WHEREOF, I have affixed my signature hereto this [ ]
day of [ ], 1997.
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
<PAGE>
EXHIBIT C
[Form of Closing Certificate of Servicer/Seller]
NEWCOURT FINANCIAL USA, INC.
OFFICER'S CERTIFICATE
The undersigned certifies that he/she is ___________ of Newcourt Financial
USA, Inc. ("NEWCOURT USA"), and that as such he/she is duly authorized to
execute and deliver this certificate on behalf of Newcourt USA, as Servicer, in
connection with the Sale and Servicing Agreement (the "AGREEMENT") dated as of
November 1, 1997 (the "EFFECTIVE DATE") by and among Newcourt USA, as Servicer,
Newcourt Receivables Corporation II ("NRC"), Manufacturers and Traders Trust
Company as Indenture Trustee, and Newcourt Receivables Asset Trust 1997-1
("ISSUER"), and as a Seller in connection with the Transfer and Sale Agreement
dated as of the Effective Date (the "TRANSFER AND SALE AGREEMENT") by and among
Newcourt USA, as Seller, and NRC (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 Newcourt USA, 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 Newcourt USA since [_______],
19__, and no such amendment has been authorized by the Board of Directors
or shareholders of Newcourt USA.
(3) Attached hereto as EXHIBIT II is a Certificate of the Secretary
of State of the State of Delaware dated [______], 1997 stating that
Newcourt USA 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 Newcourt USA 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 Newcourt USA and relating to the authorization, execution,
delivery and performance of (among other things) the Transfer and Sale
Agreement; 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
Newcourt USA, NRC, the Issuer and Manufacturers and Traders Trust Company
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 Newcourt USA 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
Newcourt USA, whether or
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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 Newcourt USA due and owing
as of the date hereof have been paid.
(8) All representations and warranties of Newcourt USA contained in
the Transfer and Sale Agreement, the Sale and Servicing 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 Newcourt USA before any court, administrative
agency or other tribunal (a) asserting the invalidity of any Program
Agreement to which Newcourt USA is a party; or (b) which is likely
materially and adversely to affect Newcourt USA'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 Newcourt USA for Newcourt USA'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 Certificate.
(11) Neither Newcourt USA's transfer and assignment of the Contract
Assets to NRC, NRC'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 Certificate 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 Newcourt
USA is a party or by which it is otherwise bound.
(12) In connection with the transfers of Contracts and related assets
contemplated in the Transfer and Sale Agreement, (a) Newcourt USA has not
made such transfer with actual intent to hinder, delay or defraud any
creditor of Newcourt USA, and (b) Newcourt USA has not received less than a
reasonably equivalent value in exchange for such transfer, is not on the
date hereof insolvent (nor will Newcourt USA 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 Newcourt USA 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) Newcourt USA 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 Transfer and
Sale Agreement.
(15) With respect to the financing statements described in the
Opinion which are identified as Specific Agreement Filings naming Newcourt
USA as debtor, Newcourt USA 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 Newcourt USA and constituting part of the
Initial Contracts Pool, and Newcourt USA further represents that such
agreements are
C-2
<PAGE>
never to be conveyed as a Subsequent Contract. In addition, Newcourt USA
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 Newcourt USA further represents that no
agreement that is part of any such fixed mortgage loan pool will ever by
conveyed as a Subsequent Contract.
IN WITNESS WHEREOF, I have affixed my signature hereto this [ ]
day of [ ], 1997.
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
C-3
<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]
Newcourt Financial USA, Inc.
Certificate Regarding Repurchased Contracts
The undersigned certifies that he/she is a ____________________________ of
Newcourt Financial USA, 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 7.07 of the Sale and Servicing
Agreement (the "AGREEMENT") dated as of November 1, 1997 by and among Newcourt
Receivables Corporation II, as Trust Depositor, the Servicer, Manufacturers and
Traders Trust Company as Indenture Trustee, and Newcourt Receivables Asset Trust
1997-1 (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
Seller on the date hereof, or substituted for by the Seller, pursuant
to and in accordance with Section 7.06 of the Agreement and Section
5.01 of the Transfer and Sale 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 7.07 of the Agreement, be
assigned by the Owner Trustee to the Seller.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day of
______, ____.
Newcourt Financial USA, Inc.
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
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
[Seller's Representations and Warranties]
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT AND
AS TO CERTAIN CONTRACTS IN THE AGGREGATE. The Seller jointly and severally
represents and warrants (x) with respect to subsections (a) and (b) 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
Subsequent Contract, and (y) with respect to subsections (c) through (e) below,
as to the Contracts Pool in the aggregate as of the Closing Date, and as of each
Subsequent Transfer Date with respect to Subsequent Contracts (after giving
effect to the addition of such Subsequent Contracts to the Contracts Pool),
that:
(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 Subsequent 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 the Sale and Servicing
Agreement as of the date of its conveyance hereunder.
(c) CONTRACTS SECURED BY FIXTURES. In the Seller's reasonable
judgment, not more than [____]% of the ADCB of the Contracts Pool consists
of Contracts secured by Equipment constituting fixtures.
(d) CONTRACTS SECURED BY OTHER REAL PROPERTY. Not more than [_____]%
of the ADCB of the Contracts Pool consists of Contracts additionally
secured by other real property (exclusive of or in addition to Equipment
constituting fixtures).
(e) CONTRACTS SECURED BY VEHICLES. Not more than [________]% of the
ADCB of the Contracts Pool consists of Contracts secured by Equipment
constituting Vehicles.
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL
CONTRACTS IN THE AGGREGATE. Each Seller jointly and severally represents and
warrants, as of the Closing Date, that:
(a) AMOUNTS. The ADCB of the Contracts as of the Initial Cutoff Date
equals the sum of the principal balance of the Class A-1 Notes, the Class
A-2 Notes, Class A-3 Notes, Class A-4 Notes, the Class B Notes, the Class C
Notes and the Class D Notes on the Closing Date.
(b) CHARACTERISTICS. The Initial Contracts have the following
additional characteristics: (i) no Contract has a remaining maturity of
more than [______] months; (ii) the final scheduled Distribution Date 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.
The Seller represents and warrants as of the Closing Date with respect to the
Initial Contracts (or as of the Subsequent Transfer Date, with respect to
Subsequent Contracts), that (i) immediately prior to such date (as applicable),
the Seller had possession of each original Contract and the related complete
Contract File (except for the Contracts identified in clause (ii) of this
Section 3.04), and there were no other custodial agreements relating to the same
in effect; (ii) immediately prior to such date (as applicable), the Persons
listed on Schedule 1 to the Sale and Servicing Agreement had possession of the
original Contracts and related complete Contract Files identified on Schedule 1
to the Sale and Servicing Agreement; (iii) each of such documents which is
required to be signed by the Obligor has been signed by the Obligor in the
appropriate spaces; (iv) all blanks on any form have been properly filled in and
each form has otherwise been correctly prepared;
J-1
<PAGE>
and (v) the complete Contract File for each Contract is in the possession of the
Servicer except for the Contracts and related Contract Files identified on
Schedule 1 to the Sale and Servicing Agreement which are in the possession of
the Persons listed therein.
SECTION 3.05. REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS OF
INITIAL CONTRACTS. The Seller 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:
(i) the ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities does not exceed [______]%
of the ADCB of the Contracts Pool;
(ii) 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;
(iii) the ADCB of all End-User Contracts with Obligors who comprise the
three (3) largest Obligors (measured by ADCB as of the date of
determination) does not exceed [______]% of the ADCB of the
Contracts Pool;
(iv) the ADCB of all End-User Contracts with Obligors who comprise the
twenty (20) largest Obligors (measured by ADCB as of the date of
determination) does not exceed [_______]% of the ADCB of the
Contracts Pool;
(v) the ADCB of all End-User Contracts related to a single Vendor, or
representing a Vendor Loan of such Vendor, does not exceed [___]%
of the ADCB of the Contracts Pool;
(vi) 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; and
(vii) in the Seller's reasonable judgment, the Discounted Contract
Balance of End-User Contracts in the Contract Pool that are "true
leases" does not exceed [_______]% of the ADCB of the Contracts
Pool.
