<PAGE>
As filed with the Securities and Exchange Commission on October 21, 1998
Registration No. 333-58677
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
(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
<TABLE>
<CAPTION>
<S><C>
Delaware 6799 35-2010710
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
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
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
M. David Galainena, Esq. James J. Croke, Esq.
Winston & Strawn Cadwalader, Wickersham & Taft
35 West Wacker Drive 100 Maiden Lane
Chicago, Illinois 60601 New York, New York 10038
(312) 558-5600 (212) 504-6000
----------------------------
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Title of Each Class Amount to Be Proposed Maximum Offering Proposed Maximum Amount of
of Securities Registered (1) Price Per Unit (2) Aggregate Offering Price (2) Registration Fee (3)
to Be Registered
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A-1 $359,435,184 100% $359,435,184 $106,033.38
Receivable-Backed
Notes
- -------------------------------------------------------------------------------------------------------------------------------
Class A-2 $134,396,972 100% $134,396,972 $39,647.11
Receivable-Backed
Notes
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Class A-3 $449,450,469 100% $449,450,469 $132,587.89
Receivable Backed
Notes
- -------------------------------------------------------------------------------------------------------------------------------
Class A-4 $106,267,195 100% $106,267,195 $31,348.82
Receivable Backed
Notes
- -------------------------------------------------------------------------------------------------------------------------------
Class B $42,194,665 100% $42,194,665 $12,447.43
Receivable-Backed
Notes
- -------------------------------------------------------------------------------------------------------------------------------
Class C $22,503,821 100% $22,503,821 $6,638.63
Receivable-Backed
Notes
- -------------------------------------------------------------------------------------------------------------------------------
</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) $1,770 was paid in connection with the initial filing of this Registration
Statement on July 8, 1998.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the commission, acting pursuant to said
Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION DATED OCTOBER [ ], 1998
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.
<PAGE>
PROSPECTUS
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
$354,435,184 [ ]% CLASS A-1 RECEIVABLE-BACKED NOTES, SERIES 1998-1
$129,396,972 [ ]% CLASS A-2 RECEIVABLE-BACKED NOTES, SERIES 1998-1
$444,450,469 [ ]% CLASS A-3 RECEIVABLE-BACKED NOTES, SERIES 1998-1
$101,267,195 [ ]% CLASS A-4 RECEIVABLE-BACKED NOTES, SERIES 1998-1
$42,194,665 [ ]% CLASS B RECEIVABLE-BACKED NOTES, SERIES 1998-1
$22,503,821 [ ]% CLASS C RECEIVABLE-BACKED NOTES, SERIES 1998-1
NEWCOURT RECEIVABLES CORPORATION II,
TRUST DEPOSITOR
NEWCOURT FINANCIAL USA INC.
SERVICER
------------------------------
The Newcourt Equipment Trust Securities 1998-1 (the "Trust" or the
"Issuer"), a limited purpose Delaware business trust, was formed pursuant to a
Trust Agreement, dated as of August 13, 1998, between Newcourt Receivables
Corporation II ("NRC II"), as Trust Depositor (in such capacity, the "Trust
Depositor"), and The Bank of New York (Delaware), as Owner Trustee (the "Owner
Trustee"). The Trust Depositor is a wholly-owned, limited purpose, bankruptcy
remote subsidiary of Newcourt Financial USA Inc. which is a wholly-owned
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 $354,435,184 aggregate principal amount of [ ]% Class A-1
Receivable-Backed Notes, Series 1998-1 (the "Class A-1 Notes"),
(COVER CONTINUED ON NEXT PAGE)
------------------------------
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE 22 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.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO ISSUER
PRICE TO PUBLIC COMMISSIONS (1) (2)
<S> <C> <C> <C>
Per Class A-1 Note....................................... [ ]% [ ]% [ ]%
Per Class A-2 Note....................................... [ ]% [ ]% [ ]%
Per Class A-3 Note....................................... [ ]% [ ]% [ ]%
Per Class A-4 Note....................................... [ ]% [ ]% [ ]%
Per Class B Note......................................... [ ]% [ ]% [ ]%
Per Class C Note......................................... [ ]% [ ]% [ ]%
Total.................................................... [ ]% [ ]% [ ]%
</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 $1,085,925.
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
October 30, 1998.
UNDERWRITERS OF THE CLASS A NOTES
FIRST UNION CAPITAL MARKETS
NATIONSBANC MONTGOMERY SECURITIES LLC
CHASE SECURITIES INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
UNDERWRITER OF THE CLASS B NOTES AND CLASS C NOTES
FIRST UNION CAPITAL MARKETS
THE DATE OF THIS PROSPECTUS IS OCTOBER [ ], 1998
<PAGE>
(cover page continued)
$129,396,972 aggregate principal amount of [ ]% Class A-2 Receivable-Backed
Notes, Series 1998-1 (the "CLASS A-2 NOTES" ), $444,450,469 aggregate principal
amount of [ ]% Class A-3 Receivable-Backed Notes, Series 1998-1 (the "CLASS
A-3 NOTES"), $101,267,195 aggregate principal amount of [ ]% Class A-4
Receivable-Backed Notes, Series 1998-1 (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"), $42,194,665 aggregate principal amount of [ ]% Class B
Receivable-Backed Notes, Series 1998-1 (the "CLASS B NOTES") and $22,503,821
aggregate principal amount of [ ]% Class C Receivable-Backed Notes, Series
1998-1 (the "CLASS C NOTES"; and together with the Class A 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
October 15, 1998 (the "INDENTURE") to be entered into between the Trust and
Harris Trust and Savings Bank, as Indenture Trustee (the "INDENTURE
TRUSTEE"). The Trust will concurrently issue $14,064,888 aggregate principal
amount of [ ]% Class D Receivable-Backed Notes, Series 1998-1 (the "CLASS
D NOTES") and $16,877,866 aggregate principal amount of [ ]% Class E
Receivable-Backed Notes, Series 1998-1 (the "CLASS E NOTES" and collectively
with the Class D Notes, the "SUBORDINATED NOTES"), as well as the Class F
Receivable-Backed Certificate, Series 1998-1 (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. 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 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, true leases
(excluding the Excluded Residual Investment (as defined herein)), 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") which meet
certain eligibility criteria specified herein, and which relate to a wide
variety of new and used information technology equipment (such as computer work
stations, personal computers, data storage devices, mainframe and mini computers
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 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 November 1, 1998
(the "INITIAL 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 the Excluded Amounts (as defined herein),
collections relating to Scheduled Payments due prior to the related Cutoff Date
and Excluded Residual Investments, 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 October 15, 1998 (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
Pooling and Servicing Agreement, dated as of October 15, 1998 (the "POOLING AND
SERVICING AGREEMENT"), among the Trust Depositor, the Trust, the Indenture
Trustee (as defined in
2
<PAGE>
"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 21, 1998
(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 Record Date (as defined herein). 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, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes,
the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes is
the November 1999 Distribution Date, the September 2000 Distribution Date, the
December 2002 Distribution Date, the May 2004 Distribution Date, the April 2005
Distribution Date, the August 2005 Distribution Date, the December 2005
Distribution Date and the August 2006 Distribution Date, respectively. The
actual payment in full, however, of the Notes or Subordinated 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 and excluding payments relating to Excluded Residual Investments
and Excluded Amounts), 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 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 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 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
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, that after 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 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 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 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.
3
<PAGE>
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 Certificate, 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
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 109.
There are material risks associated with an investment in the Notes. See "RISK
FACTORS" on page 22 for a discussion of certain factors that investors should
consider before making an investment in the Notes.
Issuer . . . . . . . . . . Newcourt Equipment Trust Securities 1998-1 (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 August 13, 1998 (as amended or restated, 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
Financial 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
Pooling 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 Pooling and
Servicing Agreement will be guaranteed by AT&T
Capital Corporation, an indirect wholly-owned
subsidiary of Newcourt.
Indenture Trustee . . . . . Harris Trust and Savings Bank, as indenture
trustee under the Indenture described herein (the
"INDENTURE TRUSTEE"). The Indenture Trustee's
offices are located at 311 West Monroe Street,
12th Floor, Chicago, Illinois 60606.
Owner Trustee . . . . . . . The Bank of New York (Delaware), as owner trustee
under the Trust Agreement (the "OWNER TRUSTEE").
The Owner Trustee's offices are White Clay Center,
Newark, Delaware 19711.
Cutoff Dates . . . . . . . With respect to the Contracts transferred to the
Trust on the Closing Date, the initial cutoff date
shall be November 1, 1998 (the "INITIAL CUTOFF
DATE"), 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 October 30, 1998 (the "CLOSING DATE").
5
<PAGE>
Collection Periods, . . . . A Collection Period is the period from and
Calculation Dates, including the first day of each calendar month to
Distribution Dates and including the last day of the calendar month
and Record Dates (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, Chicago,
Illinois 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 21, 1998. 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 . . . . . . . . . $354,435,184 aggregate principal amount (the
"INITIAL CLASS A-1 NOTE PRINCIPAL BALANCE") of
[ ]% Class A-1 Receivable-Backed Notes, Series
1998-1 (the "CLASS A-1 NOTES"); $129,396,972
aggregate principal amount (the "INITIAL CLASS A-2
NOTE PRINCIPAL BALANCE") of [ ]% Class A-2
Receivable-Backed Notes, Series 1998-1 (the "CLASS
A-2 NOTES"); $444,450,469 aggregate principal
amount (the "INITIAL CLASS A-3 NOTE PRINCIPAL
BALANCE") of [ ]% Class A-3 Receivable-Backed
Notes, Series 1998-1 (the "CLASS A-3 NOTES");
$101,267,195 aggregate principal amount (the
"INITIAL CLASS A-4 NOTE PRINCIPAL BALANCE") of
[ ]% Class A-4 Receivable-Backed Notes, Series
1998-1 (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"); $42,194,665 aggregate
principal amount (the "INITIAL CLASS B NOTE
PRINCIPAL BALANCE") of [ ]% Class B
Receivable-Backed Notes, Series 1998-1 (the "CLASS
B NOTES"); and $22,503,821 aggregate principal
amount (the "INITIAL CLASS C NOTE PRINCIPAL
BALANCE") of [ ]% Class C Receivable-Backed
Notes, Series 1998-1 (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 31.50% 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 11.50%
of the initial Aggregate Discounted Contract
Balance, the Initial Class A-3 Note Principal
Balance is equal to approximately 39.50% of the
initial Aggregate Discounted Contract Balance of
the Contracts, the Initial Class A-4 Note
Principal Balance is equal to approximately 9.00%
of the initial Aggregate Discounted Contract
Balance of the Contracts, the Initial Class B Note
Principal Balance is equal to approximately 3.75%
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 October 15, 1998
(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
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<PAGE>
OWNERS") will not be entitled to receive
Definitive Notes except in the limited
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. . . . . . On the Closing Date, the Trust will also issue
Securities [ ]% Class D Receivable-Backed Notes (the
"CLASS D NOTES") with an aggregate principal
balance of $14,064,888 (the "INITIAL CLASS D NOTE
PRINCIPAL BALANCE") and [ ]% Class E
Receivable-Backed Notes (the "CLASS E NOTES",
together with the Class D Notes, collectively the
"SUBORDINATED NOTES") with an aggregate principal
balance of $16,877,866 (the "INITIAL CLASS E NOTE
PRINCIPAL BALANCE"), as well as the Class F
Certificate (the "CERTIFICATE", and, together with
the Subordinated Notes, the "SUBORDINATED
SECURITIES") with an initial certificate balance
of $16,877,866; 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 1.25% of the initial
Aggregate Discounted Contract Balance and will be
issued pursuant to the Indenture. The Class D
Notes are not being offered and sold hereby.
B. Class E Notes. . . . . The Initial Class E Note Principal Balance is
equal to approximately 1.50% of the initial
Aggregate Discounted Contract Balance and will be
issued pursuant to the Indenture. The Class E
Notes are not being offered and sold hereby.
C. Class F . . . . . . . The Class F Certificate will represent fractional
Certificate 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 Certificate
is 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 limited purpose 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. Prior to the Closing Date, the
Trust will not have conducted any activities.
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
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<PAGE>
Contract Balance of $[ ]
as of the Closing Date. As of October 27, 1998
(the "Statistic Calculation Date"), the Aggregate
Discounted Contract Balance of such Contracts is
$1,125,191,061 (calculated utilizing the
Statistical Discount Rate as defined herein)
(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 and amounts
payable with respect to any Excluded Residual
Investments, (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 as
such terms are defined in this "SUMMARY OF
TERMS"), (iii) a security interest in the related
Equipment, (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 Pooling
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)
amounts available, if any, in the Reserve Fund,
together with earnings on the funds therein, up to
the Reserve Fund Amount and (ix) all income and
proceeds of any of the foregoing (other than
amounts payable with respect to any Excluded
Residual Investment).
A. Contracts . . . . . . All of the Contracts to be included in the Trust
(sometimes referred to herein, collectively, as
the "CONTRACT POOL" or the "TRANSFERRED
CONTRACTS") consist of conditional sale
agreements (each, a "CSA"), promissory notes with
related security agreements (each, a "SECURED
NOTE"), true 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")),
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<PAGE>
or (ii) with respect to Leases with Lessees that
are governmental entities or municipalities,
if such Lease is canceled 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" and "THE TRANSFER AND SALE
AGREEMENT AND POOLING AND SERVICING
AGREEMENT--REPRESENTATIONS AND WARRANTIES" herein.
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 Pooling 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 POOLING AND SERVICING
AGREEMENT--REPRESENTATIONS AND WARRANTIES", "USE
OF PROCEEDS" and "THE CONTRACT POOL" herein.
As of the Statistic Calculation 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 (viii) below were calculated utilizing
the Statistical Discount Rate (as defined in this
section):
(i) there were 42,894 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
$1,125,191,061;
(iii) the final scheduled payment date of
the Transferred Contract with the latest maturity
or expiration as of the Initial Cutoff Date was
July 2005;
(iv) the average Discounted Contract
Balance was approximately $26,232;
(v) all of the Contracts had (A) original
terms to maturity of not less than 3 months and
not more than 86 months, with a weighted average
original term to maturity of approximately 46.9
months, and (B) a remaining term to maturity of
not less than 1 month and not more than 81 months,
with a weighted average remaining term to maturity
of approximately 39.3 months;
(vi) of such Contracts, approximately 0.46%
were Vendor Loans;
(vii) the Obligors (as defined in this
"SUMMARY OF TERMS") on approximately 10.57% of
the Contracts were located in the State of
California; approximately 8.40% were located in
the State of Texas; approximately 6.70% were
located in the State of New York; approximately
5.75% were located in the State of Pennsylvania;
approximately 5.17% were located in
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<PAGE>
the State of New Jersey; no other state
represented more than 5.0% of the Contracts; and
(viii) of such Contracts, approximately
24.71% constitute "TRUE LEASES."
See "THE TRANSFER AND SALE AGREEMENT AND THE
POOLING AND SERVICING AGREEMENT--CONCENTRATION
AMOUNTS" herein.
For the twelve-month periods ended December 31,
1997 and December 31, 1996, the Seller has
recognized (i) delinquencies of 2.94% and 4.54%,
respectively with respect to its portfolio and
(ii) net losses of 0.50% and 0.32% with respect to
its portfolio. See "THE CONTRACT POOL --
DELINQUENCY AND LOAN LOSS INFORMATION".
The Statistical Discount Rate is equal to 6.329%
(the "STATISTICAL DISCOUNT RATE"). All of the
statistical information that is computed using the
Statistical Discount Rate is as of the Statistic
Calculation Date. Although the Discounted
Contract Balances and the Aggregate Discounted
Contract Balance calculated at the Discount Rate
(as defined herein) will vary somewhat from the
Discounted Contract Balances and Aggregate
Discounted Contract Balance calculated at the
Statistical Discount Rate, such variance is not
expected to be material.
For further information regarding the Transferred
Contracts, see "THE CONTRACT POOL" and "THE
CONTRACTS", as well as "THE TRANSFER AND SALE
AGREEMENT AND SALE AND SECURITY AGREEMENT
GENERALLY--REPRESENTATIONS AND WARRANTIES" and "--
CONCENTRATION AMOUNTS" herein.
Between the Statistic Calculation 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 Statistic
Calculation 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 of
the Contracts in the Contract Pool as of the
Closing Date will vary somewhat from the
statistical distribution of such characteristics
as of the Statistic Calculation Date as presented
in this Prospectus, such variance is not expected
to 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 are non-cancelable
by the Obligors. The Seller may, under the terms
of the Pooling 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 Pooling 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
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<PAGE>
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 Pooling
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 Pooling 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
Closing 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 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 Contract Pool concentration limitation as
described in "THE TRANSFER AND SALE AGREEMENT AND
POOLING AND SERVICING AGREEMENT" as well as the
other substitution requirements described herein.
See "THE TRANSFER AND SALE AGREEMENT AND THE
POOLING AND SERVICING AGREEMENT--REPRESENTATIONS
AND WARRANTIES" herein.
From time to time, 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 Contract 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.
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<PAGE>
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 August 2005
Distribution Date or, to the extent the final
payment on such Contract is due after the August
2005 Distribution Date, only scheduled payments
due on or prior to such date may be included in
the Discounted Contract Balance of such Contract
for the purpose of making any calculation under
the Indenture or the Pooling and Servicing
Agreement.
The Servicer is not authorized to permit an Early
Termination, without the addition to the Trust of
a related Additional Contract, if 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.
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 180 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."
B. Equipment and Other . . All of the Seller's right and interest (which is
Financed Items limited to a security interest) in the Equipment,
if any, subject to each Lease, 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 computer
work stations, personal computers, data storage
devices, mainframe and mini computers 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--EQUIPMENT" and "THE CONTRACT
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"). See "THE
CONTRACTS--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 11.94% of the ADCB
(calculated using the Statistical Discount Rate)
of the Contract Pool on the Statistic Calculation
Date. The Trust will not have title to or a
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<PAGE>
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--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 Pooling and Servicing Agreement.
See "DESCRIPTION OF THE NOTES--COLLECTION ACCOUNT"
herein.
D. Vendor. . . . . . . . . Each of the Seller's Vendor finance program
Agreements 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
remarketing arrangements upon early termination of
End-User Contracts upon a default by the End-User.
See "THE CONTRACTS--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 $[
] in the Reserve Fund which is equal to 1.5%
of the ADCB of the Contract Pool as of the Closing
Date (the "RESERVE FUND INITIAL DEPOSIT"").
Thereafter, additional deposits will be made to
the Reserve Fund to the extent necessary to
maintain the Reserve Fund Amount (as defined
herein) in the Reserve Fund. 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:
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<PAGE>
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"), the
Class D Notes will bear interest at the rate of [
]% per annum (the "CLASS D INTEREST RATE") and
the Class E Notes will bear interest at the rate
of [ ]% per annum (the "CLASS E 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 21, 1998, 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 Notes and the Class A-4 Notes) will be
in "DESCRIPTION OF THE NOTES") for such
"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"), the holders of record of
the Class C Notes (the "CLASS C NOTEHOLDERS",
together with the Class A-1 Noteholders, the Class
A-2 Noteholders, the Class A-3 Noteholders, the
Class A-4 Noteholders and the Class B Noteholders,
the "Noteholders"), the holders of record of the
Class D Notes (the "CLASS D NOTEHOLDERS") and the
holders of record of the Class E Notes (the "CLASS
E NOTEHOLDERS", together with the Class D
Noteholders, the "SUBORDINATED 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), 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
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<PAGE>
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 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 in "DESCRIPTION OF THE
NOTES") for such Payment Amount, the Class A-4
Principal Payment 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 Amounts
are available therefor, but after payment 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 (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
Payment Amount, the Class A-4 Principal Payment
sequentially, as an additional principal payment
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.
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<PAGE>
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 Class D 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.
Principal of the Class E Notes will be payable on
each Distribution Date in an amount equal to the
Class E 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
sequentially, as an additional principal payment
Schedule Amount, the Class B Principal Payment
Amount, the Class C Principal Payment Amount and
the Class D 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
Payment Amount, the Class B Principal Payment
Amount, the Class C Principal Payment Amount, the
Class D Principal Payment Amount and the Class E
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 the amount necessary to reduce the
principal amount of such Class of Notes to a
fractional percentage of the ADCB of the Contract
Pool as of the last day of 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
16
<PAGE>
Classes of Notes (excluding the Class A-1 Notes)
and the Subordinated Notes as of the Initial
Cutoff Date; PROVIDED, HOWEVER, the Class A-1
Notes will receive 100% of the Total Principal
Payment Amount 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 the Subordinated Notes.
After payment in full of the Class A-1 Notes, if
sufficient Available Amounts exist, a
proportionate amount of principal would be repaid
on any given Distribution Date on each of the
Class A Notes, the Class B Notes, and the Class C
Notes (as well as the Subordinated Notes) based on
such percentages which are (i) approximately
87.5912% for the Class A Notes, (ii) approximately
5.4745% for the Class B Notes, (iii) approximately
2.9197% for the Class C Notes, (iv) approximately
1.8248% for the Class D Notes, and (v)
approximately 2.1898% for the Class E Notes. The
principal amount payable to the Class A Notes will
be paid sequentially first to the Class A-2 Notes
until paid in full, then to the Class A-3 Notes
until paid in full, and thereafter to the Class A-
4 Notes until paid in full. To the extent the
Class B Floor exceeds the Class B Target Principal
Amount, the Class C Floor exceeds the Class C
Target Principal Amount, the Class D Floor exceeds
the Class D Target Principal amount and/or the
Class E Floor exceeds the Class E Target Principal
Amount, Additional Principal (as defined in the
"DESCRIPTION OF THE NOTES") would be distributed,
sequentially, as an additional principal payment
the aggregate amount of all Scheduled Payments due
to the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes, Class A-4 Notes, Class B Notes, Class C
Notes, Class D Notes and Class E Notes until the
Principal Amount of each has been reduced to zero.
Upon the occurrence of an Event of Default, (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 paid 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; no
principal will be paid on the Class D Notes or the
Class E Notes until the Class C Notes have been
paid in full; and no principal will be paid on the
Class E Notes until the Class D Notes have been
paid 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
November 1999 Distribution Date; the stated
maturity date of the Class A-2 Notes (the "CLASS
A-2 NOTES MATURITY DATE") is the September 2000
Distribution Date; the stated maturity date of the
Class A-3 Notes (the "CLASS A-3 NOTES MATURITY
DATE") is the December 2002 Distribution Date; the
stated maturity date for the Class A-4 Notes (the
"CLASS A-4 NOTES MATURITY DATE") is the May 2004
Distribution Date; the stated maturity date for
the Class B Notes (the "CLASS B NOTES MATURITY
DATE") is the April 2005 Distribution Date; the
stated maturity date for the Class C Notes (the
"CLASS C NOTES MATURITY DATE") is the August 2005
Distribution Date; the stated maturity date for
the Class D Notes (the "CLASS D NOTES MATURITY
DATE") is the December 2005 Distribution Date;
and the stated maturity date for the Class E Notes
(the "CLASS E NOTES MATURITY DATE") is the August
2006 Distribution Date (each of the Class A-1
Notes Maturity Date, the Class A-2 Notes Maturity
Date, the Class A-3 Notes Maturity Date, the Class
A-4 Notes Maturity Date, the Class B Notes
Maturity Date, the
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<PAGE>
Class C Notes Maturity Date, the Class D Notes
Maturity Date and the Class E Notes Maturity
Date, the "MATURITY DATE").
Expected Amortization . . . The expected amortization schedule for the Notes
Schedule is set forth herein under "DESCRIPTION OF THE
NOTES--PAYMENTS OF PRINCIPAL". Although the
Maturity Date for the A-1 Notes, A-2 Notes, A-
3 Notes, A-4 Notes, Class B Notes, Class C Notes,
Class D Notes and Class E Notes is the November
1999 Distribution Date, September 2000
Distribution Date, December 2002 Distribution
Date, May 2004 Distribution Date, April 2005
Distribution Date, August 2005 Distribution Date,
December 2005 Distribution Date and August 2006
Distribution Date, respectively, the expected
final payment date for the A-1 Notes, A-2 Notes,
A-3 Notes, the A-4 Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E
Notes is the August 1999 Distribution Date,
December 1999 Distribution Date, February 2002
Distribution Date, February 2002 Distribution
Date, February 2002 Distribution Date, February
2002 Distribution Date, February 2002 Distribution
Date and February 2002 Distribution Date,
respectively, assuming no losses and 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 Closing 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" or
Contract Balance "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 on or 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 the later of such date of
determination and the applicable Cutoff Date
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;
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<PAGE>
(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, [ ]%. The Discount Rate 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, Class D Interest Rate and Class E Interest
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,
Initial Class D Note Principal Balance or Initial
Class E Note Principal Balance, as applicable, and
(y) the expected weighted average life of each
Class of Notes or the Subordinated Notes, as
applicable, assuming no losses and a CPR of 11%,
and (ii) the Servicing Fee Percentage. The
Statistical Discount Rate is equal to 6.329%. See
"THE CONTRACT 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 Excluded 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, Class D Notes and Class E
Notes; 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, the
Class D Notes and the Class E Notes. 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, the Class D Notes and the Class E Notes; the
Class A-4 Notes will be senior in right of payment
of the Class B Notes, the Class C Notes, the Class
D Notes and the Class E Notes. The Class B Notes
will be senior in right of payment to the Class C
Notes, the Class D Notes and the Class E Notes; the
Class C Notes will be senior in right of payment to
the Class D Notes and the Class E Notes; and the
Class D Notes will be senior in right of payment to
the Class E Notes; 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 servicing,
Servicer Advances 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
19
<PAGE>
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 on each Distribution
Date 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)
Available Amounts 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
requirements set forth in the Pooling and Servicing
Agreement will be appointed as successor Servicer.
See "THE TRANSFER AND SALE AGREEMENT AND POOLING
AND SERVICING AGREEMENT--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
POOLING AND SERVICING AGREEMENT--COLLECTION AND
OTHER SERVICING PROCEDURES" herein.
Repurchase for Certain . . . The Trust Depositor under the Pooling and Servicing
Breaches Of Representations Agreement and the Seller under the Transfer and
And Warranties 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 POOLING AND
SERVICING AGREEMENT"), 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 POOLING
AND SERVICING AGREEMENT") 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 generally
Conditions 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
20
<PAGE>
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 Contracts
materially adversely affected by such breaches 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 Substitute Contracts.
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.
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 tax
Considerations 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.
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+", "P-1" and "D-1+", that the Class
A-2 Notes be RELATED AT LEAST "AAA", "Aaa" and
"AAA", the Class A-3 Notes be rated at least "AAA",
"AAA" and "AAA", that the Class A-4 Notes be rated
at least "AAA", "Aaa" and "AAA" , that the Class B
Notes be rated at least "A", "A2" and "A+", and
that the Class C Notes be rated at least "BBB",
"Baa3" and "BBB" by Standard & Poor's, Moody's
Investors Service and Duff & Phelps Credit Rating
Co., 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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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, payments upon the liquidation of Defaulted Contracts (net of
liquidation expenses), 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 Pooling and Servicing
Agreement, and payments upon an optional termination of the Trust (any such
voluntary or involuntary prepayment, purchase or termination, a "PREPAYMENT";
provided, that the term Prepayment shall not include any payment attributable to
any Excluded Residual Investment). The occurrence of an Event of Default (as
defined herein) may also result in the receipt by one or more classes of
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" AND "--ADDITIONS OF TRUST
ASSETS" 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. 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-2 NOTES, THE CLASS A-3 NOTES, THE CLASS A-4 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, the Class D Notes and the Class E Notes will be subordinated in priority
of payment to interest and principal, respectively on the Class
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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, the Class D Notes and the
Class E Notes will be subordinated in priority of payment to interest and
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, the
Class D Notes and the Class E Notes 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, the Class D
Notes and the Class E Notes 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, the Class D Notes and the Class E
Notes will be subordinated in priority of payment to interest and principal,
respectively, on the Class B Notes, (vi) payments of interest and principal on
the Class D Notes will be subordinated in priority of payment to interest and
principal, respectively, on the Class C Notes and (vii) payments of interest and
principal on the Class E Notes will be subordinated in priority of payment to
interest and principal, respectively, on the Class D Notes. The Subordinated
Notes initially will represent the right to receive principal in an amount equal
to 2.75% of the ADCB as of the Closing Date (calculated using the Discount
Rate), but such amount will be reduced as a result of principal payments made on
the Subordinated Notes prior to an Event of Default (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
offered to 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 to 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 also incur losses on their investment as a result.