[remainder of page intentionally blank]
J-2
<PAGE>
EXHIBIT K
[Reserved]
K-1
<PAGE>
EXHIBIT L
[Reserved]
L-1
<PAGE>
EXHIBIT M
[Form of Subsequent Transfer Agreement]
SUBSEQUENT TRANSFER AGREEMENT (the "AGREEMENT"), dated as of [________], by
and among Newcourt Receivables Asset Trust 1997-1 (the "TRUST"), Newcourt
Receivables Corporation II, a Delaware corporation (the "TRUST DEPOSITOR"),
Manufacturers and Traders Trust Company, as Indenture Trustee (the "INDENTURE
TRUSTEE") and Newcourt Financial USA, Inc., a Delaware corporation, as Servicer
pursuant to the Sale and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, the Trust, the Trust Depositor, the Servicer and the Indenture
Trustee, are parties to the Sale and Servicing Agreement, dated as of November
1, 1997 (the "SALE AND SERVICING AGREEMENT");
WHEREAS, pursuant to the Sale and Servicing Agreement, the Trust Depositor
wishes to sell the Subsequent 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 Servicer has timely delivered an Addition Notice related to
such conveyance as required in by Section 2.04(b) 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
Subsequent Contracts transferred hereby, [_____].
"SUBSEQUENT CONTRACTS" shall mean, for purposes of this
Agreement, the Subsequent Contracts listed in the Subsequent List of
Contracts attached hereto as EXHIBIT A.
"SUBSEQUENT TRANSFER DATE" shall mean, with respect to the
Subsequent 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 Subsequent Contracts to be transferred
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 SUBSEQUENT CONTRACTS. Subject to and upon the
terms and conditions set forth in Section 2.04(b) of the Sale and Servicing
Agreement and this Agreement, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust:
M-1
<PAGE>
(i) the Subsequent Contracts identified in the related Addition
Notice, and all monies due or to become due in payment of such Contracts on
and after the related Subsequent Cutoff Dates, any Prepayment Amounts, any
payments in respect of a casualty or early termination, and any Recoveries
received with respect thereto, but excluding any Scheduled Payments due
prior to the related Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of
any Vendor Loan, related Applicable Security, including all proceeds from
any sale or other disposition of such Equipment (but subject to the
exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect
to such Contracts or the Obligor thereunder under any Vendor Agreements
with the Seller 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 Transfer and Sale 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 other than Guaranteed Residual Investments.
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 Subsequent Contracts from the Trust Depositor to the Trust, conveying
good title thereto free and clear of any Liens.
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
Subsequent Contracts as of the Subsequent Transfer Date the representations and
warranties set forth in Exhibit J to the Sale and Servicing Agreement and deemed
to be made with respect to the Subsequent Contracts thereunder.
(c) The Trust Depositor hereby represents and warrants that (a) the ADCB
of the Subsequent 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(b)
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.
M-2
<PAGE>
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 New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 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.
NEWCOURT RECEIVABLES CORPORATION II
By:
---------------------------------------
Printed Name:
Title:
By:
---------------------------------------
Printed Name:
Title:
NEWCOURT FINANCIAL USA, INC., as Servicer
By:
---------------------------------------
Printed Name:
Title:
By:
---------------------------------------
Printed Name:
Title:
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By:
---------------------------------------
Printed Name:
Title:
M-3
<PAGE>
MANUFACTURERS AND TRADERS TRUST COMPANY, not in
its individual capacity but solely as
Indenture Trustee
By:
---------------------------------------
Printed Name:
Title:
M-4
<PAGE>
- --------------------------------------------------------------------------------
ADMINISTRATION AGREEMENT
among
NEWCOURT RECEIVABLES ASSET TRUST 1997-1,
as Issuer,
NEWCOURT FINANCIAL USA, INC.
as Administrator
NEWCOURT RECEIVABLES CORPORATION II,
as Trust Depositor,
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Indenture Trustee
Dated as of November 1, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION 1. DUTIES OF THE ADMINISTRATOR.....................................3
SECTION 2 RECORDS.........................................................5
SECTION 3. COMPENSATION....................................................5
SECTION 4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER............6
SECTION 5. INDEPENDENCE OF THE ADMINISTRATOR...............................6
SECTION 6. NO JOINT VENTURE................................................6
SECTION 7. OTHER ACTIVITIES OF ADMINISTRATOR...............................6
SECTION 8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR.....6
SECTION 9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL.................7
SECTION 10. NOTICES.........................................................7
SECTION 11. AMENDMENTS......................................................8
SECTION 12. SUCCESSORS AND ASSIGNS..........................................8
SECTION 13. GOVERNING LAW...................................................8
SECTION 14. HEADINGS........................................................8
SECTION 15. COUNTERPARTS....................................................8
SECTION 16. SEVERABILITY....................................................8
SECTION 17. NOT APPLICABLE TO NEWCOURT USA IN OTHER CAPACITIES..............9
SECTION 18. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE..9
SECTION 19. THIRD-PARTY BENEFICIARY.........................................9
SECTION 20. SURVIVABILITY...................................................9
<PAGE>
This Administration Agreement, dated as of November 1, 1997, is among
Newcourt Receivables Asset Trust 1997-1 (the "ISSUER"), Newcourt Financial USA
Inc. ( together with its successors and assigns "NEWCOURT USA") in its capacity
as administrator (the "ADMINISTRATOR"), Newcourt Receivables Corporation II
(together with its successors and assigns, the "TRUST DEPOSITOR") and
Manufacturers and Traders Trust Company, 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 and [ ]%
Class D 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 and Newcourt USA, 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 Class E
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, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
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):
<PAGE>
(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);
(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
2
<PAGE>
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);
(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:
3
<PAGE>
(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 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 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 itself and of the Issuer, execute and deliver to the
Administrator and to each successor Administrator appointed pursuant to the
terms hereof, one or more powers of attorney substantially in the form of
EXHIBIT A hereto, appointing the Administrator the attorney-in-fact of the
Owner Trustee and the Issuer for the purpose of executing on behalf of the
Owner Trustee and the Issuer all such documents, reports, filings,
instruments, certificates and opinions. 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
4
<PAGE>
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.
(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.
5
<PAGE>
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 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 dissolution 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:
(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); or
(ii) an Insolvency Event shall occur with respect to the
Administrator.
The Administrator agrees that if any of the events specified in clause (ii)
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.
6
<PAGE>
(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 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:
Newcourt Financial USA, Inc.
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Attention: Scott Herbst
Fax No.: (317) 592-1116
(ii) If to the Trust Depositor:
Newcourt Receivables Corporation II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Attention: Paul Cortellini
Fax No.: (317) 592-1116
(iii) If to the Indenture Trustee:
7
<PAGE>
Manufacturers and Traders Trust Company
1 M&T Plaza, 7th Floor
Buffalo, New York 14203
Attention: Kathy E. Puccio
Fax No.: (716) 842-4474
(iv) If to the Issuer or the Owner Trustee:
Chase Manhattan Bank Delaware
120 Market Street
Wilmington, Delaware 19801-1167
Attention: Corporate Trustee Administration Department
Fax No.: (302) 984-4903
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.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE
8
<PAGE>
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 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 NEWCOURT USA IN OTHER CAPACITIES. Nothing
in this Agreement shall affect any obligation Newcourt USA 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 Chase Manhattan Bank Delaware not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank Delaware 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 Manufacturer's and Trader's Trust Company
not in its individual capacity but solely as Indenture Trustee and in no event
shall Manufacturer's and Trader's Trust Company 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.
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]
9
<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.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in
its individual capacity but solely as
Owner Trustee
By:
---------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
NEWCOURT RECEIVABLES CORPORATION II,
as Trust Depositor
By:
---------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
By:
---------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
MANUFACTURERS AND TRADERS TRUST COMPANY,
not in its individual capacity but solely as
Indenture Trustee
By:
---------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
NEWCOURT FINANCIAL USA INC., as Administrator
By:
---------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
By:
---------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
10
<PAGE>
EXHIBIT A
LIMITED POWER OF ATTORNEY
State of _______________)
) SS.
County of ______________)
KNOW ALL PERSONS BY THESE PRESENTS, that Chase Manhattan Bank Delaware, a
Delaware banking corporation (the "OWNER TRUSTEE"), by and through its duly
elected and authorized officer, ________________________, a ___________________,
on behalf of itself and of Newcourt Receivables Asset Trust 1997-1 (the "TRUST")
as Issuer under the Administration Agreement, dated as of November 1, 1997 (the
"ADMINISTRATION AGREEMENT"), among the Trust, Newcourt Receivables Corporation
II, Manufacturer's and Trader's Trust Company as Indenture Trustee, and Newcourt
Financial USA Inc., as Administrator, does hereby nominate, constitute and
appoint Newcourt Financial USA 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 Owner Trustee and 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 or the Owner Trustee, 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.
Executed as of this ____ day of ______________, 1997.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as
Owner Trustee,
By:
---------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT OF
NOTARY PUBLIC
State of Illinois )
) SS.
County of Cook )
On August , 1997 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]
--------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TRANSFER AND SALE AGREEMENT
by and among
NEWCOURT FINANCIAL USA, INC.
as Seller
AND
NEWCOURT RECEIVABLES CORPORATION II
as Purchaser
Dated as of November 1, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE IDEFINITIONS........................................................-1-
ARTICLE IITRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT....................-1-
Section 2.01. Closing..................................................-1-
Section 2.02. Conditions to the Closing................................-2-
Section 2.03. Assignment of Agreement..................................-3-
Section 2.04. Conveyance of Subsequent Contracts.......................-3-
Section 2.05. Release of Excluded Amounts..............................-4-
Section 2.06. Delivery of Instruments..................................-4-
ARTICLE IIIREPRESENTATIONS AND WARRANTIES...................................-5-
Section 3.01. Representations and Warranties Regarding the Seller......-5-
Section 3.02. Representations and Warranties Regarding Each Contract
and as to Certain Contracts in the Aggregate.............-6-
Section 3.03. Representations and Warranties Regarding the Initial
Contracts in the Aggregate...............................-7-
Section 3.04. Representations and Warranties Regarding the Contract
Files....................................................-7-
Section 3.05. Representations and Warranties Regarding Concentrations
of Initial Contracts.....................................-8-
Section 3.06 Representations and Warranties Regarding Secondary
Contracts................................................-8-
ARTICLE IVPERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS.......-9-
Section 4.01. Custody of Contracts.....................................-9-
Section 4.02. Filing...................................................-9-
Section 4.03. Name Change or Relocation................................-9-
Section 4.04. Chief Executive Office...................................-9-
Section 4.05. Costs and Expenses.......................................-9-
Section 4.06. Sale Treatment...........................................-9-
ARTICLE VREMEDIES UPON MISREPRESENTATION....................................-10-
Section 5.01. Repurchases and Substitutions of Contracts for
Breach of Representations and Warranties.................-10-
Section 5.02. Seller's Repurchase Option...............................-10-
Section 5.03. Reassignment of Repurchased or Substituted Contracts.....-10-
ARTICLE VIINDEMNITIES.......................................................-11-
Section 6.01. Seller Indemnification...................................-11-
Section 6.02. Liabilities to Obligors..................................-11-
Section 6.03. Tax Indemnification......................................-11-
Section 6.04. Adjustments..............................................-11-
Section 6.05. Operation of Indemnities.................................-12-
ARTICLE VIIMISCELLANEOUS....................................................-12-
Section 7.01. Prohibited Transactions with Respect to the Trust........-12-
Section 7.02. Merger or Consolidation..................................-12-
Section 7.03. Termination..............................................-12-
Section 7.04. Assignment or Delegation by the Seller...................-12-
Section 7.05. Amendment................................................-13-
Section 7.06. Notices. ...............................................-13-
Section 7.07. Merger and Integration...................................-14-
Section 7.08. Headings.................................................-14-
Section 7.09. Governing Law............................................-14-
<PAGE>
Section 7.10. No Bankruptcy Petition. .................................-14-
Section 7.11. Third Party Beneficiaries. ..............................-14-
Section 7.12. Severability of Provisions. ............................ -14-
Section 7.13. No Waiver; Cumulative Remedies. ........................ -14-
Section 7.14. Counterparts. .......................................... -14-
-ii-
<PAGE>
EXHIBITS
Exhibit A Form of Assignment
Exhibit B Form of Subsequent Purchase Agreement
-iii-
<PAGE>
This TRANSFER AND SALE AGREEMENT, dated as of November 1, 1997 (this
"AGREEMENT"), is made by and among Newcourt Financial USA, Inc., a Delaware
corporation, as a seller hereunder (together with its successors and assigns,
"NEWCOURT USA" or the "SELLER") and Newcourt Receivables Corporation II, a
Delaware corporation and wholly-owned subsidiary of Newcourt USA (together with
its successors and assigns, the "TRUST DEPOSITOR"), as purchaser hereunder.
WHEREAS, in the regular course of its business, the Seller originates and
purchases Contracts.
WHEREAS, the Seller and Trust Depositor wish to set forth the terms and
conditions pursuant to which Trust Depositor will acquire Initial Contracts on
the Closing Date, and may acquire from time to time thereafter certain
Subsequent Contracts (such Initial Contracts and Subsequent Contracts, together
with certain related property as more fully described herein, being the Contract
Assets); and
WHEREAS, the Trust Depositor intends concurrently with each transfer of
Contract Assets hereunder to convey all right, title and interest in such
Contract Assets to Newcourt Receivables Asset Trust 1997-1 (the "TRUST")
pursuant to the Sale and Servicing Agreement dated as of November 1, 1997 by and
among the Trust Depositor, Newcourt USA, as Servicer, the Indenture Trustee
defined therein, and the Trust (as amended, supplemented or otherwise modified
from time to time, the "SALE AND SERVICING AGREEMENT"), executed concurrently
herewith;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Seller and the Trust Depositor agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL. Unless otherwise defined in this Agreement,
capitalized terms used herein (including in the preamble above) shall have the
meanings assigned to them in the Sale and Servicing Agreement.
ARTICLE II
TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT
SECTION 2.01. CLOSING. Subject to and upon the terms and conditions set
forth in this Agreement, the Seller hereby sells, transfers, assigns, sets over
and otherwise conveys to the Trust Depositor, in consideration of the Trust
Depositor's payment of $[ ] (less underwriting expenses and
certain other expenses associated with the initial offer and sale of the Notes
financing the Trust Depositor's payment of such amount) in cash as the purchase
price therefor, all the right, title and interest of the Seller in and to
(items (i) - (vi) below, being collectively referred to herein as the "INITIAL
CONTRACT ASSETS"):
(i) the Initial Contracts, and all monies due or to become due in
payment of such Contracts on and after the Initial Cutoff Dates, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date and
any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of any
Vendor Loan, related Applicable Security, including all proceeds from any
sale or other disposition of such Equipment (but subject to the exclusion
and release herein of Excluded Amounts);
(iii) the Contract Files;
-1-
<PAGE>
(iv) all payments made or to be made in the future with respect to
such Contracts or the Obligor thereunder under any Vendor Agreements with
the Seller and under any guarantee or similar credit enhancement with
respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract; and
(vi) all income from and proceeds of the foregoing;
PROVIDED, that the Initial Contract Assets shall not include any Residual
Investment other than the Guaranteed Residual Investment.
The foregoing sale, transfer, assignment, set-over and conveyance does not
constitute and is not intended to result in a creation or an assumption by
the Trust Depositor of any obligation of the Seller in connection with the
Initial 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 Seller, or (i)
any taxes, fees, or other charges imposed by any Governmental Authority and
(ii) any insurance premiums which remain owing with respect to any Contract
at the time such Contract is sold hereunder. Although the Seller and the
Trust Depositor agree that any such transfer is intended to be a sale of
ownership of the Initial Contract Assets, rather than the mere granting of a
security interest to secure a borrowing, in the event such transfer is deemed
to be of a mere security interest to secure indebtedness, the Seller shall be
deemed to have granted the Trust Depositor a perfected first priority
security interest in such Initial Contract Assets and this Agreement shall
constitute a security agreement under applicable law, securing the repayment
of the purchase price paid hereunder and the obligations and/or interests
represented by the Securities, in the order and priorities, and subject to
the other terms and conditions of, the Sale and Servicing Agreement, the
Indenture and the Trust Agreement, together with such other obligations or
interests as may arise hereunder and thereunder in favor of the parties
hereto and thereto. If such transfer is deemed to be the mere granting of a
security interest to secure a borrowing, the Trust Depositor may, to secure
the Trust Depositor's own borrowing under the Sale and Servicing Agreement
(to the extent that the transfer of the Initial Contract Assets thereunder is
deemed to be a mere granting of a security interest to secure a borrowing)
repledge and reassign (i) all or a portion of the Initial Contract Assets
pledged to the Trust Depositor and not released from the security interest of
this Agreement at the time of such pledge and assignment, and (ii) all
proceeds thereof. Such repledge and reassignment may be made by the Trust
Depositor with or without a repledge and reassignment by the Trust Depositor
of its rights under this Agreement, and without further notice to or
acknowledgment from the Seller. The Seller waives, to the extent permitted
by applicable law, all claims, causes of action and remedies, whether legal
or equitable (including any right of setoff), against the Trust Depositor or
any assignee of the Trust Depositor relating to such action by the Trust
Depositor in connection with the transactions contemplated by the Sale and
Servicing Agreement.