Similarly, delinquencies and defaults on the Contracts could eliminate the
protection offered to 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
investment as a result. Delinquencies and defaults on the Contracts could
eliminate the protection offered to the Class A-2 Noteholders by the
subordination of the Class A-3 Notes, 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 investment 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 A-3 Notes, the Class A-4 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 investment 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 California, Texas, New York,
Pennsylvania and New Jersey representing approximately 10.57%, 8.40%, 6.70%,
5.75% and 5.17%, respectively, of the ADCB (calculated utilizing the Statistical
Discount Rate) of the Contract Pool as of the Statistic Calculation 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 any state or
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.
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 rate environment. See "--PREPAYMENTS ON THE CONTRACTS AFFECT THE YIELD
OF THE NOTES" and "THE CONTRACTS --EQUIPMENT", "--LEASES" and "--INSTALLMENT
PAYMENT AGREEMENTS AND FINANCING AGREEMENTS".
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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, 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 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
with respect to Equipment relating to a single Obligor in a single jurisdiction
with an aggregate value less than $25,000 (the "MINIMUM VALUE FILING
EXCEPTION"). 27,682 Contracts in the Contract Pool, aggregating approximately
9.83% of the ADCB (calculated utilizing the Statistical Discount Rate) as of
the Statistic Calculation Date, are represented by the Contracts described in
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 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
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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 any
such security interest 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
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 will not identify the Trust as secured party 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. As of the Statistic Calculation
Date, in the Seller's reasonable judgment, the Discounted Contract Balance of
End-User Contracts in the Contract Pool that are secured by Vehicles, is
approximately 26.82% of the ADCB (calculated utilizing the Statistical Discount
Rate) 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, however, the
Trust Depositor believes that with respect to the Equipment which constitutes a
"FIXTURE", it has obtained a perfected first priority security interest (except
with respect to the Minimum Value Filing Exception), 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. As of the Statistic Calculation Date, in
the Seller's reasonable judgment, the Discounted Contract Balance of End-User
Contracts in the Contract Pool that are secured by fixtures, is approximately
1.38% of the ADCB (calculated utilizing the Statistical Discount Rate) 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 in the name of the
Trustee, 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 (except with respect to the Minimum Value
Filing Exception), if (i) such breach shall materially adversely affect the
rights of the holder of such Contract in such Equipment 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 the
priority of its security interest or its security interest in such Equipment
after the date such Contract is conveyed to the Trust.
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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 Pooling
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 Pooling 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 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 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. 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. 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.
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
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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.
As of the Statistic Calculation Date, in the Seller's reasonable judgment,
the Discounted Contract Balance of End-User Contracts in the Contract Pool that
are "TRUE LEASES" is approximately 24.71% of the ADCB (calculated utilizing the
Statistical Discount Rate) 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 Pooling 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
27
<PAGE>
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.
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 Pooling 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 Pooling 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.
28
<PAGE>
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 "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). As of the Statistic Calculation Date the ADCB (calculated utilizing
the Statistical Discount Rate) of all Contracts which finance, lease or are
related to Software is approximately 11.94% of the ADCB of the Contract Pool.
See "THE CONTRACTS". 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 POOLING AND SERVICING AGREEMENT--REPRESENTATIONS AND
WARRANTIES" herein. Because the Trust is a limited purpose trust with limited
assets, the Noteholders must rely solely upon the Contracts, security interests
in the related Equipment 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
29
<PAGE>
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."
YEAR 2000 COMPLIANCE
Many existing computer programs use only two digits to define a year in the
date field. These programs could fail or produce erroneous results during the
transition from the Year 1999 to the Year 2000. Newcourt has established
procedures for evaluating and managing the risks and costs associated with this
problem, but there can be no assurance that all of Newcourt's internal computer
systems will be able to handle all Year 2000 problems. Furthermore, Newcourt
does not guarantee that the systems and software of other companies on which its
systems and operations rely will be able to handle all Year 2000 problems. If
Newcourt USA, as Servicer, the Owner Trustee or the Indenture Trustee do not
have computerized systems that are Year 2000 compliant by the Year 2000, the
ability to service the Contracts (in the case of the Servicer), to make
distributions to the Noteholders and holders of the Subordinated Securities (in
the case of the Indenture Trustee) may be materially and adversely affected.
See "NEWCOURT CREDIT GROUP INC.; NEWCOURT FINANCIAL USA INC. -- READINESS FOR
YEAR 2000".
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 immediately preceding (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, a division of Wheat First
Securities, Inc., is the Administrator of VFCC, an entity which is not
affiliated with First Union Corporation, First Union Capital Markets 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
Pooling and Servicing Agreement and pledged to the Indenture Trustee pursuant
to the Indenture.
The Trust was organized as a limited purpose 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 its formation on August 13, 1998, 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. The Trust will not own any physical properties.
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, the
Trust is subject to any legal proceedings.
30
<PAGE>
THE CONTRACT 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
October 15, 1998 (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 Pooling and Servicing
Agreement. See "THE POOLING AND SERVICING AGREEMENT--REPRESENTATIONS AND
WARRANTIES" and "--CONCENTRATION AMOUNTS" herein which specifically describe the
criteria for eligibility in the Contract 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. The statistical information
concerning the Contracts set forth below is based upon information as of the
opening of business on the Statistic Calculation Date and the Statistical
Discount Rate. As of the Statistic Calculation Date, the ADCB (calculated
utilizing the Statistical Discount Rate) of the Transferred Contracts was
$1,125,191,061, the weighted average remaining term to maturity for the
Transferred Contracts was approximately 39.3 months, the final scheduled payment
date of the Transferred Contract with the latest maturity or expiration was July
2005 and the average Discounted Contract Balance was approximately $26,232.
For further information regarding the Transferred Contracts, see "THE
CONTRACTS" herein and "THE CONTRACT POOL--OTHER POOL DATA" below.
OTHER POOL DATA. Approximately As of the Statistic Calculation Date,
approximately 17.52% of the ADCB (calculated using the Statistical Discount
Rate) 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 Statistic Calculation 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 recourse, and Secondary Contracts
securing Vendor Loans), which represents an ADCB of $247,249,042 or 21.97% of
the ADCB of the Contract Pool as of the Statistic Calculation Date, relates to
the transportation industry. See "RISK FACTORS--CERTAIN RISKS ASSOCIATED WITH
GEOGRAPHIC OR INDUSTRY CONCENTRATIONS OF CONTRACTS" herein, and "THE CONTRACT
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 Statistic
Calculation Date and the Statistical Discount Rate. Certain Contracts included
in the pool as of the Statistic Calculation 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 Statistic Calculation Date and calculated at the
Statistical Discount Rate as presented in this Prospectus, such variance is not
expected to be material. The percentages and balances set forth in each of the
following tables may not sum to the indicated totals due to rounding.
The information concerning the Contracts set forth below should be read in
connection with the information set forth in "Risk Factors."
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<PAGE>
COMPOSITION OF THE CONTRACT POOL
<TABLE>
<S> <C>
Aggregate Discounted Contract Balance $ 1,125,191,061
Number of Contracts 42,894
Weighted Average Original Term 46.9
(Range) (in months) 3-86
Weighted Average Remaining Term 39.3
(Range) (in months) 1-81
Average Discounted Contract Balance $ 26,232
</TABLE>
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> <C>
CSA's 7,145 16.66% $ 459,352,648 40.82%
Finance Leases 14,798 34.50 232,504,521 20.66
IPAs 53 0.12 21,805,783 1.94
Other Financing
Arrangements 347 0.81 115,773,324 10.29
Secured Notes 46 0.11 17,712,246 1.57
True Leases 20,505 47.80 278,042,540 24.71
</TABLE>
32
<PAGE>
DISTRIBUTION OF CONTRACTS BY STATE IN WHICH OBLIGORS ARE LOCATED
<TABLE>
<CAPTION>
Percentage of Discounted Percentage of
State Number of Number of Contract Aggregate Discounted
Contracts Contracts Balance Contract Balance
<S> <C> <C> <C> <C>
Alabama 557 1.30% $ 28,865,608 2.57%
Alaska 127 0.30 2,137,118 0.19
Arizona 783 1.83 16,848,633 1.50
Arkansas 474 1.11 17,226,441 1.53
California 5,415 12.62 118,982,661 10.57
Colorado 836 1.95 18,779,464 1.67
Connecticut 700 1.63 14,380,638 1.28
Delaware 173 0.40 7,593,773 0.67
District of Columbia 288 0.67 7,398,306 0.66
Florida 2,206 5.14 37,729,549 3.35
Georgia 1,217 2.84 38,543,513 3.43
Hawaii 179 0.42 1,038,756 0.09
Idaho 255 0.59 7,418,661 0.66
Illinois 1,503 3.50 36,960,468 3.28
Indiana 672 1.57 23,790,044 2.11
Iowa 268 0.62 8,096,179 0.72
Kansas 284 0.66 6,960,541 0.62
Kentucky 525 1.22 19,617,903 1.74
Louisiana 622 1.45 17,076,487 1.52
Maine 250 0.58 10,662,260 0.95
Maryland 862 2.01 16,801,593 1.49
Massachusetts 1,339 3.12 28,988,564 2.58
Michigan 1,027 2.39 33,062,490 2.94
Minnesota 549 1.28 20,397,745 1.81
Mississippi 409 0.95 18,714,343 1.66
Missouri 589 1.37 19,032,324 1.69
Montana 140 0.33 2,094,816 0.19
Nebraska 114 0.27 7,725,876 0.69
Nevada 376 0.88 8,233,621 0.73
33
<PAGE>
<CAPTION>
Percentage of Discounted Percentage of
State Number of Number of Contract Aggregate Discounted
Contracts Contracts Balance Contract Balance
<S> <C> <C> <C> <C>
New Hampshire 375 0.87 11,097,964 0.99
New Jersey 2,008 4.68 58,220,989 5.17
New Mexico 266 0.62 3,365,615 0.30
New York 3,643 8.49 75,340,356 6.70
North Carolina 929 2.17 15,842,564 1.41
North Dakota 75 0.17 2,226,628 0.20
Ohio 1,265 2.95 38,771,155 3.45
Oklahoma 469 1.09 10,156,947 0.90
Oregon 613 1.43 9,588,352 0.85
Pennsylvania 2,185 5.09 64,675,681 5.75
Rhode Island 128 0.30 3,694,675 0.33
South Carolina 411 0.96 7,289,708 0.65
South Dakota 43 0.10 444,358 0.04
Tennessee 674 1.57 27,344,350 2.43
Texas 3,338 7.78 94,497,890 8.40
Utah 714 1.66 23,997,323 2.13
Vermont 250 0.58 11,118,367 0.99
Virginia 1,008 2.35 19,151,395 1.70
Washington 791 1.84 17,258,967 1.53
West Virginia 285 0.66 12,016,614 1.07
Wisconsin 602 1.40 22,391,084 1.99
Wyoming 83 0.19 1,541,702 0.14
</TABLE>
34
<PAGE>
DISTRIBUTION OF CONTRACTS BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Percentage of Aggregate
Number of Percentage of Number Discounted Contract Discounted Contract
Equipment Type Contracts of Contracts Balance Balance
<S> <C> <C> <C> <C>
Computer Hardware 25,215 58.78% $ 296,494,495 26.35%
Auto Diagnostic Equipment 6,364 14.84 72,485,593 6.44
Transportation 4,673 10.89 301,811,387 26.82
Construction 1,785 4.16 114,231,991 10.15
Industrial Equipment 1,485 3.46 29,922,223 2.66
Miscellaneous 1,475 3.44 44,922,741 3.99
Resources 544 1.27 48,005,468 4.27
Computer Software 379 0.88 134,337,281 11.94
Manufacturing 373 0.87 20,380,922 1.81
Healthgroup 352 0.82 42,345,156 3.76
Commercial/Retail Fixtures 150 0.35 15,493,559 1.38
Printing 99 0.23 4,760,244 0.42
</TABLE>
35
<PAGE>
DISTRIBUTION OF CONTRACTS BY OBLIGOR INDUSTRY
<TABLE>
<CAPTION>
Percentage of Aggregate
Percentage of Number of Discounted Contract Discounted Contract
Industry Number of Contracts Contracts Balance Balance
<S> <C> <C> <C> <C>
Small Business 10,732 25.02% $ 75,274,238 6.69%
Distribution 9,636 22.46 131,489,860 11.69
Miscellaneous 4,641 10.82 110,139,304 9.79
Financial Management 4,421 10.31 93,252,725 8.29
Transportation 3,958 9.23 247,249,042 21.97
Construction 2,829 6.60 131,370,192 11.68
Manufacturing 2,457 5.73 139,227,893 12.37
Machine Tool 1,339 3.12 25,184,638 2.24
Healthcare 1,293 3.01 62,013,169 5.51
Resources 769 1.79 62,238,615 5.53
Commercial 390 0.91 22,101,230 1.96
Printing 333 0.78 11,702,618 1.04
Government 96 0.22 13,947,537 1.24
</TABLE>
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<PAGE>
DISTRIBUTION OF CONTRACTS BY DISCOUNTED CONTRACT BALANCE
<TABLE>
<CAPTION>
Percentage of Aggregate
Discounted Contract Number of Percentage of Number of Discounted Contract Discounted Contract
Balance Contracts Contracts Balance Balance
<S> <C> <C> <C> <C>
$ 1 - $25,000 34,095 79.49% $ 200,355,625 17.81%
$ 25,001 - $50,000 3,654 8.52 131,467,626 11.68
$50,001 - $75,000 1,644 3.83 101,611,879 9.03
$75,001 - $100,000 1,430 3.33 124,399,210 11.06
$100,001 - $200,000 1,334 3.11 176,761,456 15.71
$200,001 - $300,000 304 0.71 74,356,849 6.61
$300,001 - $400,000 141 0.33 48,103,797 4.28
$400,001 - $500,000 84 0.20 36,932,563 3.28
$500,001 - $1,000,000 126 0.29 86,691,046 7.70
$1,000,001 - $4,000,000 78 0.18 124,654,833 11.08
greater than $4,000,000 4 0.01 19,856,176 1.76
</TABLE>
37
<PAGE>
DISTRIBUTION OF CONTRACTS BY
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Percentage of Aggregate
Remaining Term Percentage of Number of Discounted Contract Discounted Contract
(Months) Number of Contracts Contracts Balance Balance
<S> <C> <C> <C> <C>
1 - 12 4,152 9.68% $ 30,637,145 2.72%
13 - 24 13,348 31.12 185,876,586 16.52
25 - 36 14,929 34.80 279,570,436 24.85
37 - 48 3,683 8.59 217,259,182 19.31
49 - 60 6,513 15.18 363,857,090 32.34
61 - 72 189 0.44 25,706,502 2.28
73 - 84 80 0.19 22,284,121 1.98
</TABLE>
DISTRIBUTIONS OF CONTRACTS BY
ORIGINAL CONTRACT TERM
<TABLE>
<CAPTION>
Percentage of
Original Term Number of Percentage of Number of Discounted Contract Aggregate Discounted
(Months) Contracts Contracts Balance Contract Balance
<S> <C> <C> <C> <C>
1 - 12 424 0.99% $ 8,645,953 0.77%
13 - 24 11,598 27.04 130,084,836 11.56
25 - 36 18,863 43.98 297,395,693 26.43
37 - 48 3,381 7.88 165,573,481 14.72
49 - 60 7,127 16.62 378,783,825 33.66
61 - 72 1,366 3.18 111,861,028 9.94
73 - 84 129 0.30 31,557,672 2.80
85 - 96 6 0.01 1,288,574 0.11
</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 computer work stations, personal computers, data
storage devices, mainframe and mini computers 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. Data
set forth for the six months ended June 30, 1998 are not indicative of results
for the full year. 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. Except as noted in the
preceding sentence, the Subject Contracts have been and will continue to be
serviced by Newcourt USA.
SIX MONTHS ENDED JUNE 30, 1998 VERSUS SIX MONTHS ENDED JUNE 30, 1997. The
amounts classified as 31-60 days delinquent, 61-90 days delinquent and over 90
days delinquent increased as a percentage of the outstanding investment in the
Subject Contracts, to 3.44%, 1.31% and 0.48% from 2.01%, 0.50% and 0.31%,
respectively, as of the six months ended June 30, 1997. This was due in large
part to an expansion of Newcourt's lending on smaller ticket commercial assets
under large scale commercial vendor programs and the correspondingly higher
delinquency levels expected with these programs. Net losses as a percentage of
average outstanding investment in the Subject Contracts increased to 0.94% for
the six month period ending June 30, 1998 compared to 0.64% for the
corresponding 1997 period, each respectively on an annualized basis. The
increase in recognized losses primarily related to sales of repossessed assets
in the heavy truck and trailer transportation sector during the first quarter of
1998.
TWELVE MONTHS ENDED DECEMBER 31, 1997 VERSUS TWELVE MONTHS ENDED DECEMBER
31, 1996. The amounts classified as 31-60 days delinquent, 61-90 days
delinquent and over 90 days delinquent decreased as a percentage of the
outstanding investment in the Subject Contracts, to 2.21%, 0.45% and 0.28% from
2.86%, 1.27% and 0.41%, respectively, as of the year ended December 31, 1997.
This was primarily the result of a tightening in the credit and administration
systems and procedures, specifically related to transportation assets, in
response to the decline in the general performance of investments in
transportation equipment financing agreements originated in the United States.
Net losses as a percentage of average outstanding investment in Subject
Contracts increased to 0.50% from 0.32%. The losses were principally the result
of the continuing decline in the US transportation industry.
TWELVE MONTHS ENDED DECEMBER 31, 1996 VERSUS TWELVE MONTHS ENDED DECEMBER
31, 1995. The amounts classified as 31-60 days delinquent, 61-90 days
delinquent and over 90 days delinquent changed as a percentage of the
outstanding investment in the Subject Contracts, to 2.86%, 1.27% and 0.41% from
4.14%, 0.93% and 0.15%, respectively, as of the year ended December 31, 1996.
The results for this period were mixed but reflected an increasing maturation of
the US portfolio as Newcourt effectively tripled its United States asset base
from December 1995 figures. During 1996, net losses increased to 0.32% from
zero recorded losses in 1995. This was due in part to recognition of losses on
the Subject Contracts which became delinquent in 1995 but was still lower than
the expected long term average because of the growth in the portfolio. The year
ended December 31, 1995 was essentially Newcourt's first full year of operation
in the US market. As a result of the portfolio age, the majority of accounts
classified as delinquent as of December 31, 1995 were primarily in the 31-60 day
category and no losses were recognized.
39
<PAGE>
NEWCOURT USA PORTFOLIO
DELINQUENCY EXPERIENCE (a), (b), (c) AND (d)
AT
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Six Months Twelve Months Twelve Months Twelve Months
Ended Ended Ended Ended Ended
June 30, June 30, December 31, December 31, December 31,
1998 1997 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Outstanding Investment
in Contracts $2,168,039,278 $1,339,937,827 $1,849,335,840 $1,056,983,682 $354,193,858
31-60 days 3.44% 2.01% 2.21% 2.86% 4.14%
61-90 days 1.31% 0.50% 0.45% 1.27% 0.93%
Over 90 days 0.48% 0.31% 0.28% 0.41% 0.15%
Total (% of Outstanding
Investment in Contracts) 5.23% 2.82% 2.94% 4.54% 5.22%
</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 100% due to rounding.
(d) Includes all U.S. assets originated through the Transportation &
Construction Equipment Origination Channel, Information Technology
Origination Channel and Commercial Origination Channel 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 (c)
AT
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Six Months Twelve Months Twelve Months Twelve Months
Ended Ended Ended Ended Ended
June 30, 1998 June 30, 1997 December 31, 1997 December 31, 1996 December 31, 1995 (e)
<S> <C> <C> <C> <C> <C>
Outstanding Investment
in Contracts $2,168,039,278 $1,339,937,827 $1,849,335,840 $1,056,983,682 $354,193,858
Gross Losses $28,470,818 $9,277,448 $16,630,006 $13,688,978 0
Recoveries $19,242,655 $5,270,766 $9,434,278 $11,226,180 0
Net Losses $9,228,163 $4,006,683 $7,195,728 $2,462,798 0
Net Losses as a
Percentage of
Average Outstanding
Investment in Contracts
(b) 0.94% (d) 0.64% (d) 0.50% 0.32% 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) Average Outstanding Investment is the average of the Outstanding Investment
at the end of each quarter.
(c) Includes all U.S. assets originated through Newcourt USA's
Transportation & Construction Equipment Origination Channel,
Information Technology Origination Channel and Commercial Origination
Channel 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).
(d) On an annualized basis.
(e) See "DELINQUENCY AND LOSS INFORMATION -- TWELVE MONTHS ENDED DECEMBER 31,
1996 VERSUS TWELVE MONTHS ENDED DECEMBER 31, 1995."
41
<PAGE>
THE CONTRACTS
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, (iii) collections relating to security deposits, (iv) collections
relating to payments which were scheduled to be made by any Obligor on any
Contract pursuant to the terms of such Contract prior to the Cutoff Date related
to such Contract, (v) collections of late charges relating to a Contract ("LATE
CHARGES") (amounts described in clauses (i), (ii), (iii), (iv) and (v),
"EXCLUDED AMOUNTS") and (vi) collections relating to Excluded Residual
Investments.
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 POOLING
AND SERVICING AGREEMENT") 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
42
<PAGE>
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 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 Pooling 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,
43
<PAGE>
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 Pooling 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 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 computer work stations, personal computers, data
storage devices, mainframe and mini computers 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 of a
security interest in the Equipment) will be transferred to the Trust.
SOFTWARE AND SERVICES
44
<PAGE>
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
Obligor's 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 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 Statistic Calculation Date, approximately 11.94% of the ADCB (as
calculated utilizing the Statistical Discount Rate) 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
45
<PAGE>
Equipment (except with respect to the Minimum Value Filing Exception); 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 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 "CANCELABLE" 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 an 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
46
<PAGE>
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" 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"). As of the
Statistic Calculation Date, in the Seller's reasonable judgment, the aggregate
amount of Guaranteed Residual Investments included in the Contract Pool does not
exceed 0.48% of the ADCB (calculated utilizing the Statistical Discount Rate) 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 (such
Residual Investment being referred to herein as the "EXCLUDED RESIDUAL
INVESTMENT").
The Excluded Residual Investment associated with any End-User Contract
included in the Contract Pool will not be purchased by the Trust Depositor from
the Seller under the Transfer and Sale Agreement, and will not be sold to the
Trust under the Pooling 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 Excluded 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"). Under the Transfer and Sales Agreement the Seller will warrant and
covenant to the Trust, that any Subordinated Residual Interest will be
subordinated to the interests of the Trust Depositor 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
47
<PAGE>
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.
48
<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 Pooling 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
Closing 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.
The 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 charts set 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%, 11.00% and 15.00%,
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,
assuming that the Trust Depositor exercises its option to cause a redemption of
the Notes in connection with the Cleanup Call Condition and the Closing Date is
October 27, 1998, and are based upon the Statistical Discount Rate. In
addition, it is assumed, for the purpose of these charts only, that on the
Closing Date the Trust issues $354,435,184 aggregate principal amount of
5.45625% Class A-1 Notes, $129,396,972 aggregate principal amount of 5.50% Class
A-2 Notes, $444,450,469 aggregate principal amount of 5.48% Class A-3 Notes,
$101,267,195 aggregate principal amount of 5.75% Class A-4 Notes, $42,194,665
aggregate principal amount of 6.17% Class B Notes, $22,503,821 aggregate
principal amount of 6.90% Class C Notes, $14,064,888 aggregate principal amount
of 7.62% Class D Notes, $16,877,866 aggregate principal amount of 9.94% Class E
Notes.
49
<PAGE>
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 0.56 years, 0.50 years, 0.47 years and 0.44 years,
the average life of the Class A-2 Notes would be 1.21 years, 1.08 years, 1.00
years and 0.94 years, the average life of the Class A-3 Notes would be 2.35
years, 2.14 years, 2.03 years and 1.92 years, the average life of the Class A-4
Notes would be 4.18 years, 4.00 years, 3.89 years and 3.77 years, the average
life of the Class B Notes would be 2.51 years, 2.30 years, 2.19 years and 2.09
years, and the average life of the Class C Notes would be 2.55 years, 2.35
years, 2.24 years and 2.13 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.