SECTION 2.02. CONDITIONS TO THE CLOSING. On or before the Closing Date,
the Seller shall deliver or cause to be delivered to the Trust Depositor each of
the documents, certificates and other items as follows:
(a) The List of Contracts, certified by the Chairman of the Board,
President or any Vice President of the Seller together with an Assignment
substantially in the form attached as EXHIBIT A hereto (along with delivery of
any instruments required under Section 2.06 together with the identifying
information described in such Section 2.06 being indicated on such List of
Contracts).
(b) A certificate of an officer of each respective Seller substantially in
the form of EXHIBIT C to the Sale and Servicing Agreement.
(c) An opinion of counsel for the Seller substantially in the form of
EXHIBIT D to the Sale and Servicing Agreement.
(d) A letter from Ernst & Young LLP, or another nationally recognized
accounting firm, addressed to the Trust Depositor and the Issuer and the
Trustees and stating that such firm has reviewed a sample of the Contracts and
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performed specific procedures for such sample with respect to certain contract
terms and identifying those Contracts which do not so conform.
(e) Copies of resolutions of the Board of Directors of the Seller or of
the Executive Committee of the Board of Directors of the Seller approving the
execution, delivery and performance of this Agreement and the transactions
contemplated hereunder, certified in each case by the Secretary or an Assistant
Secretary of the Seller.
(f) Officially certified recent evidence of due incorporation and good
standing of the Seller under the laws of Delaware.
(g) The documents, certificates and other items described in Section 2.02
of the Sale and Servicing Agreement, to the extent not already described above.
SECTION 2.03. ASSIGNMENT OF AGREEMENT. The Trust Depositor has the right
to assign its interest under this Agreement to the Issuer and Owner Trustee as
may be required to effect the purposes of the Sale and Servicing Agreement,
without further notice to, or consent of, the Seller, and the Issuer and the
Trustees shall succeed to such of the rights of the Trust Depositor hereunder as
shall be so assigned. The Seller acknowledges that, pursuant to the Sale and
Servicing Agreement, the Trust Depositor will assign all of its right, title and
interest in and to the Contract Assets and its right to exercise the remedies
created by Section 5.01 for breaches of representations and warranties of the
Seller contained in Sections 3.02, 3.03, 3.04 and 3.05 to the Issuer and the
Trustees for the benefit of the Noteholders and Certificateholders. The Seller
agrees that, upon such assignment to the Issuer and the Trustees, such
representations will run to and be for the benefit of the Issuer and the
Trustees and that, the Issuer and the Trustees may enforce directly without
joinder of the Trust Depositor, the repurchase obligations of the Seller with
respect to breaches of such representations and warranties as set forth in
Article III herein and in Section 7.06 of the Sale and Servicing Agreement.
SECTION 2.04. CONVEYANCE OF SUBSEQUENT CONTRACTS. (a) Subject to
satisfaction of the conditions set forth in Section 2.04(b) of the Sale and
Servicing Agreement, the Seller may at its option (but shall not be obligated
to) sell, transfer, assign, set over and otherwise convey to the Trust
Depositor (by delivery of an executed Subsequent Purchase Agreement
substantially in the form attached as EXHIBIT B hereto), without recourse other
than as expressly provided herein and in the Sale and Servicing Agreement (and
the Trust Depositor shall be required to purchase, either through payment by
delivery of a cash purchase price in the amount of the prepayment proceeds
received by the Trust and released to the Trust Depositor on the Subsequent
Transfer Date, in the case of a Subsequent Contract which is an Additional
Contract, or through payment by exchange of one or more related Contracts
released by the Trust to the Trust Depositor on the Subsequent Transfer Date, in
the case of a Subsequent Contract which is a Substitute Contract) all the
right, title and interest of the Seller in and to (items (i) - (vi) below, being
collectively referred to herein as the "SUBSEQUENT CONTRACT ASSETS"):
(i) the Subsequent Contracts identified in the related Addition
Notice, and all monies due or to become due in payment of such Contracts on
and after the related Subsequent Cutoff Dates, any Prepayment Amounts, any
payments in respect of a casualty or early termination, and any Recoveries
received with respect thereto, but excluding any Scheduled Payments due
prior to the related Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of any
Vendor Loan, related Applicable Security, including all proceeds from any
sale or other disposition of such Equipment (but subject to the exclusion
and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the Obligor thereunder under any Vendor Agreements with
the Seller and under any guarantee or similar credit enhancement with
respect to such Contracts;
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(v) all Insurance Proceeds with respect to each such Contract; and
(vi) all income from and proceeds of the foregoing;
PROVIDED, that the Subsequent Contract Assets shall in no case include any
Residual Investment other than Guaranteed Residual Investments.
Any such sale, transfer, assignment, set-over and conveyance shall not
constitute and is not intended to result in a creation or an assumption by the
Trust Depositor of any obligation of the Seller in connection with the
Subsequent 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 Seller, or (i) any
taxes, fees, or other charges imposed by any Governmental Authority and (ii) any
insurance premiums which remain owing with respect to any Contract at the time
such Contract is sold hereunder. Although the Seller and the Trust Depositor
agree that any such transfer is intended to be a sale of ownership of the
Subsequent Contract Assets, rather than the mere granting of a security interest
to secure a borrowing, in the event such transfer is deemed to be of a mere
security interest to secure indebtedness, the Seller shall be deemed to have
granted the Trust Depositor a perfected first priority security interest in such
Subsequent Contract Assets and this Agreement shall constitute a security
agreement under applicable law, securing the repayment of the purchase price
paid hereunder and the obligations and/or interests represented by the
Securities, in the order and priorities, and subject to the other terms and
conditions of, the Sale and Servicing Agreement, the Indenture and the Trust
Agreement, together with such other obligations or interests as may arise
hereunder and thereunder in favor of the parties hereto and thereto. If such
transfer is deemed to be the mere granting of a security interest to secure a
borrowing, the Trust Depositor may, to secure the Trust Depositor's own
borrowing under the Sale and Servicing Agreement (to the extent that the
transfer of the Subsequent Contract Assets thereunder is deemed to be a mere
granting of a security interest to secure a borrowing) repledge and reassign (i)
all or a portion of the Subsequent Contract Assets pledged to the Trust
Depositor and not released from the security interest of this Agreement at the
time of such pledge and assignment, and (ii) all proceeds thereof. Such
repledge and reassignment may be made by the Trust Depositor with or without a
repledge and reassignment by the Trust Depositor of its rights under this
Agreement, and without further notice to or acknowledgment from the Seller. The
Seller waives, to the extent permitted by applicable law, all claims, causes of
action and remedies, whether legal or equitable (including any right of setoff),
against the Trust Depositor or any assignee of the Trust Depositor relating to
such action by the Trust Depositor in connection with the transactions
contemplated by the Sale and Servicing Agreement.
SECTION 2.05. RELEASE OF EXCLUDED AMOUNTS. Immediately upon the release
to the Trust Depositor by the Trustee, pursuant to Section 2.05 of the Sale and
Servicing Agreement, of Excluded Amounts, the Trust Depositor hereby irrevocably
agrees to release to the Seller such Excluded Amounts, which release shall be
automatic and shall require no further act by the Trust Depositor, PROVIDED,
that the Trust Depositor shall execute and deliver such instruments of release
and assignment, or otherwise confirming the foregoing release of any Excluded
Amounts, as may be reasonably requested by the Seller.
SECTION 2.06. DELIVERY OF INSTRUMENTS. On the Closing Date, the Seller
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 Trust Depositor (or, if
applicable, on the relevant Subsequent Transfer Date), in each case indorsed in
blank without recourse. Pursuant to Section 2.06 of the Sale and Servicing
Agreement, the Trust Depositor is required to deliver any such instrument to the
Owner Trustee (which in turn pursuant to Section 2.06 of the Sale and Servicing
Agreement and Section 3.05 of the Indenture is required to deliver such
instruments to the Indenture Trustee as pledgee under the Indenture).
Accordingly, the Trust Depositor hereby authorizes and directs the Seller to
deliver possession of any such instruments to the Owner Trustee on behalf of and
for the account of the Trust Depositor, and agrees that such delivery shall
satisfy the condition set forth in the first sentence of this Section 2.06. The
Seller shall also identify on the List of Contracts (including any deemed
amendment thereof associated with any Subsequent Contracts), whether by attached
schedule or marking or other effective identifying designation, all Contracts
which are or are evidenced by such instruments.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Seller hereby makes, and upon execution of each Subsequent Purchase
Agreement shall be deemed to remake, the following representations and
warranties, on which the Trust Depositor will rely in purchasing the Contract
Assets on the Closing Date (and on any Subsequent Transfer Date) and
concurrently reconveying the same to the Trust, and on which the Trust, the
Noteholders and Certificateholders will rely under the Sale and Servicing
Agreement. Such representations speak as of the execution and delivery of this
Agreement and as of the Closing Date (or Subsequent Transfer Date, as
applicable), but shall survive the sale, transfer and assignment of the
Contracts to the Trust. The repurchase obligation or substitution obligation of
the Seller set forth in Section 5.01 and in Section 7.06 of the Sale and
Servicing Agreement constitutes the sole remedy available for a breach of a
representation or warranty of the Seller set forth in Sections 3.02, 3.03, 3.04,
3.05 or 3.06 of this Agreement. Notwithstanding the foregoing, the Seller shall
not be deemed to be remaking any of the representations set forth in Section
3.03 or 3.05 on a Subsequent Transfer Date with respect to the Subsequent
Contracts, as such representations relate solely to the composition of the
Initial Contracts conveyed on the Closing Date, PROVIDED, that any inaccurate
representation as to concentrations contained in any Addition Notice shall be
subject to the same remedies hereunder as if such representation were made under
Section 3.05 on the Closing Date with respect to an Initial Contract.
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER. The
Seller represents and warrants, as of the execution and delivery of this
Agreement and as of the Closing Date (or Subsequent Transfer Date, as
applicable), that:
(a) ORGANIZATION AND GOOD STANDING. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its
assets and to transact the business in which it is currently engaged. The
Seller is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or otherwise) of the Seller or the Trust Depositor. The Seller is properly
licensed in each jurisdiction to the extent required by the laws of such
jurisdiction in order to originate, and (if the Seller is to be the
Servicer) service the Contracts in accordance with the terms of the Sale
and Servicing Agreement.
(b) AUTHORIZATION; BINDING OBLIGATION. The Seller has the power and
authority to make, execute, deliver and perform this Agreement and the
other Transaction Documents to which the Seller is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Seller is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Seller is a
party. This Agreement and the other Transaction Documents to which the
Seller is a party constitute the legal, valid and binding obligation of the
Seller, 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 Seller is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement and the other
Transaction Documents to which the Seller is a party.
(d) NO VIOLATIONS. The Seller's execution, delivery and performance
of this Agreement and the other Transaction Documents to which the Seller
is a party will not violate any provision of any existing law or regulation
or any order or decree of any court or the Certificate of Incorporation or
Bylaws of the Seller,
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or constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Seller is a party or by which the Seller or
any of the Seller's properties may be bound.
(e) LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Seller threatened, against the Seller or any of its
respective properties or with respect to this Agreement or any other
Transaction Document to which the Seller is a party which, if adversely
determined, would in the opinion of the Seller have a material adverse
effect on the business, properties, assets or condition (financial or
other) of the Seller or the transactions contemplated by this Agreement or
any other Transaction Document to which the Seller is a party.
(f) PLACE OF BUSINESS; NO CHANGES; NO TRADE NAMES. The Seller's sole
place of business or chief executive office (within the meaning of Article
9 of the UCC) is as set forth in Section 7.06, and each location where the
Seller maintains custody of Contract Files is reflected in the definition
of UCC Filing Locations or has otherwise been disclosed with all necessary
actions taken in accordance with Section 4.02. The Seller 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 the
Seller is as set forth in this Agreement and within the five years
preceding the Closing Date the Seller has not used, and the Seller
currently does not 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 Seller does not require compliance with any "bulk sales"
laws by the Seller.
(h) SOLVENCY. The transactions contemplated under this Agreement and
the Sale and Servicing Agreement will not render the Seller insolvent.
(i) USE OF PROCEEDS. No proceeds of the sale of any Initial Contract
or Subsequent Contract hereunder received by the Seller will be used by the
Seller 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. The Seller is not an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (or the Seller is exempt from all provisions of such Act).
(k) TAXES. To the best of the Seller's knowledge, (i) the Seller 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 Seller 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.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT AND
AS TO CERTAIN CONTRACTS IN THE AGGREGATE. The Seller represents and warrants
(x) with respect to subsections (a) and (b) 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 Subsequent Contract, and (y)
with respect to subsections (c) through (e) below, as to the Contracts Pool in
the aggregate as of the Closing Date, and as of each Subsequent Transfer Date
with respect to Subsequent Contracts (after giving effect to the addition of
such Subsequent Contracts to the Contracts Pool), that:
(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 Subsequent Contracts on a Subsequent Transfer Date) is true,
complete and correct as of the applicable Cutoff Date.
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(b) ELIGIBLE CONTRACT. Such Contract satisfies the criteria for the
definition of Eligible Contract set forth in the Sale and Servicing
Agreement as of the date of its conveyance hereunder.
(c) CONTRACTS SECURED BY FIXTURES. In the Seller's reasonable
judgment, not more than 1.80% of the ADCB of the Contracts Pool consists of
Contracts secured by Equipment constituting fixtures.
(d) CONTRACTS SECURED BY OTHER REAL PROPERTY. Not more than [ ]%
of the ADCB of the Contracts Pool consists of Contracts additionally
secured by other real property (exclusive of or in addition to Equipment
constituting fixtures).
(e) CONTRACTS SECURED BY VEHICLES. Not more than 46.17% of the ADCB
of the Contracts Pool consists of Contracts secured by Equipment
constituting Vehicles.
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL
CONTRACTS IN THE AGGREGATE. Each Seller represents and warrants, as of the
Closing Date, that:
(a) AMOUNTS. The ADCB of the Contracts as of the Initial Cutoff Date
equals the sum of the principal balance of the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the
Class C Notes and the Class D Notes on the Closing Date.
(b) CHARACTERISTICS. The Initial Contracts have the following
additional characteristics: (i) no Contract has a remaining maturity of
more than 83 months; (ii) the final scheduled Distribution Date on the
Contract with the latest maturity is not later than October 31,2004; (iii)
no Contract was originated after the Initial Cutoff Date; and (iv) not more
than 15.49% 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.
The Seller represents and warrants as of the Closing Date with respect to the
Initial Contracts (or as of the Subsequent Transfer Date, with respect to
Subsequent Contracts), that (i) immediately prior to such date (as applicable),
the Seller had possession of each original Contract and the related complete
Contract File (except for the Contracts identified in clause (ii) of this
Section 3.04), and there were no other custodial agreements relating to the same
in effect; (ii) immediately prior to such date (as applicable), the Persons
listed on Schedule 1 to the Sale and Servicing Agreement had possession of the
original Contracts and related complete Contract Files identified on Schedule 1
to the Sale and Servicing Agreement; (iii) each of such documents which is
required to be signed by the Obligor has been signed by the Obligor in the
appropriate spaces; (iv) all blanks on any form have been properly filled in and
each form has otherwise been correctly prepared; and (v) the complete Contract
File for each Contract is in the possession of the Servicer except for the
Contracts and related Contract Files identified on Schedule 1 to the Sale and
Servicing Agreement which are in the possession of the Persons listed therein.