50
<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
0.00% CPR
---------
<TABLE>
<CAPTION>
Distribution Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
12/20/98 92.98% 100.00% 100.00% 100.00% 100.00% 100.00%
01/20/99 83.66% 100.00% 100.00% 100.00% 100.00% 100.00%
02/20/99 72.30% 100.00% 100.00% 100.00% 100.00% 100.00%
03/20/99 63.47% 100.00% 100.00% 100.00% 100.00% 100.00%
04/20/99 54.52% 100.00% 100.00% 100.00% 100.00% 100.00%
05/20/99 45.07% 100.00% 100.00% 100.00% 100.00% 100.00%
06/20/99 35.45% 100.00% 100.00% 100.00% 100.00% 100.00%
07/20/99 27.23% 100.00% 100.00% 100.00% 100.00% 100.00%
08/20/99 16.66% 100.00% 100.00% 100.00% 100.00% 100.00%
09/20/99 7.72% 100.00% 100.00% 100.00% 100.00% 100.00%
10/20/99 0.00% 98.71% 100.00% 100.00% 99.75% 99.75%
11/20/99 0.00% 76.04% 100.00% 100.00% 95.41% 95.41%
12/20/99 0.00% 56.74% 100.00% 100.00% 91.71% 91.71%
01/20/00 0.00% 35.85% 100.00% 100.00% 87.70% 87.70%
02/20/00 0.00% 13.57% 100.00% 100.00% 83.43% 83.43%
03/20/00 0.00% 0.00% 98.34% 100.00% 79.74% 79.74%
04/20/00 0.00% 0.00% 93.00% 100.00% 76.22% 76.22%
05/20/00 0.00% 0.00% 87.72% 100.00% 72.75% 72.75%
06/20/00 0.00% 0.00% 81.82% 100.00% 68.86% 68.86%
07/20/00 0.00% 0.00% 76.97% 100.00% 65.68% 65.68%
08/20/00 0.00% 0.00% 71.81% 100.00% 62.27% 62.27%
09/20/00 0.00% 0.00% 66.99% 100.00% 59.10% 59.10%
10/20/00 0.00% 0.00% 62.27% 100.00% 56.00% 56.00%
11/20/00 0.00% 0.00% 57.59% 100.00% 52.91% 52.91%
12/20/00 0.00% 0.00% 53.26% 100.00% 50.06% 50.06%
01/20/01 0.00% 0.00% 49.07% 100.00% 47.31% 47.31%
51
<PAGE>
<CAPTION>
Distribution Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C>
02/20/01 0.00% 0.00% 44.82% 100.00% 44.51% 44.51%
03/20/01 0.00% 0.00% 41.10% 100.00% 42.05% 42.05%
04/20/01 0.00% 0.00% 37.51% 100.00% 39.70% 39.70%
05/20/01 0.00% 0.00% 34.19% 100.00% 37.51% 37.51%
06/20/01 0.00% 0.00% 30.85% 100.00% 35.31% 35.31%
07/20/01 0.00% 0.00% 27.88% 100.00% 33.36% 33.36%
08/20/01 0.00% 0.00% 24.93% 100.00% 31.41% 31.41%
09/20/01 0.00% 0.00% 22.25% 100.00% 29.65% 29.65%
10/20/01 0.00% 0.00% 19.62% 100.00% 27.92% 27.92%
11/20/01 0.00% 0.00% 16.89% 100.00% 26.12% 26.12%
12/20/01 0.00% 0.00% 14.04% 100.00% 24.24% 24.24%
01/20/02 0.00% 0.00% 11.45% 100.00% 22.54% 22.54%
02/20/02 0.00% 0.00% 9.00% 100.00% 20.93% 20.93%
03/20/02 0.00% 0.00% 6.65% 100.00% 19.38% 19.38%
04/20/02 0.00% 0.00% 4.27% 100.00% 17.81% 17.81%
05/20/02 0.00% 0.00% 2.05% 100.00% 16.35% 16.35%
06/20/02 0.00% 0.00% 0.00% 98.98% 14.85% 14.85%
07/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
08/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted
Average
Life to Call (Years) 0.56 1.21 2.35 3.73 2.34 2.34
</TABLE>
52
<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
7.00% CPR
---------
<TABLE>
<CAPTION>
Distribution Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
12/20/98 91.11% 100.00% 100.00% 100.00% 100.00% 100.00%
01/20/99 80.04% 100.00% 100.00% 100.00% 100.00% 100.00%
02/20/99 67.09% 100.00% 100.00% 100.00% 100.00% 100.00%
03/20/99 56.76% 100.00% 100.00% 100.00% 100.00% 100.00%
04/20/99 46.42% 100.00% 100.00% 100.00% 100.00% 100.00%
05/20/99 35.71% 100.00% 100.00% 100.00% 100.00% 100.00%
06/20/99 24.96% 100.00% 100.00% 100.00% 100.00% 100.00%
07/20/99 15.67% 100.00% 100.00% 100.00% 100.00% 100.00%
08/20/99 4.25% 100.00% 100.00% 100.00% 100.00% 100.00%
09/20/99 0.00% 86.83% 100.00% 100.00% 97.48% 97.48%
10/20/99 0.00% 65.22% 100.00% 100.00% 93.33% 93.33%
11/20/99 0.00% 41.20% 100.00% 100.00% 88.73% 88.73%
12/20/99 0.00% 20.56% 100.00% 100.00% 84.77% 84.77%
01/20/00 0.00% 0.00% 99.62% 100.00% 80.58% 80.58%
02/20/00 0.00% 0.00% 92.96% 100.00% 76.20% 76.20%
03/20/00 0.00% 0.00% 87.17% 100.00% 72.38% 72.38%
04/20/00 0.00% 0.00% 81.68% 100.00% 68.78% 68.78%
05/20/00 0.00% 0.00% 76.32% 100.00% 65.25% 65.25%
06/20/00 0.00% 0.00% 70.46% 100.00% 61.39% 61.39%
07/20/00 0.00% 0.00% 65.61% 100.00% 58.19% 58.19%
08/20/00 0.00% 0.00% 60.52% 100.00% 54.84% 54.84%
09/20/00 0.00% 0.00% 55.81% 100.00% 51.74% 51.74%
10/20/00 0.00% 0.00% 51.23% 100.00% 48.72% 48.72%
11/20/00 0.00% 0.00% 46.73% 100.00% 45.76% 45.76%
12/20/00 0.00% 0.00% 42.59% 100.00% 43.04% 43.04%
01/20/01 0.00% 0.00% 38.62% 100.00% 40.42% 40.42%
53
<PAGE>
<CAPTION>
Distribution Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C>
02/20/01 0.00% 0.00% 34.64% 100.00% 37.80% 37.80%
03/20/01 0.00% 0.00% 31.14% 100.00% 35.50% 35.50%
04/20/01 0.00% 0.00% 27.81% 100.00% 33.31% 33.31%
05/20/01 0.00% 0.00% 24.74% 100.00% 31.29% 31.29%
06/20/01 0.00% 0.00% 21.68% 100.00% 29.27% 29.27%
07/20/01 0.00% 0.00% 18.97% 100.00% 27.49% 27.49%
08/20/01 0.00% 0.00% 16.30% 100.00% 25.73% 25.73%
09/20/01 0.00% 0.00% 13.88% 100.00% 24.14% 24.14%
10/20/01 0.00% 0.00% 11.53% 100.00% 22.59% 22.59%
11/20/01 0.00% 0.00% 9.13% 100.00% 21.01% 21.01%
12/20/01 0.00% 0.00% 6.65% 100.00% 19.38% 19.38%
01/20/02 0.00% 0.00% 4.42% 100.00% 17.91% 17.91%
02/20/02 0.00% 0.00% 2.32% 100.00% 16.53% 16.53%
03/20/02 0.00% 0.00% 0.33% 100.00% 15.21% 15.21%
04/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
05/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
06/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
07/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
08/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted
Average
Life to Call (Years) 0.50 1.08 2.14 3.48 2.14 2.14
</TABLE>
54
<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
11.00% CPR
---------
<TABLE>
<CAPTION>
Distribution Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
12/20/98 89.98% 100.00% 100.00% 100.00% 100.00% 100.00%
01/20/99 77.87% 100.00% 100.00% 100.00% 100.00% 100.00%
02/20/99 63.98% 100.00% 100.00% 100.00% 100.00% 100.00%
03/20/99 52.77% 100.00% 100.00% 100.00% 100.00% 100.00%
04/20/99 41.63% 100.00% 100.00% 100.00% 100.00% 100.00%
05/20/99 30.21% 100.00% 100.00% 100.00% 100.00% 100.00%
06/20/99 18.83% 100.00% 100.00% 100.00% 100.00% 100.00%
07/20/99 8.94% 100.00% 100.00% 100.00% 100.00% 100.00%
08/20/99 0.00% 92.95% 100.00% 100.00% 98.65% 98.65%
09/20/99 0.00% 68.53% 100.00% 100.00% 93.97% 93.97%
10/20/99 0.00% 45.98% 100.00% 100.00% 89.65% 89.65%
11/20/99 0.00% 21.29% 100.00% 100.00% 84.91% 84.91%
12/20/99 0.00% 0.00% 100.00% 100.00% 80.83% 80.83%
01/20/00 0.00% 0.00% 93.50% 100.00% 76.56% 76.56%
02/20/00 0.00% 0.00% 86.77% 100.00% 72.12% 72.12%
03/20/00 0.00% 0.00% 80.91% 100.00% 68.26% 68.26%
04/20/00 0.00% 0.00% 75.38% 100.00% 64.62% 64.62%
05/20/00 0.00% 0.00% 70.00% 100.00% 61.08% 61.08%
06/20/00 0.00% 0.00% 64.19% 100.00% 57.26% 57.26%
07/20/00 0.00% 0.00% 59.36% 100.00% 54.08% 54.08%
08/20/00 0.00% 0.00% 54.35% 100.00% 50.78% 50.78%
09/20/00 0.00% 0.00% 49.72% 100.00% 47.73% 47.73%
10/20/00 0.00% 0.00% 45.25% 100.00% 44.79% 44.79%
11/20/00 0.00% 0.00% 40.88% 100.00% 41.91% 41.91%
12/20/00 0.00% 0.00% 36.87% 100.00% 39.27% 39.27%
01/20/01 0.00% 0.00% 33.04% 100.00% 36.75% 36.75%
55
<PAGE>
<CAPTION>
Distribution Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C>
02/20/01 0.00% 0.00% 29.23% 100.00% 34.24% 34.24%
03/20/01 0.00% 0.00% 25.89% 100.00% 32.04% 32.04%
04/20/01 0.00% 0.00% 22.71% 100.00% 29.95% 29.95%
05/20/01 0.00% 0.00% 19.79% 100.00% 28.03% 28.03%
06/20/01 0.00% 0.00% 16.91% 100.00% 26.13% 26.13%
07/20/01 0.00% 0.00% 14.35% 100.00% 24.45% 24.45%
08/20/01 0.00% 0.00% 11.85% 100.00% 22.80% 22.80%
09/20/01 0.00% 0.00% 9.58% 100.00% 21.31% 21.31%
10/20/01 0.00% 0.00% 7.40% 100.00% 19.87% 19.87%
11/20/01 0.00% 0.00% 5.18% 100.00% 18.41% 18.41%
12/20/01 0.00% 0.00% 2.92% 100.00% 16.92% 16.92%
01/20/02 0.00% 0.00% 0.89% 100.00% 15.58% 15.58%
02/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
03/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
04/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
05/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
06/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
07/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
08/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted
Average
Life to Call (Years) 0.47 1.00 2.03 3.31 2.02 2.02
</TABLE>
56
<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
15.00% CPR
---------
<TABLE>
<CAPTION>
Distribution Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C>
Closing Date 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
12/20/98 88.80% 100.00% 100.00% 100.00% 100.00% 100.00%
01/20/99 75.62% 100.00% 100.00% 100.00% 100.00% 100.00%
02/20/99 60.76% 100.00% 100.00% 100.00% 100.00% 100.00%
03/20/99 48.66% 100.00% 100.00% 100.00% 100.00% 100.00%
04/20/99 36.71% 100.00% 100.00% 100.00% 100.00% 100.00%
05/20/99 24.58% 100.00% 100.00% 100.00% 100.00% 100.00%
06/20/99 12.57% 100.00% 100.00% 100.00% 100.00% 100.00%
07/20/99 2.10% 100.00% 100.00% 100.00% 100.00% 100.00%
08/20/99 0.00% 75.50% 100.00% 100.00% 95.30% 95.30%
09/20/99 0.00% 50.10% 100.00% 100.00% 90.44% 90.44%
10/20/99 0.00% 26.68% 100.00% 100.00% 85.95% 85.95%
11/20/99 0.00% 1.38% 100.00% 100.00% 81.10% 81.10%
12/20/99 0.00% 0.00% 94.03% 100.00% 76.90% 76.90%
01/20/00 0.00% 0.00% 87.43% 100.00% 72.56% 72.56%
02/20/00 0.00% 0.00% 80.65% 100.00% 68.10% 68.10%
03/20/00 0.00% 0.00% 74.74% 100.00% 64.20% 64.20%
04/20/00 0.00% 0.00% 69.19% 100.00% 60.55% 60.55%
05/20/00 0.00% 0.00% 63.81% 100.00% 57.01% 57.01%
06/20/00 0.00% 0.00% 58.08% 100.00% 53.24% 53.24%
07/20/00 0.00% 0.00% 53.30% 100.00% 50.09% 50.09%
08/20/00 0.00% 0.00% 48.39% 100.00% 46.86% 46.86%
09/20/00 0.00% 0.00% 43.86% 100.00% 43.87% 43.87%
10/20/00 0.00% 0.00% 39.51% 100.00% 41.01% 41.01%
11/20/00 0.00% 0.00% 35.28% 100.00% 38.23% 38.23%
12/20/00 0.00% 0.00% 31.42% 100.00% 35.68% 35.68%
01/20/01 0.00% 0.00% 27.75% 100.00% 33.27% 33.27%
57
<PAGE>
<CAPTION>
Distribution Class Class Class Class Class Class
Date A-1 A-2 A-3 A-4 B C
<S> <C> <C> <C> <C> <C> <C>
02/20/01 0.00% 0.00% 24.11% 100.00% 30.88% 30.88%
03/20/01 0.00% 0.00% 20.93% 100.00% 28.78% 28.78%
04/20/01 0.00% 0.00% 17.93% 100.00% 26.80% 26.80%
05/20/01 0.00% 0.00% 15.17% 100.00% 24.99% 24.99%
06/20/01 0.00% 0.00% 12.46% 100.00% 23.20% 23.20%
07/20/01 0.00% 0.00% 10.06% 100.00% 21.62% 21.62%
08/20/01 0.00% 0.00% 7.73% 100.00% 20.09% 20.09%
09/20/01 0.00% 0.00% 5.63% 100.00% 18.71% 18.71%
10/20/01 0.00% 0.00% 3.61% 100.00% 17.38% 17.38%
11/20/01 0.00% 0.00% 1.58% 100.00% 16.04% 16.04%
12/20/01 0.00% 0.00% 0.00% 97.91% 14.69% 14.69%
01/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
02/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
03/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
04/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
05/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
06/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
07/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
08/20/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted
Average
Life to Call (Years) 0.44 0.94 1.92 3.23 1.93 1.93
</TABLE>
58
<PAGE>
NEWCOURT CREDIT GROUP INC.,
NEWCOURT FINANCIAL USA INC. AND AT&T CAPITAL CORPORATION
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 and purchase arrangements 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
The obligations of Newcourt USA as Servicer under the Pooling and Servicing
Agreement will be guaranteed by AT&T Capital Corporation ("AT&T Capital").
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.
On January 12, 1998, Newcourt acquired all of the issued and outstanding
common shares of AT&T Capital for an aggregate purchase price of approximately
$1.6 billion (CAN $2.3 billion).
Newcourt is currently one of the world's leading non-bank financial
institutions having approximately CAN $36.7 billion of owned and managed assets
and CAN $4.5 billion shareholders' equity at June 30, 1998. Newcourt currently
has operations in 24 countries, providing full-service, diversified equipment
leasing and finance services and products in the United States, Canada, Europe,
the Asia/Pacific region, Mexico, and South America. Newcourt is the largest
lessor of telecommunications equipment in the United States (based on the
aggregate value of equipment leased or financed).
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, a significant portion of the finance assets
it and its subsidiaries originate, thereby reducing its capital requirements.
Consequently, a significant portion of Newcourt's consolidated revenues are
generated by gains and fees earned from the sale of financings it and its
subsidiaries originate and by management fees earned following such sales.
As of June 30, 1998, Newcourt had total assets of CAN $19,400,291,000,
total liabilities of CAN $14,605,518, shareholders' equity of CAN $4,510,213,000
and total revenues and net income of CAN $677,984,000 and CAN $112,144,000,
respectively. For the fiscal year ended December 31, 1997, Newcourt had total
assets of CAN $6,183,016,000, total liabilities of CAN $3,121,523,000,
shareholders' equity of CAN $3,061,493,000 and total revenues and net income of
CAN $318,435,000 and CAN $36,421,000, respectively.
Newcourt offers its financing services to clients through three primary
business units: Newcourt Financial, Newcourt Capital, and Newcourt Services.
Newcourt Financial, Newcourt's commercial finance business, provides asset-based
financing for a variety of equipment to vendors and customers. Newcourt
Capital, Newcourt's corporate finance business, provides structured corporate
finance to a growing list of international clients, including major
corporations, governments and agencies. Finally, Newcourt Services, Newcourt's
control, growth and support services, is responsible for the underwriting,
funding, administration and risk management needs of Newcourt Financial and
Newcourt Capital.
Newcourt Financial offers its lending services through select strategic
relationships with equipment manufacturers, dealers and distributors and certain
professional associations and organizations. Newcourt Financial's strategy
focuses on the creation, maintenance and enhancement of vendor programs ensuring
its position as the premier provider of global asset
59
<PAGE>
based financial products. Newcourt Financial focuses on the following sectors:
Transportation and Industrial Finance, Technology Finance, Telecommunications
Finance, Business Finance, Specialty Finance, Technology Services,
International/Joint Ventures, and Operations.
Newcourt Capital is the corporate finance business which provides asset
based financing for high value assets and related advisory services to equipment
manufacturers, corporate clients, governments and public sector agencies.
Newcourt Capital focuses on the following sectors: Aerospace Finance, Rail
Finance, Public Sector Finance, Project Finance, Structured Finance,
Telecommunication and Media Finance, Business Finance, and Underwriting and
Syndication.
Newcourt Services is the service business unit responsible for providing
cost effective control and support services to Newcourt Financial and Newcourt
Capital. Newcourt Services consists of the following corporate functions:
Treasury, Credit and Risk Management, Financial Reporting and Administration,
Human Resources, Communications & Marketing, Tax Planning and Compliance,
Systems Development, and Quality Assurance.
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.
AT&T CAPITAL
AT&T Capital is a full-service, diversified equipment leasing and finance
company that operates principally in the United States and also has operations
in the Asia/Pacific region, Mexico and South America. The Company is one of the
largest equipment leasing and finance companies in the United States and is the
largest lessor of telecommunications equipment in the United States, in each
case, based on the aggregate value of equipment leased or financed.
AT&T Capital, a Delaware corporation, is a wholly owned subsidiary of
Newcourt Credit Group USA Inc., which in turn is a wholly owned subsidiary of
Newcourt. It is anticipated that during the fourth quarter of 1998 AT&T Capital
will change its name to Newcourt Credit Corporation. AT&T Capital's chief
executive offices are currently located at 2 Gatehall Drive, Parsippany, New
Jersey 07054 and its telephone number is (973) 606-4879.
AT&T Capital, through its various subsidiaries, leases and finances a wide
variety of equipment, including telecommunications equipment (such as private
branch exchanges, telephone systems and voice processing units), information
technology equipment (such as personal computers, retail point of sale systems
and automated teller machines), general office, manufacturing and medical
equipment ("General Equipment"), and transportation equipment. In addition, the
group provides franchise financing for franchises and financing collateralized
by real estate. As of December 31, 1997, AT&T Capital's and its subsidiaries'
consolidated portfolio assets (investment in finance receivables, capital leases
and operating leases) were comprised of, or collateralized by, General Equipment
(33%), information technology equipment (22%), telecommunications equipment
(22%), loans secured by real estate (12%) and transportation equipment (11%).
AT&T Capital's leasing and financing services are marketed (i) to customers of
equipment manufacturers, distributors and dealers with which AT&T Capital has a
marketing relationship for financing services and (ii) directly to end-users of
equipment. AT&T Capital's approximately 500,000 customers include large global
companies, small and mid-sized businesses and federal, state and local
governments and their agencies. As of December 31, 1997, AT&T Capital's total
assets were $8.8 billion; finance volume for 1997 was $5.7 billion; total
revenues for 1997 were $1.8 billion; and net income for 1997 was $21.0 million.
As of June 30, 1998, AT&T Capital and its subsidiaries had, on a
consolidated basis, total assets of $8.9 billion, total liabilities of $7.7
billion and total revenues and net income for the six months ended June 30, 1998
of $464.9 million and $15.4 million, respectively. As of June 30, 1997, AT&T
Capital had total assets of $8.2 billion, total liabilities of $7.2 billion and
total revenues and net income for the six months ended June 30, 1997 was $436.4
million and $15.2 million, respectively.
AT&T Capital was founded in 1985 by AT&T Corp. as a captive finance company
to assist AT&T's equipment marketing and sales efforts by providing its
customers with sophisticated financing.
On January 12, 1998, Newcourt consummated the purchase (the "Newcourt
Acquisition") of all of the outstanding shares of common stock of AT&T Capital,
pursuant to a Stock Purchase Agreement dated as of November 17, 1997 among the
AT&T Capital, Newcourt. Hercules Holdings (Cayman) Limited, the former direct
60
<PAGE>
owner of 97.4% of AT&T Capital's common stock, and certain management
stockholders. All of the outstanding shares of common stock of the AT&T Capital
are owned by Newcourt Credit Group USA Inc., a direct wholly-owned subsidiary of
Newcourt.
CREDIT UNDERWRITING PROCESS
CREDIT MANAGEMENT PHILOSOPHY. Newcourt's corporate credit philosophy
strives to manage and limit credit risk in connection with its originations
through adherence to credit adjudication policies and procedures for each of its
business units as enumerated in Newcourt's Credit Manual. The Credit Manual
defines but is 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 and (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. In addition, Newcourt has in
place policies, controls, systems and procedures to promote early problem
recognition and corrective action as well as facilitate consistent portfolio
performance measurements. Newcourt also seeks to minimize its credit risk
through diversification of its portfolio by customer, industry segment,
equipment type, geographic location and transaction maturity.
UNDERWRITING -- GENERAL. Newcourt's underwriting standards are intended to
evaluate a prospective customer's credit standing and repayment ability. 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 account executive's reasons 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. In cases where customers cannot
readily provide such information, certain exceptions are permissible subject to
the credit authority of Newcourt's experienced credit officers. 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. 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.
EXTERNAL CREDIT RATING SYSTEM (COVENANT-BASED RATING). 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.
INTERNAL CREDIT RATING SYSTEM (ASSET-BASED RATING). 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 of 5 and will enter
into a new transaction with a potential End-User rating of 4 only in special
circumstances. Newcourt USA's goal is to maintain an overall credit quality of
3 or better throughout its portfolio.
ADVANCED CREDIT SCORING SYSTEM. A portion of the portfolio, representing
smaller ticket commercial assets originated through certain of its vendor
programs, is underwritten utilizing computerized credit scoring models. The
computer makes the initial credit decision after consideration of the credit
application data and credit bureau information based on statistical
61
<PAGE>
historical loss analysis and developed in conjunction with 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.
VENDOR PROGRAMS. 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 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.
PORTFOLIO MONITORING
Delinquency is tracked and calculated monthly for each major portfolio
segment, including segmentation by classification of days past due. Credit
losses are monitored each month and are compared with credit losses for previous
months. The portfolio of assets owned and managed by Newcourt is monitored with
the assistance of a comprehensive software featuring multi-currency processing
functions, cash forecasting, customized data retrieval and tax functions. The
degree to which accounts are reviewed is based upon outstanding balances as well
as risk ratings. 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. A formal review of any account may be performed, if a
credit officer determines that there appears to be a financial impairment in the
End-User's repayment ability. Newcourt reviews these policies on a regular
basis, taking into account changes in its asset portfolio mix including average
loan balances, vendor program additions and loss levels. Any changes are
subject to approval by a committee of the Board of Directors.
CONTRACT COLLECTIONS
Newcourt USA's portfolio management unit is 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 is also 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 pursuant to its credit and collection policy. 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
180 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 or wire transfer to a Newcourt USA's lock-box account.
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'
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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 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 write-off policy will be periodically reviewed and
modified.
READINESS FOR YEAR 2000
Many existing computer programs use only two digits to identify a year in
the date field. These programs could fail or produce erroneous results during
the transition from the Year 1999 to the Year 2000.
Newcourt is addressing the Year 2000 issue from a global perspective. In
early 1998, Newcourt established a global Year 2000 Program Office to provide
oversight from both a business and technical perspective. The program will
coordinate vendors, consultants and regional Year 2000 resources. Newcourt,
including Newcourt USA, plans to convert its critical systems by the end of 1998
with conversion of remaining systems and compliance testing and certification to
be completed in 1999. As part of the integration strategy, Newcourt plans to
aggressively consolidate onto a limited set of identified Year 2000 compliant
systems in order to achieve operational efficiencies and to minimize the Year
2000 exposures and costs. Newcourt has commenced work on various types of
contingency planning to address potential problem areas with internal systems
and with suppliers and other third parties. Management expects that assessment,
remediation and contingency planning activities will be on-going throughout 1998
and 1999 with the goal of appropriately resolving all material internal systems
and third party issues.
Management does not anticipate that the total cost to Newcourt of these
Year 2000 compliance activities will be material to its financial position or
results of operations in any given year. None of the costs relating to such
activities will be paid out of the Trust Assets.
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 Pooling and Servicing Agreement, Contracts which were sold to
the Trust Depositor pursuant to the Transfer and Sale Agreement.
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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 Pooling 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 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 and the Subordinated
Securities 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 the Subordinated Securities and possible reductions in the amount
of payments of principal of and interest on the Notes and the Subordinated
Securities 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 true leases (excluding any
Excluded Residual Investment), finance leases, loans, installment payment
obligations, receivables and other obligations received from Newcourt or its
affiliates. As of the date of this Prospectus, the Trust Depositor is not
subject to any legal proceedings, including any proceedings under any Insolvency
Laws.
Newcourt USA has warranted to the Trust Depositor that the conveyance of
the Contracts to the Trust Depositor pursuant to the Transfer and Sale Agreement
is a valid sale and transfer of such Contracts to the Trust Depositor.
Additionally, Newcourt USA has been advised by its counsel that in the event
Newcourt USA were to become a debtor under the United States Bankruptcy Code,
the transfer of the Contracts from the Newcourt USA 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. As of the date of this prospectus,
Newcourt USA is not subject to any legal proceedings involving the Contracts or
any insolvency proceedings.
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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
Pooling and Servicing Agreement and the Indenture (the "OPERATIVE DOCUMENTS").
Copies of the Pooling 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 Pooling 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 Class A-1 Notes Maturity Date, the Class A-2 Notes Maturity
Date, the Class A-3 Notes Maturity Date, the Class A-4 Notes Maturity Date, the
Class B Notes Maturity Date or the Class C Notes Maturity Date, as applicable,
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.
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
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an Event of Default, 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, 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 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, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes and Class B Notes.
PRINCIPAL
The stated maturity of the Class A-1 Notes is the November 1999
Distribution Date; the stated maturity of the Class A-2 Notes is the September
2000 Distribution Date; the stated maturity of the Class A-3 Notes is the
December 2002 Distribution Date; the stated maturity of the Class A-4 Notes is
the May 2004 Distribution Date; the stated maturity of the Class B Notes is the
April 2005 Distribution Date; and the stated maturity of the Class C Notes is
the August 2005 Distribution Date. The Class D Notes and the Class E Notes will
have a stated maturity of the December 2005 Distribution Date and August 2006
Distribution Date, respectively. 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 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 the Class A-1 Notes
Maturity Date, the Class A-2 Notes Maturity Date, the Class A-3 Notes Maturity
Date, the Class A-4 Notes Maturity Date, the Class B Notes Maturity Date or the
Class C Notes Maturity Date, as applicable. Prior thereto, amounts to be
applied in reduction of the outstanding Principal Amount
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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.
"Additional Principal" with respect to any Distribution Date, an
amount equal to (a) the Total Principal Payment Amount, less (b) the sum 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, the Class C Principal
Payment Amount, the Class D Principal Payment Amount and the Class E
Principal Payment Amount.
"AGGREGATE PRINCIPAL AMOUNT" means, for any group of Notes or
Subordinated Notes at any date of determination, the sum of the Principal
Amounts of such Notes at such date.
"CLASS A PERCENTAGE" means 87.5912% (approximately).
"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 5.4745% (approximately).
"CLASS C PERCENTAGE" means 2.9197% (approximately).
"CLASS D PERCENTAGE" means 1.8248% (approximately).
"CLASS E PERCENTAGE" means 2.1898% (approximately).
"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, the Total Principal Payment Amount and (ii) following the
occurrence of an Event of Default, all remaining Available Amounts after
payment has been made in accordance with paragraphs (A) through (H) in
"Description of the Notes -- Allocations; Following an Event of Default".
"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, the difference between (1) the sum
of the Principal Amounts of the Class A-2, Class A-3 and Class A-4 Notes
immediately prior to such Distribution Date, and (2) the Class A Target
Principal Amount, and (B) following the occurrence of an Event of Default,
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".
"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, the difference
between (1) the sum of the Principal Amounts of the Class A-3 and Class A-4
Notes immediately prior to such Distribution Date, and (2) the Class A
Target Principal Amount, and (B) following the occurrence of an Event of
Default, all remaining Available Amounts after
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payment has been made in accordance with paragraphs (A) - (J) in
"DESCRIPTION OF THE NOTES -- ALLOCATIONS; FOLLOWING AN EVENT OF DEFAULT".
"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, the difference between (1) the Principal Amount of the Class A-4
Notes immediately prior to such Distribution Date, and (2) the Class A
Target Principal Amount, and (B) following the occurrence of an Event of
Default, 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".
"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, the difference between (1) the Principal
Amount of the Class B Notes immediately prior to such Distribution Date,
and (2) the greater of (x) the Class B Target Principal Amount and (y) the
Class B Floor and (B) following the occurrence of an Event of Default, 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".
"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, the difference between (1) the Principal
Amount of the Class C Notes immediately prior to such Distribution Date,
and (2) the greater of (x) the Class C Target Principal Amount and (y) the
Class C Floor, and (B) following the occurrence of an Event of Default, 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".
"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, the difference between (1) the Principal
Amount of the Class D Notes immediately prior to such Distribution Date,
and (2) the greater of (x) the Class D Target Principal Amount and (y) the
Class D Floor, and (B) following the occurrence of an Event of Default, all
remaining Available Amounts after payment has been made in accordance with
paragraphs (A) - (N) in "DESCRIPTION OF THE NOTES -- ALLOCATIONS; FOLLOWING
AN EVENT OF DEFAULT".
"CLASS E PRINCIPAL PAYMENT AMOUNT" means, with respect to the Class E
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 E Notes and (ii) (A) prior to the
occurrence of an Event of Default, the difference between (1) the Principal
Amount of the Class E Notes immediately prior to such Distribution Date,
and (2) the greater of (x) the Class E Target Principal Amount and (y) the
Class E Floor, and (B) following the occurrence of an Event of Default, all
remaining Available Amounts after payment has been made in accordance with
paragraphs (A) - (O) in "DESCRIPTION OF THE NOTES -- ALLOCATIONS; FOLLOWING
AN EVENT OF DEFAULT".
"CLASS A TARGET PRINCIPAL AMOUNT" means, with respect to any
Distribution Date, the product of (a) the Class A Percentage 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.
"CLASS B TARGET PRINCIPAL AMOUNT" means, with respect to any
Distribution Date, the product of (a) the Class B Percentage 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.