SECTION 3.05. REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS OF
INITIAL CONTRACTS. The Seller 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:
(i) the ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities does not exceed 0.19% of
the ADCB of the Contracts Pool;
(ii) the ADCB of all End-User Contracts which finance, lease or are
related to Software will not exceed 11.54% of the ADCB of the
Contracts Pool;
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(iii) the ADCB of all End-User Contracts with Obligors who
comprise the three (3) largest Obligors (measured by ADCB as
of the date of determination) does not exceed 3.30% of the
ADCB of the Contracts Pool;
(iv) the ADCB of all End-User Contracts with Obligors who comprise the
twenty (20) largest Obligors (measured by ADCB as of the date of
determination) does not exceed 11.77% of the ADCB of the
Contracts Pool;
(v) the ADCB of all End-User Contracts related to a single Vendor, or
representing a Vendor Loan of such Vendor, does not exceed 6.91%
of the ADCB of the Contracts Pool;
(vi) the ADCB of all End-User Contracts with Obligors located in a
single State of the United States does not exceed 11.98% of the
ADCB of the Contracts Pool; and
(vii) in the Seller's reasonable judgment, the Discounted Contract
Balance of End-User Contracts in the Contracts Pool that are
"true leases" does not exceed 7.70% of the ADCB of the Contracts
Pool.
SECTION 3.06 REPRESENTATIONS AND WARRANTIES REGARDING SECONDARY
CONTRACTS. The Seller represents and warrants with respect to each Secondary
Contract securing a Vendor Loan transferred by the Seller pursuant to this
Agreement as of the Closing Date and with respect to each Secondary Contract
securing a Subsequent Contract transferred by the Seller pursuant to a
Subsequent Purchase Agreement that such Secondary Contract satisfies the
criteria for the definition of Eligible Secondary Contract.
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. CUSTODY OF CONTRACTS. Subject to the terms and conditions
of this Section 4.01, and except as provided in Section 2.06, the contents of
each Contract File shall be held in the custody of the Servicer for the benefit
of the Owner Trustee as the owner thereof; provided, however, that the contents
of each Contract File identified on Schedule 1 to the Sale and Servicing
Agreement shall be held in the custody of the Person(s) as set forth therein.
The Seller agrees to cooperate with the Servicer in its efforts to comply with
all its obligations under the Sale and Servicing Agreement in respect of the
Contract Assets, and acknowledges and consents to the transactions contemplated
therein.
SECTION 4.02. FILING. On or prior to the Closing Date, the Seller shall
cause the UCC financing statement(s) referred to in Section 2.02(g) and in
Section 2.02(g) of the Sale and Servicing Agreement to be filed and from time to
time the Seller shall take and cause to be taken such actions and execute such
documents as are necessary or desirable or as the Trust Depositor or the Owner
Trustee may reasonably request to perfect and protect the Owner Trustee's
ownership interest in the Trust against all other persons, including, without
limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.
SECTION 4.03. NAME CHANGE OR RELOCATION. (a) During the term of this
Agreement, the Seller shall not change its name, identity or structure or
relocate its chief executive office, or relocate or establish or permit the
relocation or establishment of a new location where Contract Files are
maintained, without first giving at least 30 days' prior written notice to the
Trust Depositor and to the Trustees. Within five (5) days after the Seller
becomes aware of, or receives written notice of a change in the location of
where any of the Contract Files identified on Schedule 1 of the Sale and
Servicing Agreement are maintained, the Seller shall give written notice thereof
to the Trust Depositor and to the Trustees.
(b) If any change in the Seller's name, identity or structure or other
action would make any financing or continuation statement or notice of ownership
interest or lien filed under this Agreement seriously misleading within the
meaning of applicable provisions of the UCC or any title statute, the Seller, no
later than five days after the effective date of such change, shall file such
amendments as may be required to preserve and protect the Trustees' interests in
the Trust Assets and proceeds thereof. In addition, the Seller shall not change
its place of business or its chief executive office (within the meaning of
Article 9 of the UCC) from the location specified in Section 7.06, or relocate
or establish or permit the relocation or establishment of a location where it
maintains Contract Files which is other than in one of the UCC Filing Locations,
unless it has first taken such action as is advisable or necessary to preserve
and protect the Issuer's and Trustees' interest in the Contract Assets.
Promptly after taking any of the foregoing actions, the Seller shall deliver to
the Trust Depositor and the Trustees an opinion of counsel stating that, in the
opinion of such counsel, all financing statements or amendments necessary to
preserve and protect the interests of the Trustees in the Contract Assets have
been filed, and reciting the details of such filing.
SECTION 4.04. CHIEF EXECUTIVE OFFICE. During the term of this Agreement,
and subject to the other terms and provisions herein relating to changes in
location, the Seller will maintain its chief executive office in one of the
States of the United States, except Louisiana, Tennessee, Colorado, Kansas, New
Mexico, Oklahoma, Utah or Wyoming.
SECTION 4.05. COSTS AND EXPENSES. The Seller agrees to pay all reasonable
costs and disbursements in connection with the perfection and maintenance of
perfection, as against all third parties, of (i) the Trust Depositor's and the
Trustees' right, title and interest in and to the Contract Assets (including,
without limitation, the security interest in the Equipment related thereto) and
(ii) the security interests provided for in the Indenture.
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SECTION 4.06. SALE TREATMENT. The Seller and Trust Depositor shall treat
the transfer of Contract Assets made hereunder for all purposes (including
financial accounting purposes) as a sale and purchase on all of its relevant
books, records, financial statements and other applicable documents.
Notwithstanding the preceding sentence, for federal income tax purposes the
transfer of Contract Assets by the Trust Depositor hereunder shall not be
treated as a sale and purchase for federal income tax purposes so long as the
Trust is disregarded as a separate entity pursuant to Treasury Regulations
Section 301.7701-3(b)(1)(ii).
ARTICLE V
REMEDIES UPON MISREPRESENTATION
SECTION 5.01. REPURCHASES AND SUBSTITUTIONS OF CONTRACTS FOR BREACH OF
REPRESENTATIONS AND WARRANTIES. The Seller hereby agrees, for the benefit of
the Trustees and the Trust Depositor, that it shall repurchase an Ineligible
Contract or Excess Contract (together with all related Contract Assets), at a
repurchase price equal to the Transfer Deposit Amount, not later than ninety
(90) days following the date the Seller becomes aware of, or receives written
notice from any Trustee, the Servicer or the Trust Depositor of, the related
breach or inaccuracy or representation and which breach or inaccuracy has not
otherwise been cured; PROVIDED, HOWEVER, that if the Seller is able to effect a
substitution for any such Ineligible Contract or Excess Contract in compliance
with Section 2.04, the Seller may, in lieu of repurchasing such Contract, effect
a substitution for such affected Contract with a Substitute Contract not later
than the date a repurchase of such affected Contract would be required
hereunder; PROVIDED FURTHER, that with respect to a breach of any representation
or warranty relating to the Contracts in the aggregate and not to any particular
Contract, the Seller may select Contracts (without adverse selection) to
repurchase or substitute for, such that had such Contracts not been reconveyed
by the Trust Depositor and included as part of the Trust there would have been
no breach of such representation or warranty.
SECTION 5.02. SELLER'S REPURCHASE OPTION. On written notice to the Owner
Trustee and the Indenture Trustee at least twenty (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 Seller, through the Trust Depositor, may (but is 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 Class E 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 Seller.
SECTION 5.03. REASSIGNMENT OF REPURCHASED OR SUBSTITUTED CONTRACTS. Upon
receipt by the Indenture Trustee for deposit in the Collection Account of the
repurchase price as described in Section 5.01 or 5.02 (or upon the Subsequent
Transfer Date related to a Substitute Contract described in Section 5.01), and
upon receipt of a certificate of a Servicing Officer in the form attached as
EXHIBIT G to the Sale and Servicing Agreement, the Trust Depositor shall assign
to the Seller all of the Trust Depositor's right, title and interest in the
repurchased or substituted Contract and related Trust Assets, in each case
received from the Trust and the Indenture Trustee in accordance with Section
7.07 of the Sale and Servicing Agreement, without recourse, representation or
warranty.