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"CLASS C TARGET PRINCIPAL AMOUNT" means, with respect to any
Distribution Date, the product (a) the Class C Percentage 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.
"CLASS D TARGET PRINCIPAL AMOUNT" means, with respect to any
Distribution Date, the product of (a) the Class D Percentage 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.
"CLASS E TARGET PRINCIPAL AMOUNT" means, with respect to any
Distribution Date, the product of (a) the Class E Percentage 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.
"CLASS B FLOOR" means, with respect to each Distribution Date, the
minimum of (i) the Principal Amount of the Class B Notes immediately prior
to such Distribution Date and (ii) (a) 2.40% of the ADCB of the Contract
Pool as of the Closing Date, plus (b) the Principal Differential with
respect to such Distribution Date, minus (c) the sum, immediately prior to
such Distribution Date, of the Principal Amount of the Class C Notes, the
Principal Amount of the Class D Notes, the Principal Amount of the Class E
Notes and the amount on deposit in the Reserve Account after giving effect
to amounts to be withdrawn on such Distribution Date.
"CLASS C FLOOR" means, with respect to each Distribution Date, (a)
1.25% of the ADCB of the Contract Pool as of the Closing Date, plus (b) the
Principal Differential with respect to such Distribution Date, minus (c)
the sum, immediately prior to such Distribution Date, of the Principal
Amount of the Class D Notes, the Principal Amount of the Class E Notes and
the amount on deposit in the Reserve Account after giving effect to amounts
to be withdrawn on such Distribution Date, PROVIDED, HOWEVER, that if the
Principal Amount of the Class B Notes is less than or equal to the Class B
Floor, on such Distribution Date, the Class C Floor will equal the
Principal Amount of the Class C Notes utilized in the calculation of the
Class B Floor for such Distribution Date.
"CLASS D FLOOR" means, with respect to each Distribution Date, (a)
0.85% of the ADCB of the Contract Pool as of the Closing Date, plus (b) the
Principal Differential with respect to such Distribution Date, minus (c)
the sum, immediately prior to such Distribution Date, of the Principal
Amount of the Class E Notes and the amount on deposit in the Reserve
Account after giving effect to amounts to be withdrawn on such Distribution
Date, PROVIDED, HOWEVER, that if the Principal Amount of the Class C Notes
is less than or equal to the Class C Floor, on such Distribution Date, the
Class D Floor will equal the Principal Amount of the Class D Notes utilized
in the calculation of the Class C Floor for such Distribution Date.
"CLASS E FLOOR" means, with respect to each Distribution Date, (a)
0.60% of the ADCB of the Contract Pool as of the Closing Date, plus (b) the
Principal Differential with respect to such Distribution Date, minus (c)
the amount on deposit in the Reserve Account after giving effect to amounts
to be withdrawn on such Distribution Date, PROVIDED, HOWEVER that if the
Principal Amount of the Class D Notes is less than or equal to the Class D
Floor, on such Distribution Date, the Class E Floor will equal the
Principal Amount of the Class E Notes utilized in the calculation of the
Class D Floor for such Distribution Date.
"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 on or after the
applicable Cutoff Date discounted monthly at the Discount Rate; (B) as of
the Statistic Calculation Date, the present value of all of the remaining
Scheduled Payments becoming due under such Contract on or after the Initial
Cutoff Date discounted monthly at the Statistic Discount Rate; and (C) 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 (or the related Cutoff Date, if later)
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.
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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
Pooling and Servicing Agreement and to be applied in reduction of such
principal amount in accordance therewith.
"PRINCIPAL DIFFERENTIAL" means, with respect to each Distribution
Date, an amount equal to the excess, if any, of (a) the total of (i) the
Principal Amount of the Notes and Subordinated Notes as of the immediately
preceding Distribution Date after giving effect to all payments made on
such Distribution Date, minus (ii) the lesser of (A) the Total Principal
Payment Amount related to such Distribution Date and (B) Available Amounts
(including amounts to be withdrawn from the Reserve Account on such
Distribution Date) remaining after the payment of amounts owing the
Servicer and in respect of interest on the Notes and the Subordinated Notes
on such Distribution Date over (b) the ADCB of all Contracts held by the
Trust as of the last day of the Collection Period related to such
Distribution Date.
"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 or Excluded Residual Investment).
"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. On the second Business Day prior to each
Distribution Date (each, a "DETERMINATION DATE"), prior to the occurrence of an
Event of Default, 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, and the Reserve Fund if necessary, in
order to make the following payments or allocations from the Available Amounts
(which shall include amounts, if any, withdrawn from the Reserve Fund) 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;
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(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 Indenture Trustee, on behalf of the Class D 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 E 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;
(K) pay to the Indenture Trustee, on behalf of the Class A-1 Notes,
the Class A-1 Principal Payment Amount for such Distribution
Date;
(L) pay to the Indenture Trustee, on behalf of the Class A-2 Notes,
the A-2 Principal Payment Amount for such Distribution Date;
(M) pay to the Indenture Trustee, on behalf of the Class A-3 Notes,
the Class A-3 Principal Payment Amount for such Distribution
Date;
(N) pay to the Indenture Trustee, on behalf of the Class A-4 Notes,
the Class A-4 Principal Payment Amount for such Distribution
Date;
(O) pay to the Indenture Trustee, on behalf of the Class B Notes, the
Class B Principal Payment Amount for such Distribution Date;
(P) pay to the Indenture Trustee, on behalf of the Class C Notes, the
Class C Principal Payment Amount for such Distribution Date;
(Q) pay to the Indenture Trustee, on behalf of the Class D Notes the
Class D Principal Payment Amount for such Distribution Date;
(R) pay to the Indenture Trustee, on behalf of the Class E Notes the
Class E Principal Payment Amount for such Distribution Date;
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(S) pay the Additional Principal, if any, to the Class A Notes
sequentially until the Principal Amount of each of the Class A
Notes have been reduced to zero, then to the Class B Notes until
the Principal Amount of the Class B Notes has been reduced to
zero, then to the Class C Notes until the Principal Amount of the
Class C Notes has been reduced to zero, then to the Class D Notes
until the Principal Amount of the Class D Notes has been reduced
to zero, then to the Class E Notes until the Principal Amount of
the Class E Notes has been reduced to zero;
(T) pay to the Indenture Trustee for deposit into the Reserve Fund
any Available Amounts not necessary to make the payments
described in paragraph (A) through (S) above to the extent that
such amount is necessary to meet the Reserve Fund Amount; and
(U) any excess shall be paid to the holder of the Certificate.
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 and any Excluded Residual
Investment, as well as Prepayments received on or before, the last day of the
Collection Period immediately preceding such Distribution Date; (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 and (iv)
any amounts received with respect to the Guaranteed Residual Investments.
Prior to an Event of Default, if the Available Amounts are less than the
amount required to make in full the payments set forth in paragraphs (A) through
(S) above, amounts held in the Reserve Fund shall be withdrawn in order for any
of such payments to be made and such amounts will be considered as Available
Amounts for such purpose only.
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.
FOLLOWING AN EVENT OF DEFAULT. On each Determination Date after the
occurrence of an Event of Default, 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, and the Reserve
Fund if necessary, in order to make the following payments or allocations from
the Available Amounts (which shall include amounts, if any, withdrawn from the
Reserve Fund) 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 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 are less than
the full amount required to be so paid, such remaining
Available Amounts shall be allocated to each Class A-1 Note,
Class A-2 Note, Class A-3 Note and Class A-4 Note PRO RATA based
on the outstanding principal amount thereof;
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(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 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;
(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 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;
(G) pay to the Indenture Trustee, on behalf of the Class D Notes, an
amount equal to interest accrued in respect of the Class D 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 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;
(H) pay to the Indenture Trustee, on behalf of the Class E Notes, an
amount equal to interest accrued in respect of the Class E 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 are less than the full amount
required to be so paid, such remaining Available Amounts shall
be allocated to each Class E Note PRO RATA based on the
outstanding principal amount thereof;
(I) 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 are 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;
(J) 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 are 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;
(K) 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 are 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;
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(L) 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 are 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;
(M) pay to the Indenture Trustee, on behalf 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 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;
(N) pay to the Indenture Trustee, on behalf 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 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;
and
(O) pay to the holders of the Class D 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 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
Notes principal in full, then such excess shall be paid to the
holder of the Class E Notes.
(P) pay to the holders of the Class E Notes the Class E 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
E 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 E
Notes principal in full, then such excess shall be paid to the
holder of the Certificate.
Following an Event of Default, if the Available Amounts are less than the
amount required to make in full the payments set forth in paragraphs (A) through
(P) above, amounts held in the Reserve Fund shall be withdrawn in order for any
of such payments to be made and such amounts will be considered as Available
Amounts for such purpose only.
RESERVE FUND
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 Initial Deposit.
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 Certificate. Upon any
such distributions to the holder of the Certificate, the Noteholders and the
holders of the Subordinated Notes will have no further rights in, or claims to,
such amounts.
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The "RESERVE FUND AMOUNT" shall be an amount equal to the lesser of (a) the
Reserve Fund Initial Deposit, and (b) the Aggregate Principal Amount of the
Notes and the Subordinated Notes as of such date of determination.
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 or principal on the Notes and the
Subordinated NOTES as described herein.
DEFAULTED CONTRACTS
A Contract will automatically be deemed to be in default (a "DEFAULTED
CONTRACT") if (i) it is more than 180 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
The Servicer, for the benefit of the Noteholders and the Subordinated
Noteholders, shall cause to be established and maintained in the name of the
Indenture Trustee in its corporate trust department 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
and the Subordinated 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)
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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 Pooling
and Servicing Agreement.
REPLACEMENT ACCOUNTS
If any institution with which any of the accounts established pursuant to
the Pooling 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" unless and until an Event of
Default has occurred, in which case allocations of Available Amounts will be
made as described above under "--ALLOCATIONS; FOLLOWING AN EVENT OF DEFAULT".
An "EVENT OF DEFAULT" refers to any of the following events:
(a) failure to pay the Principal Amount of any Note or Subordinated
Note, if any, on its related Maturity Date;
(b) a default for five or more calender days in the payment of
interest due on any Class A Note, Class B Note, Class C Note,
Class D Note or Class E Note;
(c) (i) failure on the part of the Seller to make any payment or
deposit required under the Pooling 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, Pooling and Servicing Agreement or the Indenture,
which failure has a material adverse effect on the Noteholders
and Subordinated 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 Pooling 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
and Subordinated 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 Pooling 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 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), (d) or (f)
above, an Event of Default with respect to the Notes and Subordinated Notes
shall not be deemed to have occurred 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, the Seller, the Servicer
and the Owner Trustee.
If an Insolvency Event relating to the Trust Depositor occurs, pursuant to
the Pooling 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 Pooling 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, (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 and (v) from
and after the payment in full of the Class D Notes outstanding, Class E Notes
evidencing more than 66 2/3% of the Aggregate Principal Amount of the Class E
Notes.
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 paid on the Distribution Date with respect to each Collection Period
from the Available Amounts.
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 expressly stated in the Pooling 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 Pooling 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".
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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 Closing 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
Contract 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 and the Class E 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 180 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, 1999,
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
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
Pooling 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
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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 and filing tax returns for the trust (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
Underwriters, 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 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
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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 (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.
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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 registration, 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
presentment 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
Receivable-Backed Notes with an aggregate principal balance of $14,064,888 (the
"CLASS D NOTES") and [ ]% Class E Receivable-Backed Notes with an
aggregate principal balance of $16,877,866 (the "CLASS E NOTES" and together
with the Class D Notes, collectively the "SUBORDINATED NOTES"). 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 Class F Certificate with
an initial certificate balance of $[ ] (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
Certificate 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
POOLING AND SERVICING AGREEMENT
The following is a summary of the material terms of the Transfer and Sale
Agreement and the Pooling 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 Pooling 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 Pooling 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 Certificateholder) 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 October 15, 1998 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 Pooling and Servicing Agreement, such interests in the
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related Contracts, security interests in 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 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 security interests in the 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 or Excluded Residual Investment, (ii) security interests in 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
Pooling and Servicing Agreement and the Indenture.
Newcourt USA, as Servicer under the Pooling 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
Pooling 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 Pooling 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 (except with respect to clause (viii) below, which
representation and warranty is made only as of the Closing 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 (except with respect
to clause (viii) below, which representation and warranty is made only as of the
Closing 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
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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 are not being sold, transferred, 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 (except with
respect to the Minimum Value Filing Exception) or, in the case of any Vendor
Loan, related Applicable Security or (B) in the case of a Contract secured by
Vehicles, (1) within 60 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 Obligor's
billing address is 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 canceled 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 Pooling 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) to the Seller's knowledge, each
Lessee has represented to 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 the 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". Contracts with respect to which the
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representations in clauses (iii), (xv) and (xxiv) are not true shall also be
Eligible Contracts if all representations other than such representations are
true and 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.
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 Pooling
and Servicing Agreement, (iii) liens in favor of the Trust created pursuant to
the Pooling and Servicing Agreement, and (iv) liens in favor of the Indenture
Trustee created pursuant to the Pooling 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 Pooling and Servicing Agreement, (iv) liens in favor of the
Trust created pursuant to the Pooling and Servicing Agreement; (v) liens in
favor of the Indenture Trustee created pursuant to the Pooling 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 Pooling 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 (except with respect to the
Minimum Value Filing Exception) 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 (except with respect to the
Minimum Value Filing Exception) (Secondary Contracts which satisfy all of the
foregoing representations shall be termed "ELIGIBLE SECONDARY CONTRACTS").
The Trust Depositor will represent and warrant in the Pooling 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
(except with respect to the Minimum Value Filing Exception); (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
(except with respect to the Minimum Value Filing Exception); (v) that the Trust
Depositor holds a duly perfected lien of the first priority on each Secondary
Contract (except with respect to the Minimum Value Filing Exception) 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 (except with respect to the Minimum Value
Filing Exception).
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 Pooling 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 the Seller
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and any interest in Equipment transferred that is subject to such Contract no
later than 90 days after the 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 Certificateholder 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
Certificateholder for a breach of a representation or warranty under the Pooling
and Servicing Agreement made by the Trust Depositor with respect to such a
Contract.
Pursuant to the Pooling 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
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 Statistic Calculation Date (calculated utilizing the
Statistical Discount Rate) as follows:
(i) the ADCB of all End-User Contracts with Obligors that are governmental
entities or municipalities does not exceed 1.24% 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 11.94% of the ADCB of the Contract Pool;
and
(iii) the ADCB of all End-User Contracts with Obligors who comprise the
five (5) largest Obligors (measured by ADCB as of the date of
determination) does not exceed 4.45% 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
will be obligated to purchase from the Trust Depositor, any Contract transferred
by the 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 the 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 Certificateholder for a breach of
one of the foregoing representations or warranties.
Pursuant to the Pooling 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 "EXCESS
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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 Pooling 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 Pooling and Servicing Agreement except where arising
out of Indemnified Party's bad faith, willful misconduct or gross negligence.
Pursuant to the Pooling and Servicing Agreement, the Servicer, irrevocably and
unconditionally, (i) submits for itself and its property in any legal action
arising out of the Pooling 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 Pooling 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 Pooling 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 Pooling 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 Pooling 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 Pooling 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 Pooling 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 Pooling 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.
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CERTAIN OTHER MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling 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 Pooling and Servicing
Agreement.
Any person into which, in accordance with the Pooling 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
Pooling 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 Pooling 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 has not cured 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 Subordinated Notes 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 Pooling
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 Pooling 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 Pooling 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 Pooling and Servicing Agreement on or before the date occurring
five Business Days after notice from the Indenture Trustee or after
discovery by the Servicer; 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 Pooling and Servicing Agreement which has a material
adverse effect on the Noteholders and holders of the Subordinated
Notes 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 and holders of the
Subordinated Notes or Certificateholder or the Indenture Trustee on
behalf of such Noteholders of Notes or holders of the Subordinated
Notes aggregating not less than 25% of the Principal Amount of any
Class 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 Certificateholder for such
period; or
(c) any representation, warranty or certification made by the Servicer in
the Pooling and Servicing Agreement or in any certificate delivered
pursuant to the Pooling and Servicing Agreement shall prove to have
been incorrect when made, which has a material adverse effect on the
Noteholders and holders of the Subordinated Notes 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
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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 and holders of the Subordinated Notes
or the Certificateholder or by the Indenture Trustee on behalf of
Noteholders of Notes or holders of the Subordinated Notes 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
(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 Pooling 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
On or before March 31 of each calendar year, the Servicer will deliver to
the Indenture Trustee a statement from a nationally recognized accounting firm
to the effect that such firm has (i) audited the financial statements of the
Servicer and issued its report thereon and that such audit was made in
accordance with generally accepted auditing standards, which require that such
accounting firm plan and perform the audit to obtain reasonable assurance as to
whether the financial statements of the Servicer are free of material
misstatement, and (ii) examined management's assertion that the Servicer
maintained effective control over the servicing of equipment lease contracts,
installment sales contracts, promissory notes, loan and security agreements
and/or other similar types of receivables under servicing agreements
substantially similar one to another, in accordance with established or stated
criteria, and that such examination was performed in accordance with standards
established by the American Institute of Certified Public Accountants.
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 TO THE POOLING AND SERVICING AGREEMENT
The Pooling and Servicing Agreement may be amended from time to time by
agreement of the Owner Trustee, the Servicer, the Indenture Trustee and the
Trust Depositor without the consent of the Noteholders or holders of the
Subordinated Securities (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 Pooling 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 Pooling and Servicing Agreement or of modifying in any manner the rights of
Noteholders or the holders of the Subordinated Securities. No such amendment,
however, may
(i) increase or reduce in any manner the amount of, or delay the timing of
(a) distributions which are required to be made on any Note,
Subordinated Note or Certificate (including by way of amendment of
related definitions) or (b) the manner in which the Reserve Fund is
applied without the consent of each Noteholder or holder of a
Subordinated Security affected thereby;
(ii) change in any manner (including through amendment of related
definitions) the Noteholders or holders of Subordinated
Securities which are required to consent to any amendment to the
Pooling and Servicing Agreement; or
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(iii) make any Note, Subordinated Note or Certificate payable in money
other than Dollars without the consent of each Noteholder or
holder of a Subordinated Security affected thereby.
Promptly following the execution of any such amendment, the Indenture
Trustee shall furnish written notice of the substance of such amendment to each
Noteholder and holder of a Subordinated Security.
THE OWNER TRUSTEE
The Bank of New York (Delaware) will be the Owner Trustee under the Pooling
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 White Clay Center, Newark, Delaware 19711.
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 Pooling 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 Pooling and Servicing Agreement. In
such circumstances, a successor Owner Trustee will be appointed as provided in
the Pooling 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 Pooling and Servicing Agreement, the
Indenture Trustee will obtain the benefits of the Pooling 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" 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 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;
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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 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, 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 E Notes shall be distributed to the Class E Noteholders
ratably, without priority of any one Class E Note over any other Class
E Note, in the proportion that the aggregate amount of all accrued but
unpaid interest to the date of distribution on each Class E Note bears
to the aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class E Notes;
NINTH, 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;
TENTH, 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;
ELEVENTH, 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
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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;
TWELFTH, 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;
THIRTEENTH, 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;
FOURTEENTH, 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;
FIFTEENTH, 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;
SIXTEENTH, the balance, if any, of such installment or payment
remaining thereafter shall be distributed ratably to the Class E
Noteholders to pay in full the aggregate amount of the Class E
Principal Payment then due pursuant to or in respect of the Class E
Notes, without priority of any one Class E Note over any other Class E
Note, in the proportion that the aggregate unpaid principal amount of
each Class E Note bears to the aggregate unpaid principal amount of
all Class E Notes; and
SEVENTEENTH, the aggregate amount of Additional Principal, if any, of
such installment or payment remaining thereafter shall be paid, to the
Class A Notes sequentially until the Principal Amount of each of the
Class A Notes have been reduced to zero, then to the Class B Notes
until the Principal Amount of the Class B Notes has been reduced to
zero, then to the Class C Notes until the Principal Amount of the
Class C Notes has been reduced to zero, then to the Class D Notes
until the Principal Amount of the Class D Notes has been reduced to
zero, then to the Class E Notes until the Principal Amount of the
Class E Notes has been reduced to zero.
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" 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, 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 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 Subordinated Noteholders to the
Indenture Trustee (to the extent not previously reimbursed) shall be
distributed to the Noteholders and the Subordinated 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 such holder
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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 the Subordinated 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, 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 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 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, 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 E Notes shall be distributed to the
Class E 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 E Note over any other Class
E Note, in the proportion that the aggregate amount of all accrued but
unpaid interest to the date of distribution on each Class E Note bears
to the aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class E Notes;
EIGHTH, 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;
NINTH, 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
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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;
TENTH, 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;
ELEVENTH, 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;
TWELFTH, 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;
THIRTEENTH, 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;
FOURTEENTH, the balance, if any, of such payment remaining thereafter
shall be distributed ratably to the Class D Noteholders to pay in full
the aggregate amount of principal of the Class D Notes, 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; and
FIFTEENTH, the balance, if any, of such payment remaining thereafter
shall be distributed ratably to the Class E Noteholders to pay in full
the aggregate amount of principal of the Class E Notes, then due
pursuant to or in respect of the Class E 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 E Note over any other Class E Note, in the proportion that the
aggregate unpaid principal amount of each Class E Note bears to the
aggregate unpaid principal amount of all Class E Notes.
EVENTS OF DEFAULT; REMEDIES
If an Event of Default referred to in subparagraph (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, 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
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The Indenture Trustee with respect to the Notes and the Subordinated Notes
is Harris Trust and Savings Bank. 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 consist principally of the
distribution of monies received pursuant to the Pooling 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.
GOVERNING LAW
The Indenture will be governed by the laws of the State of New York.
AMENDMENTS TO THE INDENTURE
At any time and from time to time, the Trust 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; PROVIDED, HOWEVER, that, without the consent of each
Noteholder and Subordinated Noteholder affected thereby under the Indenture, no
such amendment, supplement, waiver or consent shall
(i) change the date of payment of any installment of
principal of or interest on any Note or Subordinated Note, or reduce
the principal amount thereof, the interest rate thereon or reduce the
amount payable with respect to such Note or Subordinated Note upon
redemption thereof, change the provisions of the Indenture relating to
the application of collections on, or the proceeds of the sale of, the
Trust Assets to payment of principal of or interest on the Notes and
Subordinated Notes, or change any place of payment where, or the coin
or currency in which, any Note or Subordinated Note or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of the provisions of the Indenture regarding the
applicable of funds available thereof to the payment of any such
amount due on the Notes or Subordinated Notes;
(ii) reduce the Principal Amount of the Notes and Subordinated
Notes or reduce the percentages used in the definition of Required
Holders the consent of which is required in connection with the
execution of a supplemental indenture (or an amendment to the
Indenture) or to waive compliance with certain provisions of the
Indenture or certain defaults under the Indenture;
(iii) reduce the percentages used in the definition of Required
Holders in connection with the sale or liquidation of Trust Assets;
(iv) modify, amend or supplement the provisions of the
Indenture relating to consent of the Noteholders and Subordinated
Noteholders to amendments, waivers and supplements to the Indenture or
the other Transaction Documents; or
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(v) permit the creation of any lien ranking prior to or on a
parity with the lien created by the Indenture with respect to the
Trust Assets.
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 Pooling 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
POOLING AND SERVICING AGREEMENT--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 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
Pooling 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
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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. Security interests in such Equipment will be
assigned 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
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 (except
with respect to the Minimum Value Filing Exception), 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. As of the Statistic Calculation Date, in
the Seller's reasonable judgment, the Discounted Contract Balance of End-User
Contracts in the Contract Pool that are secured by fixtures, is approximately
1.38% of the ADCB (calculated utilizing the Statistical Discount Rate) of the
Contract Pool.
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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 (except with respect to the Minimum Value Filing Exception), 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.
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, 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
security interests with respect to the Vehicles, the certificates of title with
respect to the Vehicles securing Contracts will not identify the Trust or the
Indenture Trustee as secured party of such Equipment. There exists a risk in
not so identifying the Trust or the Indenture Trustee as the new secured party
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. As of the Statistic
Calculation 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, is approximately 26.82% of the ADCB (calculated utilizing the
Statistical Discount Rate) 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
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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 Pooling 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 Pooling 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.
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
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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 Pooling 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 (except with respect to the Minimum
Value Filing Exception). 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.
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
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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 Pooling 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 Pooling and
Servicing Agreement.
The right of the Indenture Trustee, as secured party under the Pooling 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 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 Pooling 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". 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
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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,
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
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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.
CERTAIN 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 at their original issue price, 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, 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.
CLASSIFICATION OF THE NOTES AND THE ISSUER
The Trust and the Noteholders (by acceptance of a beneficial interest in a
Note) will agree to treat the Notes as indebtedness for all United States tax
purposes. In connection with the issuance of the Notes, Tax Counsel will
deliver its opinion that, 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. In rendering these opinions, Tax Counsel has assumed that the
terms of the Trust Agreement, the Indenture, the Transfer and Sale Agreement and
the Pooling and Servicing Agreement will be complied with by the relevant
parties thereto, and that the Noteholders will comply with their obligation to
treat the Notes as indebtedness for all United States tax purposes. 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.
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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 or the Notes will prevail. If, contrary to the opinion of Tax Counsel,
the IRS successfully asserted that one or more of the Notes did not represent
debt for federal income tax purposes, such Notes might be treated as equity
interests in the Trust and the Trust might be classified as a publicly traded
partnership taxable as a corporation. If the Trust were classified as a
publicly traded partnership taxable as a corporation, the Trust would be subject
to United States federal income tax on its net income. An imposition of such
corporate-level income tax could materially reduce the amount of cash that would
be available to make payments of principal and interest on the Notes.
Alternatively, if the Trust were classified as a partnership (other than a
publicly traded partnership taxable as a corporation), the Trust itself would
not be subject to United States federal income tax. Instead, holders of Notes
that were determined to be equity interests in such partnership would be
required to take into account their allocable share of the Trust's income and
deductions. Such treatment may have adverse federal income tax consequences for
certain Noteholders. 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 actually made by 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.
TAXATION OF INTEREST INCOME TO NOTEHOLDERS
Based upon Tax Counsel's interpretation of the definition of "QUALIFIED
STATED INTEREST" and because it is expected that the stated principal amount of
each class of Notes will not exceed the issue price of such Notes by an amount
equal to or greater than the statutory, DE MINIMIS amount (I.E., 0.25% of each
class of the Notes' stated principal amount multiplied by the weighted average
maturity of each class of Notes), the stated interest on each class of Notes
will be taxable as ordinary income for federal income tax purposes when received
or accrued in accordance with a Noteholder's general method of tax accounting.
DISPOSITION OF NOTES
Generally, capital gain or loss will be recognized by a Noteholder on a
sale or other taxable disposition of its Notes in an amount equal to the
difference between the amount realized (other than amounts attributable to, and
taxable as, accrued interest) and the Noteholder's adjusted tax basis in such
Notes. A Noteholder's adjusted tax basis in a Note will generally equal his or
her cost increased by any OID and market discount included in income with
respect to the Note and decreased by any bond premium previously amortized and
any 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. For non-corporate
taxpayers, capital gain recognized on the disposition of a Note held for more
than one year is taxed at a maximum rate of 20%. Capital gain on the
disposition of a Note held for not more than one year is taxed at the rates
applicable to ordinary income (i.e., up to 39.6%). The distinction between
capital gain or loss and ordinary income or loss is relevant for purposes of,
among other things, limitations on the deductibility of capital losses. 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
Noteholder (other than Noteholders who are not subject to the reporting
requirements) will be required to provide, under penalties of perjury, a
certificate (Form W-9) containing the Noteholder's name, address, correct
federal taxpayer identification number and a statement that the holder is not
subject to backup withholding. Should a non-exempt Noteholder fail to provide
the required certification, the Indenture Trustee will be required to withhold
(or cause to be withheld) 31% of the interest otherwise payable to the
Noteholder, and remit the withheld amounts to the IRS as a credit against the
Noteholder's federal income tax liability.
CERTAIN TAX CONSEQUENCES TO FOREIGN INVESTORS
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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 persons 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 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 Indenture
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 AND LOCAL TAX CONSEQUENCES
Because of the differences in state and local tax laws and their
applicability to different investors, it is not possible to summarize the
potential state and local tax consequences of holding the Notes. ACCORDINGLY,
PURCHASERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISERS REGARDING THE STATE
AND LOCAL 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
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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.
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, any of the Underwriters, 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, any of the Underwriters, the Seller, 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 underwriting agreement
dated [ ], 1998 for the sale of the Notes, the Trust Depositor has
agreed to sell to First Union Capital Markets, a division of Wheat First
Securities, Inc., and the other underwriters listed on the cover of this
Prospectus (the "Underwriters") and the Underwriters have separately agreed to
purchase from the Trust Depositor, the principal amount of the Notes set forth
opposite each of their names below:
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<TABLE>
<CAPTION>
<S> <C>
Aggregate Principal Amount
to be Purchased
--------------------------------
Class A-1 Receivable-Backed Notes, Series 1998-1
------------------------------------------------
First Union Capital Markets
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
Aggregate Principal Amount
to be Purchased
Class A-2 Receivable-Backed Notes, Series 1998-1
------------------------------------------------
First Union Capital Markets
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
Aggregate Principal Amount
to be Purchased
--------------------------------
Class A-3 Receivable-Backed Notes, Series 1998-1
------------------------------------------------
First Union Capital Markets
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
Aggregate Principal Amount
to be Purchased
--------------------------------
Class A-4 Receivable-Backed Notes, Series 1998-1
------------------------------------------------
First Union Capital Markets
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
Aggregate Principal Amount
to be Purchased
--------------------------------
Class B Receivable-Backed Notes, Series 1998-1
----------------------------------------------
First Union Capital Markets
Aggregate Principal Amount
to be Purchased
--------------------------------
Class C Receivable-Backed Notes, Series 1998-1
----------------------------------------------
First Union Capital Markets
</TABLE>
In the underwriting agreement, 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.
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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-1 Notes, [ ]% of the initial principal amount of the
Class A-2 Notes, [ ]% of the initial principal amount of the Class A-3
Notes and [ ]% of the initial principal amount of the Class A-4 Notes. The
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-1 Notes, [
]% of the initial principal amount of the Class A-2 Notes, [ ]% of the
initial principal amount of the Class A-3 Notes and [ ]% of the initial
principal amount of the Class A-4 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 Underwriting Agreement provides that Newcourt, Newcourt USA and the
Trust Depositor, jointly and severally, will indemnify the Underwriters 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.
First Union Capital Markets 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 Capital Markets 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 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+", "P-1" and "D-1+" , that the Class A-2 Notes be rated at
least "AAA", "AAA" and "AAA" , that the Class A-3 Notes be rated at least "AAA",
"AAA" and "AAA", that the Class A-4 Notes be rated at least "AAA", "AAA" and
"AAA", that the Class B Notes be rated at least "A", "A2" and "A+", and that
the Class C Notes be rated at least "BBB", "BAA3" and "BBB", by Standard &
Poor's, Moody's Investors Service and Duff & Phelps Credit Rating Co.,
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 effect 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
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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.
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 Underwriters will be
passed upon by Cadwalader, Wickersham & Taft, New York, New York.
EXPERTS
The Balance Sheet of the Trust at October 1, 1998 appearing in this
Prospectus have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein.
109
<PAGE>
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
BALANCE SHEET AS OF OCTOBER 1, 1998
<TABLE>
<S> <C>
Assets -- Cash $0
Beneficial Equity $0
Liabilities $0
</TABLE>
NOTES TO THE BALANCE SHEET
Newcourt Equipment Trust Securities 1998-1 (the "Trust") is a limited purpose
business trust established under the laws of the State of Delaware and was
formed on August 13, 1998 by Newcourt Receivables Corporation II (the "Trust
Depositor") and The Bank of New York (Delaware) (the "Owner Trustee") pursuant
to the Trust Agreement dated as of August 13, 1998 (as amended and restated, the
"Trust Agreement") between the Trust Depositor and the Owner Trustee. The
activities of the Trust are limited by the terms of the Trust Agreement to
acquiring, owning and managing lease and loan contracts and related assets,
issuing and making payments on notes and subordinate securities and other
activities related thereto. Prior to October 1, 1998, the Trust did not conduct
any activities.
The Trust Depositor will pay all fees and expenses related to the organization
and operations of the Trust (including any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States or any other domestic taxing authority upon the Trust).
The Trust Depositor has also agreed to indemnify the Trustees and certain other
persons.
110
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Trustee of
Newcourt Equipment Trust Securities 1998-1
We have audited the accompanying balance sheet of Newcourt Equipment Trust
Securities 1998-1 (the "Trust"), as of October 1, 1998. This balance sheet is
the responsibility of the Trust's management. Our responsibility is to express
an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of the Trust at October 1, 1998 in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
October 15, 1998
111
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
ADCB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17, 65
Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13, 64
Additional Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . .10, 48
Additional Contract Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . 5
Additional Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Adjusted Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
Aggregate Discounted Contract Balance. . . . . . . . . . . . . . . . . . .17, 65
Aggregate Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . .65
Article 2A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28, 99
Available Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Bankruptcy Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26, 97
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cedel Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 7, 80
Class A Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6, 66
Class A Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Class A Target Principal Amount. . . . . . . . . . . . . . . . . . . . . . . .67
Class A-1 Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-1 Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Class A-1 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-1 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
Class A-1 Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . .17
Class A-1 Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . .66
Class A-2 Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-2 Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Class A-2 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
Class A-2 Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . .17
Class A-2 Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . .66
Class A-3 Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-3 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . .13, 14
Class A-3 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
Class A-3 Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . .17
Class A-3 Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . .66
Class A-4 Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-4 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class A-4 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Class A-4 Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . .17
Class A-4 Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . .66
Class B Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class B Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Class B Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . .13, 90
Class B Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
Class B Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . .17
Class B Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Class B Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . .66
Class B Target Principal Amount. . . . . . . . . . . . . . . . . . . . . . . .67
Class C Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class C Noteholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Class C Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class C Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
Class C Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . .17
112
<PAGE>
Class C Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Class C Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . .66
Class D Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class D Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Class D Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 79
Class D Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . .17
Class D Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Class D Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . .67
Class E Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Class E Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Class E Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 79
Class E Notes Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . .17
Class E Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66
Class E Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . .67
Cleanup Call Condition . . . . . . . . . . . . . . . . . . . . . . . . . .17, 76
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Code Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 73
Collection Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Conditional Payment Rate . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Contract Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Contracts Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cooperative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
CPR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
CSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Defaulted Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Discount Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18, 82
Discounted Contract Balance. . . . . . . . . . . . . . . . . . . . . . . .17, 68
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 6
DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Early Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Early Termination Contract . . . . . . . . . . . . . . . . . . . . . . . . . .10
Eligible Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . .82, 83
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
Eligible Secondary Contract. . . . . . . . . . . . . . . . . . . . . . . . . .83
Eligible Secondary Contracts . . . . . . . . . . . . . . . . . . . . . . . . .83
End-User . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 83
End-User Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 44
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
ERISA Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Euroclear. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Excess Concentration Amount. . . . . . . . . . . . . . . . . . . . . . . . . .84
Excess Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
113
<PAGE>
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Excluded Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Excluded Residual Investment . . . . . . . . . . . . . . . . . . . . . . . . .47
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
Financed Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 45
Financing Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Guaranteed Residual Investment . . . . . . . . . . . . . . . . . . . . . . . .47
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
Indirect Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Ineligible Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
Initial Class A-1 Note Principal Balance . . . . . . . . . . . . . . . . . . . 6
Initial Class A-2 Note Principal Balance . . . . . . . . . . . . . . . . . . . 6
Initial Class A-3 Note Principal Balance . . . . . . . . . . . . . . . . . . . 6
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
Initial Class E Note Principal Balance . . . . . . . . . . . . . . . . . . . . 7
Initial Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Insolvency Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Investment company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
IPA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Minimum Value Filing Exception . . . . . . . . . . . . . . . . . . . . . . . .24
MLA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
MLA Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Monthly Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
Newcourt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Newcourt Entity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
Newcourt USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
Note Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
NRC II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Obligor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 83
Operative Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Optional Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Owner Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Prepaid Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Prepayment Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
Principal Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Program Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Program Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
114
<PAGE>
PTCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Qualified Institution. . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
Rating Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Required Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Reserve Fund Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
Reserve Fund Initial Deposit . . . . . . . . . . . . . . . . . . . . . . . . .13
Residual Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
S&P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 2
Scheduled Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . .18, 68
Secondary Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Secured Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 44
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
Service Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 5
Servicer Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19, 85
Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 12, 44
Servicing Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19, 75
Servicing Fee Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . .75
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 12, 44
Statistic Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Statistical Discount Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Subject Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Subordinated Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 79
Subordinated Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .2, 7
Substitute Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . .10, 48
Substitute Contract Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . 5
Tax Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Termination Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78
TIA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92
Title Registry Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Total Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . . .68
Transfer and Sale Agreement. . . . . . . . . . . . . . . . . . . . . . 2, 30, 80
Transfer Deposit Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . .83
Transferred Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81
Transferred Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Transferred Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
True Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 7
Trust Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83
Trust Depositor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 5
Trust Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . .80
Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Underwriter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
115
<PAGE>
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
UNL Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Vendor Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Vendor Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Vendor Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 45
Vendors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 45
VFCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Warranty Contract. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11, 84
</TABLE>
116
<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 UNDERWRITERS. 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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... 4
SUMMARY OF TERMS.......................................................... 5
RISK FACTORS.............................................................. 22
USE OF PROCEEDS........................................................... 29
THE TRUST................................................................. 30
THE CONTRACT POOL......................................................... 30
THE CONTRACTS............................................................. 42
PREPAYMENT AND YIELD CONSIDERATIONS....................................... 48
NEWCOURT CREDIT GROUP INC., NEWCOURT FINANCIAL USA INC and AT&T CAPITAL
CORPORATION............................................................. 58
THE TRUST DEPOSITOR....................................................... 62
DESCRIPTION OF THE NOTES.................................................. 63
THE SUBORDINATED NOTES.................................................... 79
THE CERTIFICATE........................................................... 80
CERTAIN OTHER MATTERS REGARDING THE SERVICER.............................. 85
CERTAIN LEGAL ASPECTS OF THE CONTRACTS.................................... 93
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................... 100
ERISA CONSIDERATIONS...................................................... 102
PLAN OF DISTRIBUTION...................................................... 104
RATING OF THE NOTES....................................................... 105
LEGAL MATTERS............................................................. 106
</TABLE>
UNTIL [ ], 1998, 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 EQUIPMENT
TRUST SECURITIES 1998-1
NEWCOURT RECEIVABLES
CORPORATION II
---------------------
PROSPECTUS
---------------------
UNDERWRITERS OF THE CLASS A NOTES
FIRST UNION CAPITAL MARKETS
NATIONSBANC MONTGOMERY SECURITIES LLC
CHASE SECURITIES INC.
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
UNDERWRITER OF THE CLASS B NOTES AND CLASS C NOTES
FIRST UNION CAPITAL MARKETS
[ ], 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution*
The following is an itemized list of the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
SEC Registration Fee $ 328,925.00
Printing and Engraving Expenses 45,000.00
Trustee's Fees and Expenses 24,000.00
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 320,000.00
Miscellaneous Fees 60,000.00
Total $1,085,925.00
</TABLE>
___________________________
* All amounts except the SEC Registration Fee are estimates of expenses
incurred or to be incurred in connection with the issuance and
distribution of the Notes in an aggregate principal amount assumed
for these purposes to be equal to $1,115,000,000 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
II-1
<PAGE>
Item 16. Exhibits and Financial Statements
<TABLE>
<CAPTION>
Exhibits
<S> <C>
1.1** Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Trust Depositor (filed as Exhibit
3.1 to Amendment No. 1 to the Registration Statement on Form S-1
(File No. 333-36059) and incorporated herein by reference)
3.2 Bylaws of the Trust Depositor (filed as Exhibit 3.2 to Amendment No.
1 to the Registration Statement on Form S-1 (File No. 333-36059) and
incorporated herein by reference)
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 Pooling 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)
23.2** Consent of Ernst & Young LLP
24.1* Power of Attorney (included on signature page)
25.1** Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Indenture Trustee
</TABLE>
__________________________________
* Previously filed
** Filed herewith
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 Amendment No. 2 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Chicago, State of Illinois, on October 19, 1998.
NEWCOURT RECEIVABLES CORPORATION II, as Trust
Depositor for
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: /s/ Scott Moore
------------------------------------------
Name: Scott Moore
Title: Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 2 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
** Chief Executive Officer and Director (Principal October 19, 1998
----------------------- Executive Officer)
Bradley D. Nullmeyer
** Chief Financial Officer (Principal Financial October 19, 1998
----------------------- and Accounting Officer)
Michel Beland
** Director October 19, 1998
-----------------------
Daniel A. Jauernig
** Director October 19, 1998
-----------------------
Robert J. Hicks
** Director October 19, 1998
-----------------------
Peter H. Sorensen
** /s/ Glenn Votek
------------------------------------
Glenn Votek
Attorney-in-fact
</TABLE>
<PAGE>
Registration No. 333-58677
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
NEWCOURT RECEIVABLES CORPORATION II
(Exact name of Registrant as specified in its charter)
_____________________
EXHIBIT VOLUME
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
1.1** Form of Underwriting Agreement
3.1 Certificate of Incorporation of the Trust Depositor (filed as Exhibit
3.1 to Amendment No. 1 to the Registration Statement on Form S-1
(File No. 333-36059) and incorporated herein by reference)
3.2 Bylaws of the Trust Depositor (filed as Exhibit 3.2 to Amendment No.
1 to the Registration Statement on Form S-1 (File No. 333-36059) and
incorporated herein by reference)
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 Pooling 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)
23.2** Consent of Ernst & Young LLP
24.1* Power of Attorney (included on signature page)
25.1** Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of Indenture Trustee
</TABLE>
_______________________
* Previously filed
** Filed herewith.
i
<PAGE>
NEWCOURT RECEIVABLES CORPORATION II (Trust Depositor)
NEWCOURT FINANCIAL USA INC. (Servicer)
UNDERWRITING AGREEMENT
[__________ __], 1998
First Union Capital Markets, a division of Wheat First Securities, Inc.
[Other Underwriters]
c/o First Union Capital Markets, a division of Wheat First Securities, Inc.
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 1998-1
(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 [_________ __], 1998.
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-[______]), including a form of prospectus, relating to the Notes. 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"
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc.
[__________ __], 1998 2
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.
(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
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc.
[__________ __], 1998 3
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 having jurisdiction
over the Servicer or any of its subsidiaries or any of their properties or
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc.
[__________ __], 1998 4
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 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
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc.
[__________ __], 1998 5
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 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
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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
obligated to qualify to do business in any jurisdiction in which it is not
currently so qualified; and PROVIDED, FURTHER, that the Trust Depositor
shall not be required to file a general consent to service of process in
any jurisdiction.
(f) The Trust Depositor will furnish to the Representative, without
charge, two copies of the Registration Statement (including exhibits
thereto), one of which will be signed, and to each Underwriter conformed
copies of the Registration Statement (without exhibits thereto) and, during
the prospectus delivery period. as many copies of any Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Underwriters may reasonably request.
(g) For a period from the date of this Agreement until the retirement
of the Notes, or until such time as the Underwriters shall cease to
maintain a secondary market in the Notes, whichever first occurs, the Trust
Depositor will deliver to the Underwriters (i) the annual statements of
compliance, (ii) the annual independent certified public accountants'
reports furnished to the Indenture Trustee, (iii) all documents required to
be distributed to Noteholders of the Trust and (iv) all documents filed
with the Commission pursuant to the Exchange Act or any order of the
Commission thereunder, in each case as provided to the Indenture Trustee or
filed with the Commission, as soon as such statements and reports are
furnished to the Indenture Trustee or filed or as soon thereafter as
practicable.
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(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 Commission
promulgated thereunder.
(j) For a period of 90 days from the date hereof, the Trust Depositor
will not offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or announce
any offering of, any securities collateralized by, or evidencing an
ownership interest in, any asset-backed securities of the Trust Depositor
or the Trust (other than the Notes purchased hereunder) without the prior
written consent of the Underwriters.
Section 6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
respective obligations of the several Underwriters hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations and
warranties of the Trust Depositor and the Servicer contained herein, 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
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hereunder, all transactions contemplated to be consummated under such
Transaction 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) [____________] 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) [____________] 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 Cadwalader,
Wickersham & Taft, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Underwriters
may require, and the Trust Depositor shall have furnished to such counsel
such documents as they reasonably request for enabling them to pass upon
such matters.
(g) (i) [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) [Pryor, 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'
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Information (as defined herein) from such representation), (iii) the
representations and warranties of the Servicer or the Trust Depositor,
as the case may be, contained in this Agreement and the Transaction
Agreements are true and correct in all material respects on and as of
the Closing Date, (iv) the Servicer or the Trust Depositor, as the case
may be, has complied in all material respects with all agreements and
satisfied in all material respects all conditions on its part to be
performed or satisfied hereunder and under such agreements at or prior
to the Closing Date, (v) no stop order suspending the effectiveness of
the Registration Statement has been issued and is outstanding and no
proceedings for that purpose have been instituted and not terminated or,
to the best of his or her knowledge, are contemplated by the Commission,
and (vi) since the date of its most recent financial statements, there
has been no material adverse change in the financial position or results
of operations of the Servicer or the Trust Depositor, as applicable, or
the Trust or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results
of 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
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information is given in the Prospectus, as of a date not more than five
days prior to the date of such bring-down letter), the conclusions and
findings of such firm with respect to the financial information and
other matters covered by its initial letter and (iii) confirming in all
material respects the conclusions and findings set forth in its initial
letter.
(k) The Underwriters shall receive evidence satisfactory to them
that, on or before the Closing Date, UCC-1 financing statements have been
or are being filed in each office in each jurisdiction in which such
financing statements are required to perfect the first priority security
interests created by the Sale and Servicing Agreement reflecting the
interest of the Trust Depositor in the 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(l) shall have occurred.
Section 8. DEFAULTING UNDERWRITERS.
(a) If, on the Closing Date, any Underwriter or Underwriters default
in the performance of its or their obligations under this Agreement, the
Representative may make arrangements for the purchase of such Notes by
other persons satisfactory to the Trust Depositor and the Representative,
including any of the Underwriters, but if no such arrangements are made by
the Closing Date, then each remaining non-defaulting Underwriter shall be
severally obligated to purchase the Notes which the defaulting Underwriter
or Underwriters agreed but failed to purchase on the Closing Date in the
respective proportions which the principal amount of Notes set forth
opposite the name of each remaining non-defaulting Underwriter in Schedule
I hereto bears to the aggregate principal amount of Notes set forth
opposite the names of all the remaining non-defaulting Underwriters in
Schedule I hereto; PROVIDED, HOWEVER, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Notes on the
Closing Date if the aggregate principal amount of Notes which the
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defaulting Underwriter or Underwriters agreed but failed to purchase on
such date exceeds one-eleventh of the aggregate principal amount of the
Notes to be purchased on the Closing Date, and any remaining non-defaulting
Underwriter shall not be obligated to purchase in total more than [____]%
of the principal amount of the Notes which it agreed to purchase on the
Closing Date pursuant to the terms of Section 2. If the foregoing maximums
are exceeded and the remaining Underwriters or other underwriters
satisfactory to the Representative and the Trust Depositor do not elect to
purchase the Notes which the defaulting Underwriter or Underwriters agreed
but failed to purchase, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Trust Depositor, except
that the provisions of Sections 9 and 13 shall not terminate and shall
remain in effect. As used in this Agreement, the term "Underwriter"
includes, for all purposes of this Agreement unless the context otherwise
requires, any party not listed in Schedule I hereto who, pursuant to this
Section 8, purchases Notes which a defaulting Underwriter agreed but failed
to purchase.
(b) Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have for damages caused by its default. If other
Underwriters are obligated or agree to purchase the Notes of a defaulting
Underwriter, either the Representative or the Trust Depositor may postpone
the Closing Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Trust Depositor or counsel
for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement, and the Trust 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
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loss, claim, damage, liability or action arises out of or is based upon (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement as originally filed or in any
amendment thereof or supplement thereto, or in any Preliminary Prospectus
or the Prospectus or in any amendment thereof or supplement thereto or (ii)
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Underwriter for any legal or other
expenses reasonably incurred by that Underwriter directly in connection
with investigating or preparing to defend or defending against or appearing
as a third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; PROVIDED, HOWEVER, that
neither the Servicer, 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 each of the Trust Depositor, the Servicer, Newcourt, and each
of their directors, each officer of the Trust Depositor, the Servicer or
Newcourt who signed the Registration Statement and each person, if any, who
controls the Trust Depositor, the Servicer or Newcourt within the meaning
of the Securities Act (collectively referred to for the purposes of this
Section 10 as the Trust Depositor, the Servicer or Newcourt, as
appropriate), against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Trust Depositor,
the Servicer and Newcourt 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, the Servicer and
Newcourt through the Representative by or on behalf of such Underwriter
specifically for use therein (the "Underwriters' Information"), and shall
reimburse the Trust Depositor, the Servicer and Newcourt for any legal or
other expenses reasonably incurred by the Trust Depositor, the Servicer and
Newcourt 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.
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(c) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 10, notify the
indemnifying party in writing of the claim or the commencement of that
action; PROVIDED, HOWEVER, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 10 except to the extent it has been materially prejudiced by such
failure; and, PROVIDED, FURTHER, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 10. If any
such claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; PROVIDED, HOWEVER, that the
Representative shall have the right to employ counsel to represent jointly
the Representative and the other Underwriters (and their respective
controlling persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought under this Section 10)
if, in the reasonable judgment of the Representative, it is advisable for
the Representative and the other Underwriters and controlling persons to be
jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Trust Depositor, 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
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(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, 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
light, remedy or claim under or in respect of this Agreement or any provision
contained herein.
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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 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, a division of
Wheat First Securities, Inc., 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
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc. 16
[__________ __], 1998
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 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
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc. 17
[__________ __], 1998
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>
First Union Capital Markets, a division of Wheat First Securities, Inc. 18
[__________ __], 1998
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, A DIVISION
OF WHEAT FIRST SECURITIES, INC.,
as Representative of the Underwriters
By:
--------------------------------------
Name:
Title:
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc. 19
[__________ __], 1998
SCHEDULE I
Date of Underwriting Agreement: [_______ __], 1998
Underwriters: First Union Capital Markets, a division of
Wheat First Securities, Inc.
Representative and Address: First Union Capital Markets, a division of
Wheat First Securities, Inc.
One First Union Center, TW-6
301 South College Street
Charlotte, NC 28288-0610
Title, Purchase Price and Description of Notes:
CLASS A-1 NOTES
Title: $[___________] [_____]% Class A-1 Receivable-Backed
Notes, Series 1998-1
Price to public: [_____]%
Purchase price: [_____]%
Underwriting
discount: [_____]%
Distribution Dates: The 20th calendar day of each month (if such day is
not a Business Day, the next succeeding Business Day),
commencing [_________ __], 1998
Maturity: [_________] [____] Distribution Date
Redemption
provisions: Notes remaining outstanding may be redeemed in whole,
but not in part, on any Distribution Date at the Trust
Depositor's option if the ADCB of the Contract Pool
at such time is less than 10% of the initial ADCB of
the Contract Pool as of the Cutoff Date.
CLASS A-2 NOTES
Title: $[__________] [____]% Class A-2 Receivable-Backed
Notes, Series 1998-1
Price to public: [______]%
Purchase price: [______]%
Underwriting
discount: [______]%
Distribution Dates: The 20th calendar day of each month (if such day is
not a Business Day, the next succeeding Business
Day), commencing [_________ __], 1998
Maturity: [_________] [____] Distribution Date
Redemption
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc. 20
[__________ __], 1998
provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date at
the Trust Depositor's option if the ADCB of the
Contract Pool at such time is less than 10% of the
initial ADCB of the Contract Pool as of the Cutoff
Date.
CLASS A-3 NOTES
Title: $[___________] [_______]% Class A-3 Receivable-Backed
Notes, Series 1998-1
Price to public: [________]%
Purchase price: [________]%
Underwriting
discount: [____]%
Distribution Dates: The 20th calendar day of each month (if such day is
not a Business Day, the next succeeding Business Day),
commencing [_________ __], 1998
Maturity: [_________] [_____] Distribution Date
Redemption
provisions: Notes remaining outstanding may be redeemed in whole,
but not in part, on any Distribution Date at the Trust
Depositor's option if the ADCB of the Contract Pool
at such time is less than 10% of the initial ADCB of
the Contract Pool as of the Cutoff Date.
CLASS A-4 NOTES
Title: $[___________] [_____]% Class A-4 Receivable-Backed
Notes, Series 1998-1
Price to public: [______]%
Purchase price: [______]%
Underwriting
discount: [______]%
Distribution Dates: The 20th calendar day of each month (if such day is not
a Business Day, the next succeeding Business Day),
commencing [_________ __], 1998
Maturity: [_________] [____] Distribution Date
Redemption
provisions: Notes remaining outstanding may be redeemed in whole,
but not in part, on any Distribution Date at the Trust
Depositor's option if the ADCB of the Contract Pool
at such time is less than 10% of the initial ADCB of
the Contract Pool as of the Cutoff Date.
Class B Notes
Title: $[__________] [_____]% Class B Receivable-Backed
Notes, Series 1998-1
Price to public: [_____]%
Purchase price: [_____]%
Underwriting
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc. 21
[__________ __], 1998
discount: [_____]%
Distribution Dates: The 20th calendar day of each month (if such day is not
a Business Day, the next succeeding Business Day),
commencing [_________ __], 1998
Maturity: [_________] [____] Distribution Date
Redemption
provisions: Notes remaining outstanding may be redeemed in whole,
but not in part, on any Distribution Date at the Trust
Depositor's option if the ADCB of the Contract Pool at
such time is less than 10% of the initial ADCB of the
Contract Pool as of the Cutoff Date.
CLASS C NOTES
Title: $[_________] [_____]% Class C Receivable-Backed Notes,
Series 1998-1
Price to public: [______]%
Purchase price: [______]%
Underwriting
discount: [_____]%
Distribution Dates: The 20th calendar day of each month (if such day is not
a Business Day, the next succeeding Business Day),
commencing [_________ __], 1998
Maturity: [________] [____] Distribution Date
Redemption
provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date at
the Trust Depositor's option if the ADCB of the
Contract Pool at such time is less than 10% of the
initial ADCB of the Contract Pool as of the Cutoff
Date.