[remainder of page intentionally left blank]
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<PAGE>
ARTICLE VI
INDEMNITIES
SECTION 6.01. SELLER INDEMNIFICATION. The Seller will defend and
indemnify the Trust Depositor, the Trust, the Trustees, any agents of the
Trustees and the Certificateholders and Noteholders (each, 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 Sale and Servicing Agreement or the use,
ownership or operation of any Equipment by the Seller or the Servicer or any
Affiliate of either thereof, (ii) any representation or warranty or covenant
made by the Seller in this Agreement being untrue or incorrect (subject to the
third sentence of the preamble to Article III of this Agreement above), and
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or in any amendment thereto or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement was made in conformity with information
furnished to the Trust Depositor by the Seller specifically for use therein;
PROVIDED, HOWEVER, that the Seller 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 Seller under this Section
6.01 shall not terminate upon a Service Transfer pursuant to Article VIII of the
Sale and Servicing Agreement and shall survive any termination of that agreement
or this Agreement.
SECTION 6.02. LIABILITIES TO OBLIGORS. No obligation or liability to any
Obligor under any of the Contracts is intended to be assumed by the Trustees,
the Trust, the Noteholders or the Certificateholders under or as a result of
this Agreement and the transactions contemplated hereby.
SECTION 6.03. TAX INDEMNIFICATION.
(a) The Seller agrees to pay, and to indemnify, defend and hold
harmless the Trust Depositor, the Trust, the Trustees, the Noteholders or
the Certificateholders from, [TO BE DISCUSSED].
(b) The Seller agrees to pay and to indemnify, defend and hold
harmless the Trust and the Trustees, on an after-tax basis (as hereinafter
defined), from [TO BE DISCUSSED].
SECTION 6.04. ADJUSTMENTS. The Seller agrees 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 Seller shall
indemnify the Trust Depositor or the Trust as assignee thereof, in an amount
equal to any shortfall associated with such Prepayment Amount.
The Seller agrees that if, with respect to any Lease with Lessees that are
governmental entities or municipalities, (i) such Lease may be canceled in
accordance with its terms and (ii) the Vendor that assigned such Lease to the
Seller is not unconditionally obligated to repurchase such Lease from the Seller
for a purchase price not less than the Discounted Contract Balance of such Lease
as of the date of repurchase (assuming that the interest rate to be applied in
calculating the Discounted Contract Balance of such Lease is the Discount Rate
on the date of repurchase) plus interest at the Discount Rate through the date
of repurchase (such amount, the "REQUIRED LEASE CANCELLATION PAYMENT") then the
Seller shall indemnify the Trust Depositor or the Trust as assignee thereof
against such cancellation in an
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<PAGE>
amount equal to the difference between the amount, if any, received from the
related Vendor and the Required Lease Cancellation Payment.
The Seller hereby further agrees that if any real property collateral
securing any Contract described in Section 3.02(d) 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 the Seller, 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 6.05. OPERATION OF INDEMNITIES. Indemnification under this
Article VI shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Seller has made any indemnity
payments to the Trust Depositor or the Trustees pursuant to this Article VI and
the Trust Depositor or the Trustees thereafter collects any of such amounts from
others, the Trust Depositor or the Trustees will repay such amounts collected to
the Seller, except that any payments received by the Trust Depositor or the
Trustees from an insurance provider as a result of the events under which the
Seller's indemnity payments arose shall be repaid prior to any repayment of the
Seller's indemnity payment.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST. The
Seller 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 the Sale and
Servicing Agreement, lend any money to the Trust.
SECTION 7.02. MERGER OR CONSOLIDATION. (a) Except as otherwise provided
in this Section 7.02, the Seller will keep in full force and effect its
existence, rights and franchises as a Delaware corporation, and the Seller will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement and of any of the
Contracts and to perform its duties under this Agreement.
(b) Any person into which the Seller may be merged or consolidated, or any
corporation resulting from such merger or consolidation to which the Seller is a
party, or any person succeeding to the business of the Seller, shall be
successor to the Seller hereunder, without execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
(c) Upon the merger or consolidation of the Seller as described in this
Section 7.02, the Seller shall provide the Rating Agencies notice of such merger
or consolidation within thirty (30) days after completion of the same.
SECTION 7.03. TERMINATION. This Agreement shall terminate (after
distribution of all amounts distributable pursuant to Section 7.05 of the Sale
and Servicing Agreement) on the Distribution Date on which the principal balance
of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes,
Class B Notes, Class C Notes, Class D Notes and the Certificates is reduced to
zero; PROVIDED, that the Seller's representations and warranties and indemnities
by the Seller shall survive termination.
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<PAGE>
SECTION 7.04. ASSIGNMENT OR DELEGATION BY THE SELLER. Except as
specifically authorized hereunder, the Seller 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 7.05. AMENDMENT. (a) This Agreement may be amended from time to
time by the Seller and Trust Depositor, with notice to the Rating Agencies, but
without the consent of the Trustees or any of the Noteholders or
Certificateholders, to correct manifest error, to cure any ambiguity, to correct
or supplement any provisions herein which may be inconsistent with any other
provisions herein, or to add any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel for the Seller acceptable to the Trustees,
adversely affect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by the Seller and
Trust Depositor, with consent of the Required Holders, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Trustees for
the benefit of Noteholders or Certificateholders; PROVIDED, HOWEVER, that no
such amendment or waiver shall (a) reduce in any manner the amount of, or delay
the timing of, collections of payments on the Contracts or distributions which
are required to be made on any Note or Certificate or (b) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of the
holders of all affected Securities then outstanding.
(c) Promptly after execution of any amendment or consent pursuant to this
Section 7.05, the Trust Depositor shall furnish written notification of the
substance of such amendment and a copy of such amendment to each Trustee and
each Rating Agency.
(d) It shall not be necessary for the consent of Noteholders or
Certificateholders under this Section 7.05 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Noteholders and Certificateholders
shall be subject to such reasonable requirements as the Trustees may prescribe.
(e) Upon the execution of any amendment or consent pursuant to this
Section 7.05, this Agreement shall be modified in accordance therewith, and such
amendment or consent shall form a part of this Agreement for all purposes, and
every holder of Notes and Certificates theretofore or thereafter issued
hereunder shall be bound thereby.
SECTION 7.06. NOTICES. All notices, demands, certificates, requests and
communications hereunder ("NOTICES") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Seller:
Newcourt Financial USA, Inc.
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Fax No.: ( )
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<PAGE>
(ii) If to the Trust Depositor:
Newcourt Receivables Corporation II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Fax No.: ( )
(iii) If to the Indenture Trustee, Owner Trustee or the
Rating Agencies
At their respective addresses for notices specified for
notices in the Sale and Servicing Agreement.
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
All communications and notices pursuant hereto to a Noteholders or
Certificateholder shall be in writing and delivered or mailed at the address
shown in the Note Register or Certificate Register, respectively.
SECTION 7.07. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 7.08. HEADINGS. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
SECTION 7.09. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of New
York.
SECTION 7.10. NO BANKRUPTCY PETITION. The Seller covenants and agrees
that, prior to the date that is one year and one day after the payment in full
of all amounts owing in respect of all outstanding Securities, it will not
institute against the Trust Depositor, or the Trust, or join any other Person in
instituting against the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States. This Section 7.10 will survive the termination of this
Agreement.
SECTION 7.11. THIRD PARTY BENEFICIARIES. Each Trustee is a third-party
beneficiary to this Agreement to the extent of rights and benefits specifically
granted or established hereunder in favor of such Trustee in its capacity as
such Trustee, and may enforce the provisions hereof in such regard as if it were
a direct party hereto.
SECTION 7.12. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreement, 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.
SECTION 7.13. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising, on the part of the Trust Depositor (or any
assignee thereof) or the Seller, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights,
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<PAGE>
remedies, powers and privileges herein provided are cumulative and not
exhaustive (except to the extent specifically provided herein) of any other
rights, remedies, powers or privileges provided by law.
SECTION 7.14. COUNTERPARTS. This Agreement may be executed in two or
more counterparts including by telefax transmission thereof (and by different
parties on separate counterparts), each of which shall be an original, but all
of which together shall constitute one and the same instrument.