Closing Date, Time and Location:
Date: [_________ __], 1998
Time: [9:00 Chicago time]
Location: [Winston & Strawn 35 West Wacker Drive Chicago,
Illinois]
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc. 22
[__________ __], 1998
SCHEDULE H
UNDERWRITERS
$[__________] Principal Amount of Class A-1 Notes to be Purchased
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
First Union Capital Markets, a division of Wheat First Securities, Inc. $__________
[Other Underwriters] __________
__________
__________
</TABLE>
UNDERWRITERS
$[__________] Principal Amount of Class A-2 Notes to be Purchased
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
First Union Capital Markets, a division of Wheat First Securities, Inc. $__________
[Other Underwriters] __________
__________
__________
</TABLE>
UNDERWRITERS
$[__________] Principal Amount of Class A-3 Notes to be Purchased
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
First Union Capital Markets, a division of Wheat First Securities, Inc. $__________
[Other Underwriters] __________
__________
__________
</TABLE>
UNDERWRITERS
$[__________] Principal Amount of Class A-4 Notes to be Purchased
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
First Union Capital Markets, a division of Wheat First Securities, Inc. $__________
[Other Underwriters] __________
__________
__________
</TABLE>
<PAGE>
First Union Capital Markets, a division of Wheat First Securities, Inc. 23
[__________ __], 1998
UNDERWRITER
$[__________] Principal Amount of Class B Notes to be Purchased
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
First Union Capital Markets, a division of Wheat First Securities, Inc. $__________
__________
__________
__________
</TABLE>
UNDERWRITER
$[__________] Principal Amount of Class C Notes to be Purchased
<TABLE>
<CAPTION>
Principal Amount
----------------
<S> <C>
First Union Capital Markets, a division of Wheat First Securities, Inc. $__________
__________
__________
__________
</TABLE>
<PAGE>
EXHIBIT 4.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AMENDED AND RESTATED TRUST AGREEMENT
by and between
NEWCOURT RECEIVABLES CORPORATION II
as Trust Depositor,
and
THE BANK OF NEW YORK (DELAWARE)
as Owner Trustee
Dated as of October [ ], 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE ONE PAGE
------
<S> <C>
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 TWO
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .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. 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 THREE
TRUST 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. OWNERSHIP BY TRUST DEPOSITOR OF TRUST CERTIFICATE . . . . . . . . . .8
ARTICLE FOUR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
ACTIONS BY OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 4.01. Prior Notice to Certificateholder with Respect to Certain Matters . .8
SECTION 4.02. ACTION BY OWNER WITH RESPECT TO CERTAIN MATTERS . . . . . . . . . . .9
SECTION 4.03. ACTION BY OWNER WITH RESPECT TO BANKRUPTCY. . . . . . . . . . . . . .9
SECTION 4.04. RESTRICTIONS ON OWNER'S POWER . . . . . . . . . . . . . . . . . . . .9
ARTICLE FIVE
CERTAIN DUTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.01. REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-i-
<PAGE>
SECTION 5.02. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.03. METHOD OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.04. NO SEGREGATION OF MONEYS; NO INTEREST . . . . . . . . . . . . . . . 10
SECTION 5.05. ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDER, THE INTERNAL
REVENUE SERVICE AND OTHERS . . . . . . . . . . . . . . . . . . . 10
SECTION 5.06. SIGNATURE ON RETURNS; TAX MATTERS PARTNER . . . . . . . . . . . . . 10
ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 6.01. GENERAL AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 6.02. GENERAL DUTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 6.03. ACTION UPON INSTRUCTION . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. . . . . 12
SECTION 6.06. RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES . . . . . . . . . . . . . . . . . . 12
SECTION 7.02. FURNISHING OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 7.03. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 13
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY . . . . . . . . . . . . . . . . . 14
SECTION 7.06. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATE, NOTES OR
CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.07. OWNER TRUSTEE MAY OWN TRUST CERTIFICATE AND NOTES . . . . . . . . . 15
ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.01. OWNER TRUSTEE'S FEES AND EXPENSES . . . . . . . . . . . . . . . . . 15
SECTION 8.02. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.03. PAYMENTS TO THE OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . 15
ARTICLE NINE
TERMINATION 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 . . . . . . . . . . . . . . . . . 16
ARTICLE TEN
SUCCESSOR 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. . . . . . . . . . . . . . . . . . . . . . 17
SECTION 10.04. MERGER OR CONSOLIDATION OF OWNER TRUSTEE . . . . . . . . . . . . . 18
SECTION 10.05. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. . . . . . . . . . . 18
-ii-
<PAGE>
ARTICLE ELEVEN
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 11.07. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . 21
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. . . . . . . . . . . . . . . . 22
EXHIBITS
Exhibit A - Form of Certificate of Trust. . . . . . . . . . . . . . . . . . .A-1
Exhibit B - Form of Trust Certificate . . . . . . . . . . . . . . . . . . . .B-1
</TABLE>
-iii-
<PAGE>
This AMENDED AND RESTATED TRUST AGREEMENT dated as of October [ ],
1998, is between NEWCOURT RECEIVABLES CORPORATION II, a Delaware corporation,
as Trust Depositor (the "TRUST DEPOSITOR"), and THE BANK OF NEW YORK
(DELAWARE), as owner trustee (the "OWNER TRUSTEE").
WHEREAS, the parties hereto wish to amend and restate the Trust Agreement
dated as of August 13, 1998;
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 $[ ].
"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 October [ ], 1998.
"CODE" means the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"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 Harris Trust and Savings Bank, 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 A-3
Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes, in each case issued pursuant to the Indenture.
"OWNER" means the Holder of the Trust Certificate.
"OWNER TRUSTEE" means The Bank of New York (Delaware), 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 The Bank of New York (Delaware), White Clay Center, Newark,
Delaware 19711, or such other office at such other address in the State of
Delaware 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.
"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.
"POOLING AND SERVICING AGREEMENT" means the Pooling 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.
"TRUST" means the trust established by this Agreement.
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"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
Pooling and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and all other property of the Trust from time to time, including
any rights of the Owner Trustee and the Trust pursuant to the Pooling and
Servicing Agreement and the Administration Agreement.
"UNDERWRITERS" means First Union Capital Markets, a division of Wheat First
Securities, Inc. and BancAmerica Robertson Stephens, Chase Securities Inc.,
Merrill Lynch, Pierce Fenner & Smith Incorporated and Salomon Brothers Inc.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS. Capitalized terms used that
are not otherwise defined herein shall have the meanings ascribed thereto in the
Pooling 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
EQUIPMENT TRUST SECURITIES 1998-1", 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.
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:
(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;
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(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 Pooling 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
Pooling 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. TRUST ESTATE. The Owner Trustee hereby acknowledges receipt
in trust from the Trust Depositor, as of the date hereof, of the Trust Estate.
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 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 knowingly 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.
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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 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; and this Agreement constitutes the legal, valid
and binding obligation of the Trust Depositor, enforceable in
accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(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
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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.
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
(A) following such transfer, there would be no more than one holder of the Trust
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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. 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 Bank of New York is
hereby initially appointed Certificate Registrar for the purpose of registering
the Trust Certificate and transfers and exchanges of the Trust Certificate as
herein provided. In the event that, subsequent to the Closing Date, the Owner
Trustee notifies the Servicer that The Bank of New York 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 New York, 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 (subject to Section 3.01(b)) 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 or Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer of the
Trust Certificate.
(e) All Trust Certificates surrendered for registration of transfer shall
be canceled and subsequently destroyed by the Owner Trustee or Certificate
Registrar.
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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 or Certificate Registrar 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, the
Indenture Trustee and the Trust Depositor, within 15 days after receipt by the
Certificate Registrar of a written request therefor from the Servicer, the
Indenture Trustee or the Trust Depositor, the name and address of the
Certificateholder as of the most recent Record Date in such form as the
Servicer, the Indenture Trustee 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 or the State of Delaware an office or offices
or agency or agencies where the Trust Certificate may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Trust Certificate and the Transaction
Documents may be served. The Owner Trustee initially designates The Bank of New
York, 101 Barclay Street, 12 East, New York, New York 10286 with a copy to The
Bank of New York, 101 Barclay Street, 12 East, New York, New York 10286 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. 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:
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(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of
the Contracts) and the compromise of any action, claim or lawsuit
brought by or against the Trust (except with respect to the
aforementioned claims or lawsuits for collection of the
Contracts);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(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 Pooling 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.
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ARTICLE FIVE
CERTAIN DUTIES
SECTION 5.01. REPORTS. On each Distribution Date, the Owner Trustee
shall send or cause to be sent to the Certificateholder the statement or
statements provided to the Owner Trustee by the Servicer pursuant to Section
9.01 of the Pooling and Servicing Agreement with respect to such Distribution
Date.
SECTION 5.02. TAXES. 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.
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 Section
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 Pooling 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 or cause to be delivered 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 or cause to be
filed such tax returns relating to the Trust and make such elections as from
time to time may be required or appropriate under any applicable state or
federal statute or any rule or regulation thereunder so as to maintain the
federal income tax treatment for the Trust as set forth in Section 2.11, (d)
cause such tax returns to be signed in the manner required by law and (e)
collect or cause to be collected any withholding tax as described in and in
accordance with Section 5.02(c) with respect to income or distributions to
Owner. The Owner Trustee shall elect under Section 1278 of the Code to
include in income currently any market discount that accrues with respect to
the Contracts. If applicable, the Owner Trustee shall not make the election
provided under Section 754 or Section 761 of the Code.
SECTION 5.06. SIGNATURE ON RETURNS; TAX MATTERS PARTNER.
(a) The Trust Depositor shall sign on behalf of the Trust the tax returns
of the Trust.
(b) If Subchapter K of the Code should be applicable to the Trust, the
Certificateholder shall be designated the "TAX MATTERS PARTNER" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
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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 on behalf of the Trust 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 directs or 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 or
the Trust 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
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
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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, in its individual capacity, that are not related to the ownership or
the administration of the Trust Estate.
SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the other Transaction Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.03.
SECTION 6.06. RESTRICTIONS. The Owner Trustee shall not take any action
(i) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (ii) that, to the actual knowledge of 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 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 its
individual capacity. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
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(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
Pooling and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by the Agreement, or to
institute, conduct or defend any litigation under this Agreement
or otherwise or in relation to this Agreement or any other
Transaction Document, at the request, order or direction of the
Owner, unless 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:
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(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 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, The Bank of New
York (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
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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 Pooling and Servicing Agreement. Additionally, the Owner Trustee shall be
entitled to be reimbursed by the Trust Depositor or Servicer for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Owner Trustee may employ in connection with the exercise and performance of its
rights and its duties hereunder.
SECTION 8.02. INDEMNIFICATION. The Trust Depositor shall be liable as
primary obligor for, and shall indemnify the Owner Trustee and its
successors, assigns and servants (collectively, the "INDEMNIFIED PARTIES")
from and against, any and all liabilities, obligations, losses, damages,
taxes, claims, actions and suits, and any and all reasonable costs, expenses
and disbursements (including reasonable legal fees and expenses) of any kind
and nature whatsoever (collectively, "EXPENSES") which may at any time be
imposed on, incurred by or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement,
the other Transaction Documents, the Trust Estate, the administration of the
Trust Estate or the action or inaction of the Owner Trustee hereunder;
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 and any
indemnity payments to be made pursuant to this Section shall not be made from
the Trust Estate and such indemnity payments, if unpaid, do not constitute a
general recourse claim against the Trust. 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.
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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 Pooling 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 Pooling 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 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
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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 Pooling 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
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
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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.
Any successor Owner Trustee appointed pursuant to this Section 10.03
shall file an amendment to the Certificate of Trust with the Delaware
Secretary of State identifying the name and principal place of business of
such successor in the State of Delaware.
SECTION 10.04. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
PROVIDED, that such corporation shall be eligible pursuant to Section 10.01 and,
PROVIDED, FURTHER, that the Owner Trustee shall mail notice of such merger or
consolidation to each Rating Agency.
SECTION 10.05. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any financed Equipment may at the time be located, the
Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust or any part thereof and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner Trustee pursuant to Section 10.01 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee
or co-trustee is not authorized to act separately without the
Owner Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or
acts are to be performed, the Owner Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of
the Owner Trustee;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this
Agreement; and
(c) the Administrator and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
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<PAGE>
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of or affording protection to, the Owner
Trustee. Each such instrument shall be filed with the Owner Trustee and a copy
thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
ARTICLE 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 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.
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<PAGE>
(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.
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
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<PAGE>
(iii) If to the Indenture Trustee:
Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Attention: Robert D. Foltz
Fax No: (312) 461-4662
(iv) If to the Owner Trustee:
The Bank of New York (Delaware)
White Clay Center
Newark, Delaware 19711
Attention: Corporate Trust Administration
Fax No.: (212) 815-5999
with a copy to:
The Bank of New York
Asset Backed Finance Unit
101 Barclay Street, 12 East
New York, New York 10286
Attention: Cheryl Laser
Fax No: (212) 815-5544
(vii) If to the Underwriters:
First Union Capital Markets
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.
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
-21-
<PAGE>
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 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.
The parties hereto agree that any payments to be made pursuant to this Section
shall not be made from the Trust Estate and such payments, if unpaid, do not
constitute a general recourse claim against the Trust.
[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:__________________________
THE BANK OF NEW YORK (DELAWARE),
as Owner Trustee
By:___________________________________
Printed Name:_____________________
Title _____________________________
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<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
This Certificate of Trust of Newcourt Equipment Trust Securities 1998-1
(the "TRUST"), dated [ ], 1998, is being duly executed and filed
by The Bank of New York (Delaware), 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
Equipment Trust Securities 1998-1.
2. DELAWARE TRUSTEE. The name and business address of the Owner Trustee
of the Trust in the State of Delaware is White Clay Center, Newark, Delaware
19711.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon
filing.
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.
THE BANK OF NEW YORK (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 EQUIPMENT TRUST SECURITIES 1998-1 CLASS F RECEIVABLE-BACKED
CERTIFICATE
NO. 1 Trust Certificate
Principal Balance $[_____________]
THIS CERTIFIES THAT [_________________________] is the registered
owner of $[_______________] of a nonassessable, fully-paid, fractional
undivided equity interest in the Newcourt Equipment Trust Securities 1998-1 (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 August
13, 1998, as amended and restated by the Amended and Restated Trust Agreement
dated as of [ ], 1998 (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 The Bank of
New York (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 Pooling
and Servicing Agreement, dated as of [ ], 1998 (the "POOLING
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 Harris
Trust and Savings Bank, as Indenture Trustee (the "INDENTURE TRUSTEE") or
(iii) the Indenture, dated as of [ ], 1998 (the "INDENTURE"),
between the Trust and the Indenture Trustee.
This Trust Certificate is the duly authorized Trust Certificate
designated as "CLASS F RECEIVABLE-BACKED CERTIFICATE, SERIES 1998-1" (the
"TRUST CERTIFICATE"). Also issued under the Indenture are seven classes of
notes designated as "[________]% CLASS A-1 RECEIVABLE- BACKED NOTES, SERIES
1998-1" and "[ ]% CLASS A-2 RECEIVABLE-BACKED NOTES, SERIES
1998-1" and "[ ]% CLASS A-3 RECEIVABLE-BACKED NOTES, SERIES
1998-1" and "[ ]% CLASS A-4 RECEIVABLE-BACKED NOTES, SERIES
1998-1" and "[________]% CLASS B RECEIVABLE-BACKED NOTES, SERIES 1998-1", and
"[_________]% CLASS C RECEIVABLE-BACKED NOTES, SERIES 1998-1" and "[ ]
% CLASS D RECEIVABLE-BACKED NOTES, SERIES 1998-1" and "[___________]% CLASS E
RECEIVABLE-BACKED NOTES, SERIES 1998-1" (collectively, the "NOTES"). This
Trust Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of
this Trust Certificate by virtue of its acceptance hereof assents and by
which such Holder is bound. The property of the Trust includes, among other
things, all the right, title and interest of the Trust Depositor in and to
the Contracts listed on the List of Contracts delivered on the Closing Date
(including, without limitation, all security interests and all monies due or
to
<PAGE>
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 [ ], 1998 (each, a
"DISTRIBUTION DATE"), and ending no later than the Distribution Date in
[ ] to the Person in whose name this Trust Certificate is registered
at the close of business on the last Business 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
Pooling 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
Pooling and Servicing Agreement. A copy of each of the Pooling 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 Pooling 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 Pooling 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
Pooling 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: [________________], 1998 NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (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.
THE BANK OF NEW YORK (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>
Exhibit 4.2
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1,
as Issuer,
and
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity but solely in its capacity
as Indenture Trustee
___________________________________
INDENTURE
Dated as of October [ ], 1998
___________________________________
$[__________] Class A-1 Receivable-Backed Notes
$[__________] Class A-2 Receivable-Backed Notes
$[__________] Class A-3 Receivable-Backed Notes
$[__________] Class A-4 Receivable-Backed Notes
$[__________] Class B Receivable-Backed Notes
$[__________] Class C Receivable-Backed Notes
$[__________] Class D Receivable-Backed Notes
$[__________] Class E Receivable-Backed Notes
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- -------------------------------------------------------------------------------
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TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. . . . . . . .6
SECTION 1.03. RULES OF CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . .6
ARTICLE TWO
THE 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 THREE
COVENANTS; 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
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. . . . . . . . . . . . 19
SECTION 4.02. APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . . . . . 19
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT . . . . . . . . . . . 20
ARTICLE FIVE
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.02. RIGHTS UPON EVENT OF DEFAULT; NOTICE.. . . . . . . . . . . . . 22
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 . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . . . . 28
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. . . . . . . . . . . . . . . . . . . . 29
SECTION 5.14. UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . . . . . 29
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 SIX
THE INDENTURE TRUSTEE
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE. . . . . . . . . . . . . . . . . . 31
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE. . . . . . . . . . . . . . . . . . 32
SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE . . . . . . . . . . . . 32
SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . 32
SECTION 6.05. NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS. . . . . . . . . . . . 33
SECTION 6.07. COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . . . 33
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE . . . . . . . . . . . . . . . 33
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. . . . . . . . . . . . . 34
SECTION 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE INDENTURE
TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.11. ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER . . . . . . . 36
SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE. . . . . . 36
SECTION 6.14 EXECUTION OF TRANSACTION DOCUMENTS . . . . . . . . . . . . . . 36
ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.02. PRESERVATION OF INFORMATION: COMMUNICATION TO NOTEHOLDERS. . . 38
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SECTION 7.03. REPORTS BY ISSUER. . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.04. REPORTS BY INDENTURE TRUSTEE . . . . . . . . . . . . . . . . . 39
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEY. . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.02. TRUST ACCOUNTS.. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS. . . . . . . . . . . . . 42
SECTION 8.04. RELEASE OF COLLATERAL. . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.05. OPINION OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS . . . . 44
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. . . . . . 44
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . 46
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE . . . . . . . . . . . . . . . 46
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. . . . . . . . . . . . . . 46
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. . . . . . . . . 46
ARTICLE TEN
REDEMPTION OF NOTES
SECTION 10.01. REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.02. FORM OF REDEMPTION NOTICE. . . . . . . . . . . . . . . . . . . 47
SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE . . . . . . . . . . . . . . . 47
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. . . . . . . . . . . 48
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE . . . . . . . 49
SECTION 11.03. ACTS OF NOTEHOLDERS. . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.04. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.05. NOTICES TO NOTEHOLDERS; WAIVER . . . . . . . . . . . . . . . . 50
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS. . . . . . . . . . . . 51
SECTION 11.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS . . . . . . . . . . . 51
SECTION 11.08. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.09. SEPARABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.10. BENEFITS OF INDENTURE. . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.11. LEGAL HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.13. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.14. RECORDING OF INDENTURE . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.15. TRUST OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.16. NO PETITION. . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 11.17. INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 11.18. CONFLICT WITH TRUST INDENTURE ACT. . . . . . . . . . . . . . . 52
SECTION 11.19. COMMUNICATION BY NOTEHOLDERS WITH OTHER NOTEHOLDERS. . . . . . 52
SECTION 11.20. LISTING RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . 52
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EXHIBITS
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Exhibit A-1 - Form of Class A-1 Note . . . . . . . . . . . . . . . . . . .A-1-1
Exhibit A-2 - Form of Class A-2 Note . . . . . . . . . . . . . . . . . . .A-1-1
Exhibit A-3 - Form of Class A-3 Note . . . . . . . . . . . . . . . . . . .A-3-1
Exhibit A-4 - Form of Class A-4 Note . . . . . . . . . . . . . . . . . . .A-4-1
Exhibit B - Form of Class B Note. . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Form of Class C Note. . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Form of Class D Note. . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E - Form of Class E Note. . . . . . . . . . . . . . . . . . . . . E-1
Exhibit F - Form of Note Assignment . . . . . . . . . . . . . . . . . . . F-1
Exhibit G - Form of Note Depository Agreement . . . . . . . . . . . . . . G-1
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CROSS-REFERENCE TABLE
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Trust Indenture
Act of 1939 Indenture
Section Section
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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
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This Indenture, dated as of October [ ], 1998 (this "INDENTURE"), is
between Newcourt Equipment Trust Securities 1998-1, a Delaware business trust
(the "ISSUER") and Harris Trust and Savings Bank, in its capacity as
indenture trustee (the "INDENTURE TRUSTEE") and not in its individual
capacity.
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Issuer's [____]%
Class A-1 Receivable-Backed Notes (the "CLASS A-1 NOTES"), [____]% Class A-2
Receivable-Backed Notes (the "CLASS A-2 NOTES"), [____]% Class A-3
Receivable-Backed Notes (the "CLASS A-3 NOTES"), [____]% Class A-4
Receivable-Backed Notes (the "CLASS A-4 NOTES"), [____]% Class B
Receivable-Backed Notes (the "CLASS B NOTES"), [____]% Class C
Receivable-Backed Notes (the "CLASS C NOTES"), [____]% Class D
Receivable-Backed Notes (the "CLASS D NOTES") and [____]% Class E
Receivable-Backed Notes (the "CLASS E NOTES"; and, together with the Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes,
Class C Notes and Class D Notes, the "NOTES"):
GRANTING CLAUSE
The Issuer hereby grants, transfers, assigns and otherwise conveys to the
Indenture Trustee on the Closing Date, on behalf of and for the benefit of the
Holders of the Notes, without recourse, all of the Issuer's right, title and
interest in, to and under the 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).
"ADDITIONAL PRINCIPAL" means, with respect to any Distribution Date, an
amount equal to (a) the Total Principal Payment Amount, less (b) the sum 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, the Class C Principal
Payment Amount, the Class D Principal Payment Amount and the Class E
Principal Payment Amount.
"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
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the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter) and, so long as
the Administration Agreement is in effect, any Vice President or more senior
officer of the Administrator who is authorized to act for the Administrator
in matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on the list of
Authorized Officers delivered by the Administrator to the Indenture Trustee
on the Closing Date (as such list may be modified or supplemented from time
to time thereafter).
"BOOK ENTRY NOTES" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.09.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which banking institutions in the cities of Indianapolis, Indiana; Wilmington,
Delaware; Chicago, Illinois or New York, New York are authorized or obligated by
law, executive order or governmental decree to be closed.
"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 311 West Monroe Street, 12th Floor, Chicago, Illinois 60606; 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.
"DISTRIBUTION DATE" means the twentieth (20th) day (or if any such date is
not a Business Day, then on the next succeeding Business Day) of each calendar
month commencing [ ], 1998.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" shall have the meaning specified in Section 5.01.
"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.
2
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"GENERAL PARTNER" means each Certificateholder obligated to pay the
expenses of the Issuer pursuant to Section 2.07 of the Trust Agreement.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"HOLDER" 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.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TRUSTEE" means Harris Trust and Savings Bank, 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 A-3 Interest Rate, the Class A-4
Interest Rate, the Class B Interest Rate, the Class C Interest Rate, the Class D
Interest Rate and the Class E Interest Rate, or any of them, in each case as
defined in the Pooling 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 Pooling 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 F hereto.
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"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings specified
in Section 2.04.
"NOTEHOLDER" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency) and with
respect to a Definitive Note the Person in whose name a Note is registered on
the Note Register.
"OFFICER'S CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to,
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and who shall be satisfactory to the Indenture Trustee and
which shall comply with any applicable requirements of Section 11.01, and shall
be in form and substance satisfactory to the Indenture Trustee.
"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(a) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(b) 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
(c) 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 The Bank of New York (Delaware), not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor trustee under the Trust Agreement.
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"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.
"RECORD DATE" means, with respect to any Distribution Date, the calendar
day immediately preceding such Distribution Date; provided, however, that with
any Definitive Note the Record Date shall be the last calendar day of the month
preceding the month in which such Distribution Date occurs.
"REDEMPTION DATE" means in the case of a redemption of the Notes pursuant
to Section 10.01(a) or a payment to Noteholders pursuant to Section 10.01(b),
the Distribution Date specified by the Servicer or the Issuer pursuant to
Section 10.01(a) or 10.01(b), as the case may be.
"REDEMPTION DATE AMOUNT" means (i) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the unpaid principal amount of
the Notes redeemed plus accrued and unpaid interest thereon at the weighted
average of the Interest Rate for each Class of Notes being so redeemed to but
excluding the Redemption Date, or (ii) in the case of a payment made to
Noteholders pursuant to Section 10.01(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (i)
above.
"REGISTERED HOLDER" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"RESPONSIBLE OFFICER" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office (or any successor group of the
Indenture Trustee), including any Vice President, assistant secretary or other
officer or assistant officer of the Indenture Trustee customarily performing
functions similar to those performed by the people who at such time shall be
officers, respectively, or to whom any corporate trust matter is referred at the
Corporate Trust Office of the Indenture Trustee because of his knowledge of and
familiarity with the particular subject.
"POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing
Agreement, dated as of the date hereof, among the Issuer, the Trust Depositor,
the Servicer and the Indenture Trustee.
"STATE" means any one of the 50 states of the United States, or the
District of Columbia or any of its territories.
"TARGETED HOLDER" means any holder of a right to receive interest or
principal with respect to the Notes or other interests in the Trust (other than
a Note or other interest with respect to which an opinion is or has been
rendered that such interest will be treated as debt for federal income tax
purposes) and any holder of a right to receive any amount in respect of the
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 CERTIFICATE" means the Class F Certificate of the Issuer
substantially in the form of EXHIBIT B to the Trust Agreement.
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"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 Pooling and Servicing Agreement.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"COMMISSION" means the Securities and Exchange Commission.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"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 [_______________], (ii) Class A-2 Notes in an aggregate principal
amount of [_______________], (iii) Class A-3 Notes in an aggregate principal
amount of [_______________], (iv) Class A-4 Notes in an aggregate principal
amount of [_______________], (v) Class B Notes in an aggregate principal amount
of [_______________], (vi) Class C Notes in an aggregate principal amount of
[_______________], (vii) Class D Notes in an aggregate principal amount of
[_______________] and (viii) Class E Notes in an aggregate principal amount of
[___________]. The aggregate principal amount of such Classes of Notes
Outstanding at any time may not exceed such respective amounts, except as
otherwise provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples of $1,000 in excess thereof or in such other denomination as
shall be necessary.
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 Indenture Trustee nor the Registrar shall have any
responsibility to monitor or restrict the transfer of beneficial ownership in
any Note an interest in which is transferable through the facilities of the
Clearing Agency.
(b) Notwithstanding any other provision of this Indenture, no transfer of
the Class D Notes or Class E Notes shall be made or shall be valid or effective
hereunder unless such transfer is made in a transaction which does not require
registration or qualification under the Securities Act of 1933 or qualification
under any state securities or "Blue Sky" laws. In addition, neither the
Indenture Trustee nor the Note Registrar shall effect the registration of any
transfer of the Class D Notes or Class E Notes if the Note Registrar determines
that, following such transfer, there would be more than 100 Targeted Holders of
the Class D Notes and Class E Notes.
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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 harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, 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, 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.
(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
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Section 5.02. All principal payments on each Class of Notes shall be made PRO
RATA to the Noteholders of such Class entitled thereto. 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 Pooling 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
Collateral 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 canceled 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 canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange
for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the 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
and Class E Notes as specified in Section 2.11 below), upon original
issuance, will be issued in the form of a typewritten Note or Notes
representing the Book-Entry Notes, to be delivered to DTC, the initial
Depository, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Noteholder of such Notes will receive a
Definitive Note representing such Noteholder's interest in such Note, except
as provided in Section 2.11. Unless and until definitive, fully registered
Notes (the "DEFINITIVE NOTES") have been issued to Noteholders pursuant to
Section 2.11:
(a) the provisions of this Section shall be in full force and effect;
(b) 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;
(c) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section shall
control;
(d) 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
(e) 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
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deemed to represent such percentage only to the extent that it has received
instructions to such effect from Noteholders and/or Clearing Agency
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
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 to the Clearing Agency, and shall
have no obligation to the Noteholders.
SECTION 2.11. DEFINITIVE NOTES. The Class D Notes and Class E Notes
shall be initially issued in the form of Definitive Notes. With respect to the
other Classes of Notes, if (i)(A) the Administrator advises the Indenture
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities as described in the Note Depository
Agreement, and (B) the Indenture Trustee or the Administrator is unable to
locate a qualified successor, (ii) the Administrator at its option advises the
Indenture Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency, or (iii) after the occurrence of an Event of
Default, 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 agrees 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 Pooling and Servicing Agreement, and cause to be
distributed all such amounts on a Distribution Date as deposited therein (i) for
the benefit of the Class A-1 Notes, to the Class A-1 Noteholders, (ii) for the
benefit of the Class A-2 Notes, to the Class A-2 Noteholders, (iii) for the
benefit of the Class A-3 Notes, to the Class A-3 Noteholders, (iv) for the
benefit of the Class A-4 Notes, to the Class A-4 Noteholders, (v) for the
benefit of the Class B Notes, to the Class B Noteholders, (vi) for the benefit
of the Class C Notes, to the Class C Noteholders, (vii) for the benefit of the
Class D Notes, to the Class D Noteholders and (viii) for the benefit of the
Class E Notes, to the Class E Noteholders, in each case as further specified
herein. Amounts properly withheld under the Code by any Person from a payment
to any Noteholder of interest and/or principal shall be considered as having
been paid by the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain in New York, New York, an office or agency where Notes may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the 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, upon written notice and instruction from the Servicer, the
Indenture Trustee shall withdraw from the Collection Account and 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:
(a) 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;
(b) 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;
(c) 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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(d) 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
(e) 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 Pooling
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 Pooling and
Servicing Agreement, the Indenture Trustee is otherwise authorized to release
such instrument from the Collateral. The Issuer will from time to time execute,
deliver and file all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, all as prepared by the Servicer and delivered to the
Issuer, and will take such other action necessary or advisable to:
(a) Grant more effectively all or any portion of the Collateral;
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(b) maintain or preserve the lien and security interest (and the
priority thereof) created by this Indenture or carry out more effectively the
purposes hereof;
(c) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(d) enforce any of the Collateral;
(e) 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
(f) 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 Pooling 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 Pooling 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 Pooling and Servicing Agreement), specifying in such notice the
name and address of such Successor Servicer.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Transaction Documents if the effect thereof would adversely affect the Holders
of the Notes.