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<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.
NEWCOURT RECEIVABLES CORPORATION II
By:
---------------------------------------
Printed Name:
--------------------------
Title:
---------------------------------
NEWCOURT FINANCIAL USA, INC.
By:
--------------------------------------
Printed Name:
-------------------------
Title:
--------------------------------
<PAGE>
Exhibit A
Transfer and Sale
Agreement
FORM OF ASSIGNMENT
In accordance with the Transfer and Sale Agreement (the "AGREEMENT") dated
as of [ ], 1997 made by and between the undersigned, as
Seller thereunder (the "SELLER"), and Newcourt Receivables Corporation II, a
Delaware corporation and wholly-owned subsidiary of Newcourt Financial USA, Inc.
(the "TRUST DEPOSITOR"), as purchaser thereunder, the undersigned does hereby
sell, transfer, convey and assign, set over and otherwise convey to the Trust
Depositor all its right, title and interest in and to:
(i) the Initial Contracts, and all monies due or to become due in
payment of such Contracts on and after the Initial Cutoff Date, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date and
any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of any
Vendor Loans, related Applicable Security, including all proceeds from any
sale or other disposition of such Equipment (but subject the exclusion and
release in the Agreement 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 Vendor Agreements with
the Seller and under any guarantee or similar credit enhancement with
respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract; and
(vi) all income from and proceeds of the foregoing;
PROVIDED, that the property described above shall not include any Residual
Investment other than the Guaranteed Residual Investment.
This Assignment is made pursuant to and in reliance upon the representation
and warranties on the part of the undersigned contained in Article III of the
Agreement and no others. Capitalized terms used in this Assignment and not
defined shall have the same meanings as such terms would have if used in the
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this [ ] day of [ ].
NEWCOURT FINANCIAL USA, INC.
By:
-------------------------------------
Printed Name:
-----------------------
Title:
-------------------------------
<PAGE>
Exhibit B
Transfer and Sale
Agreement
FORM OF SUBSEQUENT PURCHASE AGREEMENT
SUBSEQUENT PURCHASE AGREEMENT (the "AGREEMENT"), dated as of [_____],
[____], by and among Newcourt Receivables Corporation II, a Delaware corporation
(the "TRUST DEPOSITOR") and Newcourt Financial USA, Inc., a Delaware corporation
("NEWCOURT USA" or the "SELLER"), pursuant to the Transfer and Sale Agreement
referred to below.
WITNESSETH:
WHEREAS, the Trust Depositor and the Seller are parties to the Transfer and
Sale Agreement, dated as of November 1, 1997 (the "TRANSFER AND SALE
AGREEMENT");
WHEREAS, pursuant to the Transfer and Sale Agreement, the Seller wishes to
sell the Subsequent 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 Seller has timely delivered an Addition Notice related to such
conveyance as required in the Sale and Servicing Agreement dated as of November
1, 1997 among Newcourt USA (in the capacity of Servicer thereunder), the Trust
Depositor and the Indenture Trustee as defined therein (the "SALE AND SERVICING
AGREEMENT").
NOW, THEREFORE, the Seller 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 Subsequent Contracts transferred hereby, [________].
"SUBSEQUENT CONTRACTS" shall mean, for purposes of this
Agreement, the Subsequent Contracts listed in the Subsequent
List of Contracts attached hereto as Exhibit A.
"SUBSEQUENT TRANSFER DATE" shall mean, with respect to
the Subsequent 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 Subsequent Contracts to
be transferred pursuant to this Agreement on the Subsequent Transfer Date, and
also further separately 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.
<PAGE>
SECTION 3. TRANSFER OF SUBSEQUENT CONTRACTS. Subject to and upon the
terms and conditions set forth in Section 2.04 of the Transfer and Sale
Agreement and this Agreement, the Seller hereby sells, transfers, assigns, sets
over and otherwise conveys to the Trust Depositor, in consideration of the 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 Seller of the related Contract Assets with respect to which a
Substitution Event has occurred (if applicable):
(i) the Subsequent Contracts identified in the related Addition
Notice, and all monies due or to become due in payment of such Contracts on
and after the related Subsequent Cutoff Dates, any Prepayment Amounts, any
payments in respect of a casualty or early termination, and any Recoveries
received with respect thereto, but excluding any Scheduled Payments due
prior to the related Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of any
Vendor Loan, related Applicable Security, including all proceeds from any
sale or other disposition of such Equipment (but subject to the exclusion
and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the Obligor thereunder under any Vendor Agreements with
the Seller and under any guarantee or similar credit enhancement with
respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract; and
(vi) all income from and proceeds of the foregoing;
PROVIDED, that such Subsequent Contract Assets shall in no case include any
Residual Investment other than the Guaranteed Residual Investment.
It is the intention of the Seller and the Trust Depositor that the transfer
contemplated by this Agreement shall constitute a sale of the Subsequent
Contracts from the Seller to the Trust Depositor, conveying good title thereto
free and clear of any Liens, and that the Subsequent Contracts shall not be part
of the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy or similar law.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. (a) The
Seller hereby represents and warrants to the Trust Depositor that the
representations and warranties of the Seller in Section 3.01 of the Transfer and
Sale Agreement are true and correct as of the Subsequent Transfer Date.
(b) Each Seller hereby jointly and severally repeats and remakes with
respect to the Subsequent Contracts as of the Subsequent Transfer Date, the
representations and warranties set forth in the Transfer and Sale Agreement and
deemed to be made with respect to such Subsequent Contracts thereunder.
(c) Seller hereby represents and warrants that (i) the ADCB of the
Subsequent 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(b) 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 Transfer and Sale 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.
B-2
<PAGE>
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]
B-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.
NEWCOURT RECEIVABLES CORPORATION II
By:
--------------------------------------
Printed Name:
Title:
NEWCOURT FINANCIAL USA, INC.
By:
--------------------------------------
Printed Name:
Title:
<PAGE>
================================================================
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)___
========
MANUFACTURERS AND TRADERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 16-0538020
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a national bank) identification No.)
One M&T Plaza
Buffalo, New York 14240-2399
(Address of principal executive offices) (Zip Code)
========
NEWCOURT RECEIVABLES CORPORATION II
(Exact name of obligor as specified in its charter)
DELAWARE 35-2010710
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
========
RECEIVABLE-BACKED NOTES, SERIES 1997-1
(Title of indenture securities)
================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION
Furnish the following information as to the trustee:
I. Name and address of each examining or supervising authority to
which it is subject.
Superintendent of Banks of the State of New York, 2 World Trade
Center, New York, NY 10047 and Albany, NY 12203.
Federal Reserve Bank of New York, 33 Liberty Street, New York, NY
10045.
Federal Deposit Insurance Corporation, Washington, D.C. 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
[Items 3 through 15 omitted pursuant to General Instruction B to Form T-1]
<PAGE>
ITEM 16. LIST OF EXHIBITS
Exhibit A. Organization Certificate of the Trustee as now in
effect (incorporated herein by reference to Exhibit 1,
Form T-1, Registration Statement No. 33-7309).
Exhibit B. Certificate of Authority of the Trustee to commence
business (incorporated herein by reference to Exhibit
2, Form T-1, Registration Statement No. 33-7309).
Exhibit C. Authorization of the Trustee to exercise corporate
trust powers (incorporated herein by reference to
Exhibit 3, Form T-1, Registration Statement No.
33-7309).
Exhibit D. Existing By-Laws of the Trustee (incorporated herein by
reference to Exhibit 4, Form T-1, Registration
Statement No. 33-7309).
Exhibit E. Not Applicable.
Exhibit F. Consent of the Trustee (incorporated herein by
reference to Exhibit 6, Form T-1, Registration
Statement No. 33-7309).
Exhibit G. Report of Condition of the Trustee.*
Exhibit H. Not Applicable.
Exhibit I. Not Applicable
_________________________
* Filed Herewith
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Manufacturers and Traders Trust Company, a banking corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility and qualification to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of Buffalo, and
State of New York, on the ____ day of November, 1997.
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ RUSSELL T. WHITLEY
---------------------------------------------------
Russell T. Whitley
Assistant Vice President
1