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SECTION 3.08. NEGATIVE COVENANTS. Until the Termination Date, the
Issuer shall not:
(a) 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;
(b) 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
(c) (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
(d) dissolve or liquidate in whole or in part.
SECTION 3.09. ISSUER MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing under the
laws of the United States or any State and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture Trustee,
in form and substance satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture and
each other Transaction Document on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be delivered to and shall be satisfactory to the Indenture Trustee to the
effect that such transaction will not have any material adverse tax consequence
to the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (v) above or that no such actions will be
taken) each stating that such consolidation or merger and such supplemental
indenture comply with this Article Three and that all conditions precedent
herein provided for relating to such transaction have been complied with; and
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(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.
(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.
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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 Pooling 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 Pooling 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; BINDING OBLIGATION. 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. Issuer Documents constitute the legal, valid and binding
obligation of the Issuer 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 CONFLICT. The execution and delivery of the Issuer Documents,
the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof will not conflict with, result in any
breach of any of the materials terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which
the Issuer is a party or by which it or any of its property is bound.
(d) NO VIOLATION. The execution and delivery of the Issuer
Documents, the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof will not conflict with or violate, in any
material respect, any Requirements of Law applicable to the Issuer.
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(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
thirty (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.
SECTION 4.02. APPLICATION OF TRUST MONEY. Except as provided in
Section 5.06, 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
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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 Pooling 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 any Distribution Date the full amount
of accrued interest on any Note and which continues
unremedied for five (5) or more calendar days after such
Distribution Date;
(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 Pooling and
Servicing Agreement or Transfer and Sale Agreement
within three (3) 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, Pooling and
Servicing Agreement or the Indenture, which failure has
a material adverse effect on the Noteholders and which
continues unremedied for a period of sixty (60)
calendar days after written notice; PROVIDED, that no
such sixty (60) calendar 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 (5) 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 Pooling 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 (sixty) 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 Pooling
and Servicing Agreement and the Transfer and Sale
Agreement;
(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.
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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 shall not be deemed to have
occurred if the Required Holders waive such Event of Default pursuant to a
written notice to the Trust Depositor, Indenture Trustee and the Servicer. 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. The Indenture Trustee
shall not be deemed to have notice of an Event of Default unless it shall have
received a written notice pursuant to this Section 5.02 or it has actual
knowledge of an Event of Default.
If an Insolvency Event relating to the Trust Depositor occurs, pursuant to
the Trust Agreement and the Pooling 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 Pooling 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, the Indenture Trustee may in its
discretion (except as provided in Section 5.03(d)), proceed to protect and
enforce its rights and the rights of the Noteholders, by such appropriate
Proceedings as the Indenture Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Indenture Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture if an Event of Default shall have occurred, and 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
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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 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.
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(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
the Indenture Trustee (subject to Section 5.05) may, and shall (subject to
Section 6.07) if so directed by the Required Holders in writing:
(a) 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;
(b) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(c) 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
(d) 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 except as otherwise provided above, the Indenture Trustee
may, but need not, elect to maintain possession of the Collateral. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal and interest on the Notes, and the
Indenture Trustee shall take such desire into account when determining whether
or not to maintain possession of the Collateral. In determining whether to
maintain possession of the Collateral, the Indenture Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Collateral for such purpose.
SECTION 5.06. PRIORITIES.
(a) If the Indenture Trustee collects any money or property pursuant
to this Article Five, it shall pay out the money or property in the 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
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previously reimbursed), (including, without limitation,
compensation as required under Section 6.07 and 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 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;
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
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aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class D Notes;
SEVENTH, 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 E Notes shall
be distributed to the Class E 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 E Note over any other Class E Note, in the proportion
that the aggregate amount of all accrued but unpaid interest to
the date of distribution on each Class E Note bears to the
aggregate amount of all accrued but unpaid interest to the date
of distribution on all Class E Notes;
EIGHTH, 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;
NINTH, 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;
TENTH, 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;
ELEVENTH, 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 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 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;
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THIRTEENTH, 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
FOURTEENTH, 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; and
FIFTEENTH, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class E
Noteholders to pay in full the Class E Principal Payment Amount,
then due pursuant to or in respect of the Class E 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 E Note over any other Class E Note, in
the proportion that the aggregate unpaid principal amount of each
Class E Note bears to the aggregate unpaid principal amount of
all Class E 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):
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) 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;
(c) 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;
(d) the Indenture Trustee for sixty (60) days after its receipt of
such notice, request and offer of indemnity has failed to institute such
Proceedings; and
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such sixty (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.
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In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.08. 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 Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the 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 or Event of Default shall impair any such right
or remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article 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:
(a) such direction shall not be in conflict with any rule of law or
with any other provision of this Indenture;
(b) 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;
(c) 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
(d) 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.
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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 Pooling and
Servicing Agreement in accordance with the terms thereof, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Pooling 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 or administrative actions or proceedings
to compel or secure performance by the Trust Depositor or the Servicer of each
of their obligations under the Pooling 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 Pooling 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 Pooling 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, 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 upon and after the occurrence 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 on their face 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 Pooling and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(h) The Indenture Trustee shall have no discretionary duties other
than those explicitly set forth in this Indenture.
(i) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this section and to the provisions of the TIA.
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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, 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; PROVIDED,
HOWEVER, that 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.
(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 Pooling 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.
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 the Transaction
Documents 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.
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SECTION 6.05. NOTICE OF DEFAULTS. If a Default occurs 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 ninety
(90) days after it occurs. A Default shall be known to a Responsible Officer
of the Indenture Trustee if the Indenture Trustee has actual knowledge of
such Default or has received notice thereof pursuant to Section 5.02. Except
in the case of an Event of 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 and its officers, directors, employees and
agents 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 anything to the contrary, all payments required to be made
pursuant to this Section 6.07, to the extent unpaid, shall not be made from
the Trust Assets; PROVIDED, HOWEVER, if an Event of Default has occurred
payments required to be made pursuant to this Section 6.07 shall be paid in
accordance with Section 5.06; PROVIDED, FURTHER, that any payments required
to be made pursuant to this Section 6.07, if unpaid, shall not constitute a
general recourse claim against the Issuer.
The Issuer's, Servicer's and Administrator'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(e) 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:
(a) the Indenture Trustee fails to comply with Section 6.11;
(b) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, shall
have entered a decree or order granting relief or appointing a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or similar
official) for the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the Indenture
Trustee's affairs, provided any such decree or order shall have continued
unstayed and in effect for a period of thirty (30) consecutive days;
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(c) 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
(d) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed, the Issuer shall promptly
appoint a successor Indenture Trustee.
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.
(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
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necessary or desirable. If the Administrator shall not have joined in such
appointment within fifteen (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.
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
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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 Illinois banking corporation 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 Pooling
and Servicing Agreement (the foregoing documents, the "INDENTURE TRUSTEE
DOCUMENTS") and to authenticate the Notes.
(b) DUE AUTHORIZATION; BINDING OBLIGATION. 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.
The Indenture Trustee Documents constitute the legal, valid and binding
obligation of the Indenture Trustee enforceable in accordance with their
terms, except as enforcement may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditor's rights generally and
by the availability of equitable remedies.
(c) NO CONFLICT. The execution and delivery of the Indenture Trustee
Documents, the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof (including the authentication of the
Notes), will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, any indenture, contract, agreement,
mortgage, deed of trust, or other instrument to which the Indenture Trustee
is a party or by which it or any of its property is bound.
(d) NO VIOLATION. The execution and delivery of the Indenture
Trustee Documents, the performance of the transactions contemplated thereby
and the fulfillment of the terms thereof (including the authentication of
the Notes), will not conflict with or violate, in any material respect, any
Requirements of Law applicable to the Indenture Trustee.
(e) ALL CONSENTS REQUIRED. All approvals, authorizations, consents,
orders or other actions of any Person or any Governmental Authority
applicable to the Indenture Trustee, required in connection with the
execution and delivery of the Indenture Trustee Documents, the performance
by the Indenture Trustee of the transactions contemplated thereby and the
fulfillment by the Indenture Trustee of the terms thereof (including the
authentication of the Notes), have been obtained.
(f) VALIDITY, ETC. Each Indenture Trustee Document constitutes a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as such
enforceability may be limited by Insolvency Laws and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity) or by an implied covenant of good
faith and fair dealing.
SECTION 6.14 EXECUTION OF TRANSACTION DOCUMENTS. The Issuer hereby
requests and the Indenture Trustee agrees to execute and deliver the Pooling and
Servincing Agreement and Administration Agreement.
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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 (thirty) 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 fifteen (15) days
after the Issuer or the Trust Depositor 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 or Trust Depositor 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.
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SECTION 7.04. REPORTS BY INDENTURE TRUSTEE. If required by TIA Section
313(a), within sixty (60) days after January 31 beginning with January 31,
1999, the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
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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
Pooling 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 Indenture Trustee shall
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 Pooling 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 Pooling 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 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;
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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, 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 E Notes shall be distributed to the
Class E Noteholders ratably, without priority of any one Class E
Note over any other Class E Note, in the proportion that the
aggregate amount of all accrued but unpaid interest to the date
of distribution on each Class E Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class E Notes;
NINTH, 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;
TENTH, 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;
ELEVENTH, 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
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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;
TWELFTH, 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;
THIRTEENTH, 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;
FOURTEENTH, 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;
FIFTEENTH, 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;
SIXTEENTH, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to the
Class E Noteholders to pay in full the aggregate amount of the
Class E Principal Payment then due pursuant to or in respect of
the Class E Notes, without priority of any one Class E Note over
any other Class E Note, in the proportion that the aggregate
unpaid principal amount of each Class E Note bears to the
aggregate unpaid principal amount of all Class E Notes; and
SEVENTEENTH, the aggregate amount of Additional Principal,
if any, of such installment or payment remaining thereafter shall
be paid, to the Class A Notes sequentially until the Principal
Amount of the Class A Notes has been reduced to zero, then to the
Class B Notes until the Principal Amount of the Class B Notes has
been reduced to zero, then to the Class C Notes until the
Principal Amount of the Class C Notes has been reduced to zero,
then to the Class D Notes until the Principal Amount of the Class
D Notes has been reduced to zero, then to the Class E Notes until
the Principal Amount of the Class E Notes has been reduced to
zero.
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred,
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 Pooling and Servicing
Agreement. Except as otherwise provided in Section 7.03 of the Pooling and
Servicing Agreement, all income or other gain
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from investments of moneys deposited in such Trust Accounts shall be
deposited by the Indenture Trustee in the Collection Account, and any loss
resulting from such investments shall be charged to the related Trust
Account. The Issuer will not direct the Indenture Trustee to make any
investment of any funds or to sell any investment held in any of the Trust
Accounts unless the security interest granted and perfected in such account
will continue to be perfected in such investment or the proceeds of such
sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as Indenture Trustee, in
accordance with their terms.
(c) If (i) the Issuer shall have failed to give written investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 11:00 a.m., New York City time (or such other time as may be agreed
by the Issuer and Indenture Trustee), on any Business Day or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.02 or (iii) if such Notes shall have been declared due and payable following
an Event of Default, but amounts collected or receivable from the Collateral are
being applied in accordance with Section 5.05 as if there had not been such a
declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in Eligible
Investments described in clause (vi) of the definition thereof in the Pooling
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 Pooling 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 upon receipt by the Indenture Trustee of an Opinion of Counsel,
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 and upon
receipt by the Indenture Trustee of an Opinion of Counsel, also may, with prior
notice to each Rating Agency, and with the consent of a Majority in Interest, by
Act of such Holders delivered to the Issuer and the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights
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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 Noteholder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture, the Pooling and Servicing Agreement or the
Notes unless such consideration is offered to be paid to all Noteholders that so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of the Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Indenture Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
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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
Pooling 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 (the "Redemption Price"); 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 twenty (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 twenty (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.
45
<PAGE>
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 ninety (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 ninety (90) days of such release) of the property or securities proposed
to be released
46
<PAGE>
and stating that in the opinion of such person the proposed release will not
impair the security created by this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall also
furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property or securities (other than property described in clauses (A) or (B) of
Section 11.01(b)(v)) released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the certificates
required by clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be furnished in
the case of any release of property or securities if the fair value thereof as
set forth in the related Officer's Certificate is less than $25,000 or less than
one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the
Issuer may, without compliance with the other provisions of this Section, (A)
collect, liquidate, sell or otherwise dispose of the Contracts as and to the
extent permitted or required by the Transaction Documents, (B) make cash
payments out of the Trust Accounts as and to the extent permitted or required by
the Transaction Documents, so long as the Issuer shall deliver to the Indenture
Trustee every twelve months, commencing on the [_______________] 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 give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Servicer, the
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.
47
<PAGE>
SECTION 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "ACT" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, 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 Pooling and Servicing
Agreement for such recipient.
Each party hereto may, by Notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent Notices shall be sent.
SECTION 11.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for Notice to Noteholders of any event, such Notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such Notice. In any case where Notice to Noteholders is given by mail,
neither the failure to mail such Notice nor any defect in any Notice so mailed
to any particular Noteholder shall affect the sufficiency of such Notice with
respect to other Noteholders, and any Notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for Notice in any manner, such Notice may be
waived in writing by any Person entitled to receive such Notice, either before
or after the event, and such waiver shall be the equivalent of such Notice.
Waivers of Notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event of Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
48
<PAGE>
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 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
49
<PAGE>
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 NOTEHOLDERS WITH OTHER NOTEHOLDERS.
Noteholders may communicate with other Noteholders with respect to their rights
under this Indenture or the Notes pursuant to Section 312(b) of the TIA. Every
Noteholder, by receiving and holding the same, agrees with the Issuer and the
Indenture Trustee that none of the Issuer and the Indenture Trustee nor any
agent of the Issuer and the Indenture Trustee shall be deemed to be in violation
of any existing law, or any law hereafter enacted which does not specifically
refer to Section 312 of the TIA, by reason of the disclosure of any such
information as to the names and addresses of the Noteholders in accordance with
Section 312 of the TIA, regardless of the source from which such information was
derived, and that the Indenture Trustee shall not be held accountable by reason
of mailing any material pursuant to a request made under Section 312(b) of the
TIA.
SECTION 11.20. LISTING RESTRICTIONS. Neither the Issuer nor the Owner
Trustee acting on behalf of the Issuer will (i) list or cause the Class D Notes
or the Class E Notes to be listed or traded on an established securities market
(within the meaning of Treasury Regulation Section 1.7704-1(b)), or (ii)
cooperate in, or facilitate, the establishment of such a market.
The provisions of TIA Sections 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
[signature page follows]
50
<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 EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (Delaware), not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee under the Trust
Agreement
By:______________________________________
Printed Name:_________________________
Title:________________________________
HARRIS TRUST AND SAVINGS BANK, not in its individual
capacity but solely as Indenture Trustee
By:______________________________________
Printed Name:_________________________
Title:________________________________
51
<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]
52
<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]
53
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
[ ]% CLASS A-1 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. __________
Newcourt Equipment Trust Securities 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($____) 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.
A-1-1
<PAGE>
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.
A-1-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as of the date set forth
below.
Date: [ ] NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (Delaware), not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:______________________________________
Printed Name:
---------------------
Title:
----------------------------
A-1-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture
Trustee
By:______________________________________
Authorized Signatory
A-1-4
<PAGE>
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-1 Receivable- Backed Notes (the "CLASS A-1
NOTES"), all issued under an Indenture, dated as of October [ ], 1998 (the
"INDENTURE"), between the Issuer and Harris Trust and Savings Bank, 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 Pooling 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 (5) days of such Distribution
Date and the amount then due and payable shall be payable only upon presentation
and surrender of this Note at the Corporate Trust Office of the Indenture
Trustee or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of Chicago.
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-1 Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder by acceptance of a Note or a beneficial interest in a Note
covenants and agrees that no recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner Trustee or the Indenture
Trustee on the Notes or under the Indenture or any certificate or other writing
delivered in connection therewith, against (i) the Indenture Trustee or the
Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of the Indenture Trustee or the Owner Trustee in its
A-1-5
<PAGE>
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.
A-1-6
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
[ ]% CLASS A-2 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
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.
A-2-1
<PAGE>
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.
A-2-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (Delaware), not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:______________________________________
Printed Name:
---------------------
Title:
----------------------------
A-2-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture
Trustee
By:________________________________________
Authorized Signatory
A-2-4
<PAGE>
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-2 Receivable-Backed Notes (the
"CLASS A-2 NOTES"), all issued under an Indenture, dated as of October [ ],
1998 (the "INDENTURE"), between the Issuer and Harris Trust and Savings Bank,
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 Pooling 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 (5) days of such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
Chicago.
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 cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
A-2-5
<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 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.
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.
A-2-6
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
[ ]% CLASS A-3 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
payable on the earlier of [ ] (the "CLASS A-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.
A-3-1
<PAGE>
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.
A-3-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (Delaware), not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:_______________________________________
Printed Name:
----------------------
Title:
----------------------------
A-3-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture
Trustee
By:_______________________________________
Authorized Signatory
A-3-4
<PAGE>
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-3 Receivable-Backed Notes (the "CLASS
A-3 NOTES"), all issued under an Indenture, dated as of October [ ], 1998 (the
"INDENTURE"), between the Issuer and Harris Trust and Savings Bank, 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 Pooling 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 (5) days of such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
Chicago.
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 cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
A-3-5
<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 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.
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.
A-3-6
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
[ ]% CLASS A-4 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"ISSUER"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [ ] Dollars ($___________)
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.
A-4-1
<PAGE>
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.
A-4-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (Delaware), not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee, under the Trust
Agreement
By:_______________________________________
Printed Name:
----------------------
Title:
-----------------------------
A-4-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture
Trustee
By:________________________________________
Authorized Signatory
A-4-4
<PAGE>
[REVERSE OF CLASS A-4 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-4 Receivable-Backed Notes (the "CLASS
A-4 NOTES"), all issued under an Indenture, dated as of October [ ], 1998 (the
"INDENTURE"), between the Issuer and Harris Trust and Savings Bank, 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 Pooling 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 (5) days of such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
Chicago.
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 cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
A-4-5
<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 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.
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.
A-4-6
<PAGE>
EXHIBIT B
FORM OF CLASS B NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
[ ]% CLASS B RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1998-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as
the "ISSUER"), for value received, hereby promises to pay to Cede & Co., or
its registered assigns, the principal sum of [ ] Dollars
($_________) 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, no
payments of principal of the Class B Notes shall be made until the principal
on the 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.
B-1
<PAGE>
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
B-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (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-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture
Trustee
By:____________________________________
Authorized Signatory
B-4
<PAGE>
[REVERSE OF CLASS B NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class B Receivable-Backed Notes (the "CLASS B
NOTES"), all issued under an Indenture, dated as of October [ ], 1998 (the
"INDENTURE"), between the Issuer and Harris Trust and Savings Bank, 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 Pooling 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 (5) days of such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
Chicago.
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 cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
B-5
<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 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.
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-6
<PAGE>
EXHIBIT C
FORM OF CLASS C NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
[ ]% CLASS C RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. _______
Newcourt Equipment Trust Securities 1998-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as
the "ISSUER"), for value received, hereby promises to pay to Cede & Co., or
its registered assigns, the principal sum of [ ] Dollars
($_________) 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, no
payments of principal of the Class C Notes shall be made until the principal
on the 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.
C-1
<PAGE>
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
C-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (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
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture
Trustee
By:_______________________________________
Authorized Signatory
C-4
<PAGE>
[REVERSE OF CLASS C NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class C Receivable-Backed Notes (the "CLASS C
NOTES"), all issued under an Indenture, dated as of October [ ], 1998 (the
"INDENTURE"), between the Issuer and Harris Trust and Savings Bank, 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 Pooling 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 (5) days of such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
Chicago.
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 cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
C-5
<PAGE>
Each Noteholder, by acceptance of a Note or 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.
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-6
<PAGE>
EXHIBIT D
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 TWO 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 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.
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.
D-1
<PAGE>
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 EQUIPMENT TRUST SECURITIES 1998-1
[ ]% CLASS D RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Newcourt Equipment Trust Securities 1998-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as
the "ISSUER"), for value received, hereby promises to pay to [ ].,
or its registered assigns, the principal sum of [ ] Dollars
($_________) 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, no
payments of principal of the Class D Notes shall be made until the principal
on the 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.
D-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (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-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture
Trustee
By:_______________________________________
Authorized Signatory
D-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 October [ ], 1998 (the
"INDENTURE"), between the Issuer and Harris Trust and Savings Bank, 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 Pooling 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 (5) days of such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
Chicago.
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 cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
D-5
<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 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.
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 E NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY
THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
TERMINATION DATE") WHICH IS TWO 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 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.
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.
E-1
<PAGE>
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 EQUIPMENT TRUST SECURITIES 1998-1
[ ]% CLASS E RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Newcourt Equipment Trust Securities 1998-1, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as
the "ISSUER"), for value received, hereby promises to pay to [ ].,
or its registered assigns, the principal sum of [ ] Dollars
($_________) payable on the earlier of [ ] (the "CLASS E MATURITY
DATE") and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture referred to on the reverse hereof. No payments of principal of the
Class E Notes shall be made until the principal on all the Class A-1 Notes
has been paid in full. After the occurrence of an Event of Default, no
payments of principal of the Class E Notes shall be made until the principal
on the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes,
Class C Notes and Class D 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-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (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-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture
Trustee
By:________________________________________
Authorized Signatory
E-4
<PAGE>
[REVERSE OF CLASS E NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class E Receivable- Backed Notes (the "CLASS E
NOTES"), all issued under an Indenture, dated as of October [ ], 1998 (the
"INDENTURE"), between the Issuer and Harris Trust and Savings Bank, as Indenture
Trustee (the "INDENTURE TRUSTEE"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Class E Notes and the other Classes of Notes described in the Indenture
(collectively, the "NOTES") are and will be equally and ratably secured by the
Collateral pledged as security therefor as provided in the Indenture subject to
the priorities of allocations as to interest and principal payments as described
therein and in the Pooling and Servicing Agreement.
Principal of the Class E Notes will be payable on the earlier of the Class
E Maturity Date and the Redemption Date, if any, pursuant to Section 10.01 of
the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class E Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution Date
shall be made by check mailed to the Person whose name appears as the Registered
Holder of this Note (or one or more Predecessor Notes) on the Note Register as
of the close of business on each Record Date, 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 (5) days of such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
Chicago.
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 E Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
E-5
<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 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.
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 NOTE ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
______________________________________________________________________________
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________________
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:_______________________
Signature Guaranteed:
______________________________________ __________________________________
Signature must be guaranteed by an Notice: The signature(s) on this
eligible guarantor institution which assignment must correspond with the
is a participant in the Securities name(s) as it appears on the face of
Transfer Agent's Medallion Program the within Note in every particular,
(STAMP) or similar signature without alteration or enlargement or
guarantee program. any change whatsoever.
_____________________________________
(Authorized Officer)
F-1
<PAGE>
EXHIBIT G
FORM OF NOTE DEPOSITORY AGREEMENT
G-1
<PAGE>
October 20, 1998
Newcourt Receivables Corporation II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Re: Newcourt Equipment Trust Securities 1998-1
Class A-1 Receivable-Backed Notes, Series 1998-1,
Class A-2 Receivable-Backed Notes, Series 1998-1,
Class A-3 Receivable-Backed Notes, Series 1998-1,
Class A-4 Receivable-Backed Notes, Series 1998-1,
Class B Receivable-Backed Notes, Series 1998-1 and
Class C Receivable-Backed Notes, Series 1998-1
(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 Equipment Trust
Securities 1998-1 (the "TRUST") in connection with the filing by the Trust
Depositor of the registration statement on Form S-1 (File No. 333-58677) (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 Pooling 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
October 20, 1998
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.
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 other state or
jurisdiction.
<PAGE>
Newcourt Receivables Corporation II
October 20, 1998
Page 3
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
October 20, 1998
Re: Newcourt Receivables Corporation II
Registration Statement on Form S-1 (Reg. No. 333-58677)
-------------------------------------------------------
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 Class A-1 Receivable-Backed
Notes, Series 1998-1, Class A-2 Receivable-Backed Notes, Series 1998-1, Class
A-3 Receivable-Backed Notes, Series 1998-1, Class A-4 Receivable-Backed
Notes, Series 1998-1, Class B Receivable-Backed Notes, Series 1998-1, and
Class C Receivable-Backed Notes, Series 1998-1 (collectively the "Notes") to
be issued from the Newcourt Equipment Trust Securities 1998-1, a limited
purpose Delaware business trust (the "Trust"). The property of the Trust
will include (a) a pool of contracts consisting of certain conditional sale
agreements, true leases, finance leases, installment payment agreements and
similar types of financing agreements with end-users of a wide variety of
equipment and services as described in the Prospectus (defined below), (b)
collections on such contracts, and (c) monies available in a reserve fund.
The Notes will be issued pursuant to an indenture dated as of August 21, 1998
(the "Indenture") between the Trust and Harris Trust and Savings Bank, as
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 "Certain 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
<PAGE>
and Exchange Commission (the "Commission") initially on July 8, 1998, 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 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 opinion. 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 opinion. 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," "Certain Federal Income Tax Consequences," and "Legal
Matters" in the Prospectus, 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>
Exhibit 10.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
POOLING AND SERVICING AGREEMENT
among
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1,
as Issuer,
NEWCOURT RECEIVABLES CORPORATION II,
as Trust Depositor,
NEWCOURT FINANCIAL USA INC.,
as Servicer
and
HARRIS TRUST AND SAVINGS BANK,
as Indenture Trustee
Dated as of October [ ], 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 1.05. ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE TWO
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS. . . . . . . . . . . . . . . . . . . 26
SECTION 2.01. CREATION AND FUNDING OF TRUST; TRANSFER OF TRUST ASSETS.. . . . . . 26
SECTION 2.02. CONDITIONS TO THE CLOSING.. . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE.. . . . . . . . . . . . . . . . . . . . 27
SECTION 2.04. CONVEYANCE OF SUBSEQUENT CONTRACTS. . . . . . . . . . . . . . . . . 27
SECTION 2.05. RELEASE OF EXCLUDED AMOUNTS.. . . . . . . . . . . . . . . . . . . . 29
SECTION 2.06. DELIVERY OF INSTRUMENTS . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST DEPOSITOR. . . . 30
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.. . . . . . . 31
ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS. . . . . . . . . . . . 33
SECTION 4.01. CUSTODY OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.02. FILING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.03. NAME CHANGE OR RELOCATION.. . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.04. COSTS AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE FIVE
SERVICING OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.01. APPOINTMENT AND ACCEPTANCE; RESPONSIBILITY FOR CONTRACT
ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.02. GENERAL DUTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.03. CONSENT TO ASSIGNMENT OR REPLACEMENT. . . . . . . . . . . . . . . . 35
SECTION 5.04. DISPOSITION UPON TERMINATION OF CONTRACT. . . . . . . . . . . . . . 35
SECTION 5.05. SUBSERVICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.06. FURTHER ASSURANCE.. . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.07. NOTICE TO OBLIGORS. . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.08. COLLECTION EFFORTS; MODIFICATION OF CONTRACTS.. . . . . . . . . . . 36
SECTION 5.09. PREPAID CONTRACT. . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.10. ACCELERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11. TAXES AND OTHER AMOUNTS.. . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.12. SUITS BY SERVICER.. . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.13. REMITTANCES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 5.14. SERVICER ADVANCES.. . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.15. REALIZATION UPON DEFAULTED CONTRACT.. . . . . . . . . . . . . . . . 37
SECTION 5.16. MAINTENANCE OF INSURANCE POLICIES.. . . . . . . . . . . . . . . . . 37
SECTION 5.17. OTHER SERVICER COVENANTS. . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.18. SERVICING COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.19. PAYMENT OF CERTAIN EXPENSES BY SERVICER.. . . . . . . . . . . . . . 38
SECTION 5.20. RECORDS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.21. INSPECTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.22. TRUSTEES TO COOPERATE IN RELEASES.. . . . . . . . . . . . . . . . . 39
ARTICLE SIX
COVENANTS OF THE TRUST DEPOSITOR . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.01. CORPORATE EXISTENCE.. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.02. CONTRACTS NOT TO BE EVIDENCED BY PROMISSORY NOTES. . . . . . . . . 40
SECTION 6.03. SECURITY INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.04. DELIVERY OF COLLECTIONS. . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.05. REGULATORY FILINGS. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.06. COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.07. ACTIVITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.08. INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.09. GUARANTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.10. INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.11. MERGER; TRANSFERS. . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.12. DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.13. OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.14. SEPARATE CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . 41
SECTION 6.15. LOCATION; RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.16. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES.. . . . . . . . . . . . . 42
SECTION 6.17. BANKRUPTCY LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.18 LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS.. . . . . . . 43
SECTION 6.19. CHIEF EXECUTIVE OFFICE. . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE SEVEN
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND . . . . . . . . . . . . . . 44
SECTION 7.01. TRUST ACCOUNTS; COLLECTIONS.. . . . . . . . . . . . . . . . . . . . 44
SECTION 7.02. RESERVE FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.03. TRUST ACCOUNT PROCEDURES. . . . . . . . . . . . . . . . . . . . . . 44
SECTION 7.04. SECURITYHOLDER DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 45
SECTION 7.05. ALLOCATIONS AND DISTRIBUTIONS.. . . . . . . . . . . . . . . . . . . 45
SECTION 7.06. REPURCHASES OF, OR SUBSTITUTION FOR, CONTRACTS FOR BREACH OF
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.07. REASSIGNMENT OF REPURCHASED OR SUBSTITUTED CONTRACTS. . . . . . . . 50
SECTION 7.08. SELLER'S AND TRUST DEPOSITOR'S REPURCHASE OPTION. . . . . . . . . . 51
</TABLE>
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<TABLE>
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ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.01. SERVICER DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.02. SERVICER TRANSFER.. . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.03. APPOINTMENT OF SUCCESSOR SERVICER; RECONVEYANCE; SUCCESSOR
SERVICER TO ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.04. NOTIFICATION TO SECURITYHOLDERS.. . . . . . . . . . . . . . . . . . 54
SECTION 8.05. EFFECT OF TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.06. DATABASE FILE.. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.07. SUCCESSOR SERVICER INDEMNIFICATION. . . . . . . . . . . . . . . . . 54
SECTION 8.08. RESPONSIBILITIES OF THE SUCCESSOR SERVICER. . . . . . . . . . . . . 54
SECTION 8.09. RATING AGENCY CONDITION FOR SERVICER TRANSFER.. . . . . . . . . . . 55
ARTICLE NINE
REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.01. MONTHLY REPORTS.. . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.02. OFFICER'S CERTIFICATE.. . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.03. OTHER DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . 56
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER. . . . . . . . . . . . 56
SECTION 9.06. ANNUAL SUMMARY STATEMENT. . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE TEN
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.01. SALE OF TRUST ASSETS. . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE ELEVEN
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.01. AMENDMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.02. PROTECTION OF TITLE TO TRUST. . . . . . . . . . . . . . . . . . . . 60
SECTION 11.03. GOVERNING LAW.. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.04. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.05. SEVERABILITY OF PROVISIONS. . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.06. THIRD PARTY BENEFICIARIES.. . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.07. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.08. HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.09. NO BANKRUPTCY PETITION. . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.10. JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.11. TAX CHARACTERIZATION. . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.12. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.13. LIMITATION OF LIABILITY OF OWNER TRUSTEE. . . . . . . . . . . . . . 63
</TABLE>
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SCHEDULES
<TABLE>
<S> <C>
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 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . J-1
Exhibit K [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . K-1
Exhibit L [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . L-1
Exhibit M Form of Subsequent Transfer Agreement . . . . . . . . . . . . . . M-1
</TABLE>
iv
<PAGE>
This POOLING AND SERVICING AGREEMENT, dated as of October [ ], 1998,
is among Newcourt Equipment Trust Securities 1998-1 (together with its
successors and assigns, the "ISSUER" or the "TRUST"), Newcourt Receivables
Corporation II (together with its successor and assigns, the "TRUST
DEPOSITOR"), Harris Trust and Savings Bank (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. For purposes of calculating ADCB
as referred to in Section 3.02, Section 3.03 and Section 3.05 of the Transfer
and Sale Agreement the Discount Rate shall be deemed to be [ ]%.
"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 transferred, the ADCB of such
Subsequent Contracts and the related 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.
"ADDITIONAL PRINCIPAL" means, with respect to any Distribution Date, an
amount equal to (a) the Total Principal Payment Amount, less (b) the sum 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, the Class C Principal
Payment Amount, the Class D Principal Payment Amount and the Class E
Principal Payment Amount.
<PAGE>
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as
of October [ ], 1998 by and among the Trust, Newcourt USA, the Trust
Depositor and the Indenture Trustee.
"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 Pooling 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, at
any date of determination, the sum of the Principal Amounts of such Notes 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 inclusive of such payments
received from Vendors pursuant to Vendor Agreements, but excluding the Excluded
Amounts and any Excluded Residual Investment, as well as Prepayments received on
or before, the last day of the Collection Period immediately preceding such
Distribution Date, (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 (and Reserve Fund, up
to the Reserve Fund Amount), together with earnings on funds therein, and (iv)
any amounts received with respect to the Guaranteed Residual Investments.
Amounts withdrawn from the Reserve Fund pursuant to Section 7.05 will also be
considered Available Amounts.
"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, Chicago, Illinois 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.
"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 REGISTER" has the meaning specified in the Trust Agreement.
"CERTIFICATEHOLDER" has the meaning specified in the Trust Agreement.
"CERTIFICATE" means the Class F Certificate.
"CLASS" means any of the group of Notes or the Certificate identified
herein as, as applicable, the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the
Class D Notes, the Class E Notes, or the Class F Certificate.
2
<PAGE>
"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 [ ]%
"CLASS A TARGET PRINCIPAL AMOUNT" means, with respect to any Distribution
Date, the product of (a) the Class A Percentage 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.
"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 [ ] 1999
Distribution Date.
"CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1 Note is
registered in the Note Register.
"CLASS A-1 NOTES" means the $[ ] aggregate initial
principal amount of Class A-1 Receivable-Backed Notes, Series 1998-1 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, the Total Principal Payment Amount and (ii) following the occurrence
of an Event of Default, all remaining Available Amounts after payment has been
made in accordance with Section 7.05(b)(i)-(viii).
"CLASS A-2 INTEREST RATE" means [ ]% per annum
(calculated on the basis of a year of 360 days and twelve 30-day months).
"CLASS A-2 MATURITY DATE" means the [ ] Distribution
Date.
"CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"CLASS A-2 NOTES" means the $[ ] aggregate initial
principal amount of Class A-2 Receivable-Backed Notes, Series 1998-1 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, the difference between (1) the sum of the Principal
Amounts of the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes
immediately prior to such Distribution Date, and (2) the Class A Target
Principal Amount and (B) following the occurrence of an Event of Default, all
remaining Available Amounts after payment has been made in accordance with
Section 7.05(b)(i)-(ix).
"CLASS A-3 INTEREST RATE" means [ ]% per annum
(calculated on the basis of a year of 360 days and twelve 30-day months).
"CLASS A-3 MATURITY DATE" means the [ ] Distribution
Date.
"CLASS A-3 NOTEHOLDER" means the Person in whose name a Class A-3 Note is
registered in the Note Register.
"CLASS A-3 NOTES" means the $[ ] aggregate initial
principal amount of Class A-3 Receivable-Backed Notes, Series 1998-1 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
3
<PAGE>
lesser of (i) the Principal Amount of the Class A-3 Notes and (ii)(A) prior
to the occurrence of any Event of Default, the difference between (1) the sum
of the Principal Amounts of the Class A-3 Notes and the Class A-4 Notes
immediately prior to such Distribution Date, and (2) the Class A Target
Principal Amount and (B) following the occurrence of an Event of Default, all
remaining Available Amounts after payment has been made in accordance with
Section 7.05(b)(i)-(x).
"CLASS A-4 INTEREST RATE" means [ ]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS A-4 MATURITY DATE" means the [ ] Distribution
Date.
"CLASS A-4 NOTEHOLDER" means the Person in whose name a Class A-4 Note is
registered in the Note Register.
"CLASS A-4 NOTES" means the $[ ] aggregate initial
principal amount of Class A-4 Receivable-Backed Notes, Series 1998-1 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, the
difference between (1) the Principal Amount of the Class A-4 Notes immediately
prior to such Distribution Date, and (2) the Class A Target Principal Amount and
(B) following the occurrence of an Event of Default, all remaining Available
Amounts after payment has been made in accordance with Section 7.05(b)-(xi).
"CLASS B FLOOR" means, with respect to each Distribution Date, (a) 2.40%
of the ADCB of the Contracts Pool as of the Closing Date, plus (b) the
Principal Differential with respect to such Distribution Date, minus (c) the
sum, immediately prior to such Distribution Date, of the Principal Amount of
the Class C Notes, the Principal Amount of the Class D Notes, the Principal
Amount of the Class E Notes and the amount on deposit in the Reserve Fund
(after giving effect to amounts to be withdrawn on such Distribution Date).
"CLASS B INTEREST RATE" means [ ]% per annum
(calculated on the basis of a year of 360 days and twelve 30-day months).
"CLASS B MATURITY DATE" means the [ ] Distribution
Date.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered in the Note Register.
"CLASS B NOTES" means the $[ ] aggregate initial
principal amount of Class B Receivable-Backed Notes, Series 1998-1 issued
pursuant to the Indenture.
"CLASS B PERCENTAGE" means [ ]%
"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, the difference between (1) the Principal Amount of the Class B Notes
immediately prior to such Distribution Date, and (2) the greater of (x) the
Class B Target Principal Amount and (y) the Class B Floor and (B) following the
occurrence of an Event of Default, all remaining Available Amounts after payment
has been made in accordance with Section 7.05(b)(i)-(xii).
"CLASS B TARGET PRINCIPAL AMOUNT" means, with respect to any Distribution
Date, the product of (a) the Class B Percentage 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.
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<PAGE>
"CLASS C FLOOR" means, with respect to each Distribution Date, (a) 1.25%
of the ADCB of the Contracts Pool as of the Closing Date, plus (b) the
Principal Differential with respect to such Distribution Date, minus (c) the
sum, immediately prior to such Distribution Date, of the Principal Amount of
the Class D Notes, the Principal Amount of the Class E Notes and the amount
on deposit in the Reserve Fund (after giving effect to amounts to be
withdrawn on such Distribution Date), PROVIDED, HOWEVER, that if the
Principal Amount of the Class B Notes is less than or equal to the Class B
Floor, on such Distribution Date, the Class C Floor will equal the Principal
Amount of the Class C Notes utilized in the calculation of the Class B Floor
for such Distribution Date.
"CLASS C INTEREST RATE" means [ ]% per annum
(calculated on the basis of a year of 360 days and twelve 30-day months).
"CLASS C MATURITY DATE" means the [ ] Distribution
Date.
"CLASS C NOTEHOLDER" means the Person in whose name a Class C Note is
registered in the Note Register.
"CLASS C NOTES" means the $[ ] aggregate initial
principal amount of Class C Receivable-Backed Notes, Series 1998-1 issued
pursuant to the Indenture.
"CLASS C PERCENTAGE" means [ ]%
"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, the difference between (1) the Principal Amount of the Class C Notes
immediately prior to such Distribution Date, and (2) the greater of (x) the
Class C Target Principal Amount and (y) the Class C Floor and (B) following the
occurrence of an Event of Default, all remaining Available Amounts after payment
has been made in accordance with Section 7.05(b)(i)-(xiii).
"CLASS C TARGET PRINCIPAL AMOUNT" means, with respect to any Distribution
Date, the product (a) the Class C Percentage 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.
"CLASS D FLOOR" means, with respect to each Distribution Date, (a) 0.85%
of the ADCB of the Contracts Pool as of the Closing Date, plus (b) the
Principal Differential with respect to such Distribution Date, minus (c) the
sum, immediately prior to such Distribution Date, of the Principal Amount of
the Class E Notes and the amount on deposit in the Reserve Fund (after giving
effect to amounts to be withdrawn on such Distribution Date), PROVIDED,
HOWEVER, that if the Principal Amount of the Class C Notes is less than or
equal to the Class C Floor, on such Distribution Date, the Class D Floor will
equal the Principal Amount of the Class D Notes utilized in the calculation
of the Class C Floor for such Distribution Date.
"CLASS D INTEREST RATE" means [ ]% per annum
(calculated on the basis of a year of 360 days and twelve 30-day months).
"CLASS D MATURITY DATE" means the [ ] Distribution
Date.
"CLASS D NOTEHOLDER" means the Person in whose name a Class D Note is
registered in the Note Register.
"CLASS D NOTES" means the $[ ] aggregate initial
principal amount Class D Receivable-Backed Notes Series 1998-1, issued pursuant
to the Indenture.
"CLASS D PERCENTAGE" means [ ]%
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"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, the difference between (1) the Principal Amount of the Class D Notes
immediately prior to such Distribution Date, and (2) the greater of (x) the
Class D Target Principal Amount and (y) the Class D Floor and (B) following the
occurrence of an Event of Default, all remaining Available Amounts after payment
has been made in accordance with Section 7.05(b)(i)-(xiv).
"CLASS D TARGET PRINCIPAL AMOUNT" means, with respect to any Distribution
Date, the product of (a) the Class D Percentage 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.
"CLASS E FLOOR" means, with respect to each Distribution Date, (a) 0.60%
of the ADCB of the Contracts Pool as of the Closing Date, plus (b) the
Principal Differential with respect to such Distribution Date, minus (c) the
amount on deposit in the Reserve Fund (after giving effect to amounts to be
withdrawn on such Distribution Date), PROVIDED, HOWEVER that if the Principal
Amount of the Class D Notes is less than or equal to the Class D Floor, on
such Distribution Date, the Class E Floor will equal the Principal Amount of
the Class E Notes utilized in the calculation of the Class D Floor for such
Distribution Date.
"CLASS E INTEREST RATE" means [____]% per annum (calculated on the basis of
a year of 360 days and twelve 30-day months).
"CLASS E MATURITY DATE" means the [____] Distribution Date.
"CLASS E NOTEHOLDER" means the Person in whose name a Class E Note is
registered in the Note Register.
"CLASS E NOTES" means the $[_____] aggregate initial principal amount Class
E Receivable-Backed Notes Series 1998-1, issued pursuant to the Indenture.
"CLASS E PERCENTAGE" means [ ]%
"CLASS E PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date and the Class E 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 E Notes and (ii)(A) prior to the occurrence of any Event of
Default, the difference between (1) the Principal Amount of the Class E Notes
immediately prior to such Distribution Date, and (2) the greater of (x) the
Class E Target Principal Amount and (y) the Class E Floor and (B) following the
occurrence of an Event of Default, all remaining Available Amounts after payment
has been made in accordance with Section 7.05(b)(i)-(xv).
"CLASS E TARGET PRINCIPAL AMOUNT" means, with respect to any Distribution
Date, the product of (a) the Class E Percentage 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.
"CLASS F CERTIFICATEHOLDER" means the Person in whose name a Class F
Certificate is registered in the Certificate Register.
"CLASS F CERTIFICATE" means the $[ ] initial
certificate balance of Class F Certificate, representing the beneficial equity
interest in the Trust and issued pursuant to the Trust Agreement.
"CLASS F MATURITY DATE" means the [ ] Distribution
Date.
"CLOSING DATE" means [ ], 1998.
"CODE" means the Internal Revenue Code of 1986, as amended.
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"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 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 and any Excluded Residual Investments.
"COMMISSION" means the United States Securities and Exchange Commission.
"COMPUTER DISK" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the 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 prepayment 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.
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"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 180 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 180 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.
"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,
Class B Interest Rate, Class C Interest Rate, Class D Interest Rate and Class
E 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 no losses and 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 on or after the
applicable Cutoff Date discounted monthly at the Discount Rate, (ii) as of
the Statistic Calculation Date, the present value of all of the remaining
Scheduled Payments becoming due under such Contract on or after the Initial
Cutoff Date discounted monthly at [ ]%, and (iii) 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 (or the Initial Cutoff Date, if later) 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 [
], 1998.
"DOLLAR" and "$" means lawful currency of the United States of America.
"DUFF & PHELPS" means Duff & Phelps Credit Rating Company or any
successor thereto.
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"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;
(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) as of the Closing Date, with respect to an Initial Contract,
or the Subsequent Transfer Date, with respect to a Subsequent Contract, the
Contract and any related Equipment or interest therein (other than Excluded
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, other than the Minimum Value Filing Exception, 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 60 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
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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);
(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 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
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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;
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;
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(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 the
Eligible Investments described above.
"ELIGIBLE REPURCHASE OBLIGATIONS" means repurchase obligations with respect
to any security that is a direct obligation of, or fully guaranteed by, the
United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (c)(ii) of the
definition of Eligible Investments.
"ELIGIBLE SECONDARY CONTRACT" shall mean each Secondary Contract
(i) that satisfies all the criteria set forth in the definition of
"Eligible Contract" except clauses (b), (h) (with respect to ownership by
the 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 computer work stations, personal computers, data
storage devices, mainframe and mini computers 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 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 which shall not have been waived pursuant to Section 5.02 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 Subsequent 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.
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"EXCLUDED AMOUNTS" means (i) any collections on deposit in the
Collection Account or otherwise received by the Servicer on or with respect
to the Contracts Pool or related Equipment, which collections are
attributable to any taxes, fees or other charges imposed by any Governmental
Authority, (ii) any collections representing reimbursements of insurance
premiums or payments for services that were not financed by the Seller, (iii)
collections relating to security deposits, (iv) collections relating to
payments which were scheduled to be made by any Obligor on any Contract
pursuant to the terms of such Contract prior to the Cutoff Date related to
such Contract and (iv) collections representing Late Charges on any Contract.
"EXCLUDED RESIDUAL INVESTMENTS" means Residual Investments, other than
Guaranteed Residual Investments, which are not included in the Discounted
Contract Balance of any End-User Contract and, therefore, are not financed with
the proceeds of the Notes.
"EXPIRED LEASE" means any Lease that has terminated other than on its
scheduled expiration date.
"EXPIRED LEASE PROCEEDS" means any and all cash proceeds or rents realized
from the transfer 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.
"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 with
respect to which the Seller may look to either the Vendor or to the related
Obligor on an End-User Contract constituting a Lease, and not just the value of
the related Equipment itself, to recover its Residual Investment.
"GUARANTY" means the guaranty of performance of the servicing obligations
of Newcourt USA under the Guaranty by [ ], dated as of
October [ ], 1998, in favor of the Trust.
"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, (ii) with respect to ratings assigned by Moody's, A2 or P-1 for
one month instruments, A1 or P-1 for three month instruments, Aa3 or P-1 for
six month instruments and Aaa or P-1 for instruments with a term in excess of
six months and (iii) with respect to ratings assigned by Duff & Phelps, D-1+
for short-term instruments and AAA for long-term instruments.
"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.
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"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.
"INITIAL CLASS A-1 PRINCIPAL AMOUNT" means $[ ].
"INITIAL CLASS A-2 PRINCIPAL AMOUNT" means $[ ].
"INITIAL CLASS A-3 PRINCIPAL AMOUNT" means $[ ].
"INITIAL CLASS A-4 PRINCIPAL AMOUNT" means $[ ].
"INITIAL CLASS B PRINCIPAL AMOUNT" means $[ ].
"INITIAL CLASS C PRINCIPAL AMOUNT" means $[ ].
"INITIAL CLASS D PRINCIPAL AMOUNT" means $[ ].
"INITIAL CLASS E PRINCIPAL AMOUNT" means $[ ].
"INITIAL CLASS F CERTIFICATE BALANCE" means $[ ].
"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 [ ] 1998.
"INITIAL PRINCIPAL AMOUNT" means, when used in the context of a reference
to an individual Class of Notes, 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.
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"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.
"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 Equipment Trust Securities 1998-1, 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 true leases and financing
leases, 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 transfer 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 (or other counsel if the Servicer has no 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 transfer, 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
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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, 5.09 and/or 5.10 hereof, as applicable.
"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, Class E Maturity
Date or Class F Maturity Date.
"MINIMUM VALUE FILING EXCEPTION" any Contract secured by Equipment having
an aggregate value of less than $25,000.
"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 Bank of New York (Delaware), 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 7.04(b).
"PERMITTED LIENS" means (a) with respect to Contracts in the Contracts
Pool:
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(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:
(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.
"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 transfer, 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, the aggregate
Initial Principal Amount thereof reduced by (i) the aggregate amount of any
distributions applied in reduction of such principal amount and (ii) the
aggregate amount of any distributions then on deposit in the Note Distribution
Account, if any, for such Class of Notes established in accordance with the
Indenture and to be applied in reduction of such principal amount in accordance
with such Indenture.
"PRINCIPAL DIFFERENTIAL" means, with respect to each Distribution Date,
an amount equal to the excess, if any, of (a) the total of (i) the Principal
Amount of the Notes and Subordinated Notes as of the immediately preceding
Distribution Date after giving effect to all payments made on such
Distribution Date, minus (ii) the lesser of (A) the Total Principal Payment
Amount related to such Distribution Date and (B) Available Amounts (including
amounts to be withdrawn from the Reserve Fund on such Distribution Date)
remaining after the payment of amounts owing the Servicer and in respect of
interest on the Notes and the Subordinated Notes on such Distribution Date
over (b) the ADCB of all Contracts held by the Trust as of the last day of
the Collection Period related to such Distribution Date.
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"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 Trust Accounts and with respect to
which (a) the Indenture Trustee has noted its interest therein on its books and
records, and (b) the Indenture Trustee has purchased such investments for value
without notice of any adverse claim thereto (and, if such investments are
securities or other financial assets or interests therein, within the meaning of
Section 8-102 of the UCC as enacted in 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 (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, Moody's and Duff & Phelps, so long as
such Persons maintain a rating on the Notes; and if none of S&P, Moody's or Duff
& Phelps 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 calendar
day immediately preceding such Distribution Date (or, with respect to any
Definitive Notes, as defined in the Indenture, the last calendar day of the
related Collection Period).
"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, transfer, lease, re-lease or re-financing of repossessed
Equipment or
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other property, Insurance Proceeds 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 and Late Charges.
"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, (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, and (v) from and after the payment in full of the Class D
Notes Outstanding, Holders of Class E Notes holding Class E Notes evidencing
more than 66 2/3% of the Aggregate Principal Amount of all Class E Notes.
"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, $[ ]
(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 $[ ] which is equal to
[ ]% of the ADCB of the Contracts Pool at the Closing 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.
"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 or other payment scheduled to be made by the
related Obligor under the terms of such Contract (or, if applicable, from a
Vendor or Obligor with respect to any Guaranteed Residual Investment) after the
related Cutoff Date; it being understood that Scheduled Payments do not include
any Excluded Amount or Excluded Residual Investment.
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"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).
"SELLER REPRESENTATIONS AND WARRANTIES" means the representations and
warranties set forth in Sections 3.02, 3.03, 3.04 and 3.05 of the Transfer and
Sale 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.
"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 [ ]%.
"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
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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.
"STATISTIC CALCULATION DATE" means October [ ], 1998.
"SUBSEQUENT CONTRACT" means any Contract 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) which Contract satisfies the
Subsequent Contract Qualification Conditions.
"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, (1)
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; 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
Statistic Calculation Date, and the related Contract or Contracts
identified on the related Addition Notice were not so included (and
assuming such hypothetical inclusion satisfied the criteria set forth in
clause (a) and (b) above that would have been applicable at such time),
the representations of the Seller set forth in Section 3.05 of the
Transfer and Sale Agreement 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 [ ]
Distribution Date or, to the extent the final payment on such Contract is
due after the [ ] Distribution Date, only scheduled
payments due on or prior to such date will be included in the Discounted
Contract Balance of such Subsequent Contract;
and (2) with respect to any such Subsequent Contract 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 Subsequent 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 Closing Date.
"SUBSEQUENT CUTOFF DATE" means the date specified as such for Subsequent
Contracts in the related Subsequent Transfer Agreement.
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"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.
"SUBSTITUTION EVENT" means, with respect to any transfer of a related
Subsequent 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, (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 this Agreement or other provision which breach or other provision,
in the absence of a substitution of a Subsequent Contract for such Contract or
Contracts, would require the payment of a Transfer Deposit Amount to the Trust
in respect of such Contract, or (d) one or more Contracts then held in the
Trust and identified in the related Addition Notice has become a Prepaid
Contract and the Trust has received the related Prepayment Amount.
"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 Agreement, the Note Purchase Agreement and
the Guaranty.
"TRANSFER AND SALE AGREEMENT" means the Transfer and Sale Agreement dated
as of October [ ], 1998 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 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;
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(ii) the Equipment related to such Contracts and, in the case of any
Vendor Loan, related Applicable Security, including all proceeds from any
transfer or other disposition of such Equipment (but subject to the
exclusion and release herein of Excluded Amounts) and any Guaranteed
Residual Investment;
(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;
(vii) each Assignment; and
(viii) all income from and proceeds of the foregoing;
PROVIDED, that Transferred Assets shall not include (a) any Excluded
Residual Investment or (b) title to the Equipment related to such Contracts.
"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 October [ ], 1998, 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.
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"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
[ ], 1998, among First Union Capital Markets, a division of Wheat
First Securities, Inc. (as an underwriter thereunder and as Representative of
the underwriters), the Trust Depositor, and Newcourt USA.
"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 outstanding 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.
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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.
Each of the Owner Trustee and Administrator (as defined in the Administration
Agreement) 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 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 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"). The parties to the Agreement
hereby agree and acknowledge that title to the Equipment shall not be
transferred to the Trust hereunder and that the Trust Depositor shall retain
title to the Equipment. Although the Trust Depositor and the Trust agree that
such transfer is intended to be a 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 EXHIBIT 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) (i) an opinion of Winston & Strawn to the effect that 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) an opinion of Bose
McKinney & Evans to the effect that 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.
(p) A fully executed Guaranty.
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 and interest in the Trust Assets
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 transfer,
assign, set over and otherwise convey to the Trust, without recourse other than
as
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expressly provided herein and therein, (i) all the right and interest of the
Trust Depositor in and to 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). The
parties to the Agreement hereby agree and acknowledge that title to the
Equipment shall not be transferred to the Trust hereunder and that the Trust
Depositor shall retain title to the Equipment. Although the Trust Depositor and
the Trust agree that such transfer is intended to be a transfer 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) At least two Business Days prior to the related Subsequent
Transfer Date, the Trust Depositor shall have provided the Owner Trustee
and the Indenture Trustee with an Addition Notice complying with the
definition thereof contained herein;
(ii) there shall have occurred, with respect to each such Subsequent
Contract, a corresponding 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) 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;
(v) 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;
(vi) 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;
(vii) 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;
(viii) 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 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
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(ix) 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 Seller Representations and
Warranties 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 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 the Seller
Representations and Warranties, 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 Seller Representations
and Warranties, 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 Seller
Representations and Warranties 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 TRANSFER; 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 due 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 transfer and assignment of the Trust Assets, enforceable
against the Trust Depositor and creditors of and purchasers from the Trust
Depositor. This Agreement and the other Transaction Documents to which the
Trust Depositor is a party constitute the legal, valid and binding
obligation of the Trust Depositor enforceable in accordance with their
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
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(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 transfer and assignment of the Contracts to the Trust.
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
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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 due 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, other than
"instruments" delivered to the Indenture Trustee pursuant to Section 2.06, 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 first priority perfected
security interest in such Contracts has been granted to the Indenture
Trustee; and
(vi) within ninety (90) 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 related to such
Subsequent Contracts) and that there exists a Contract File for each
Contract and stating all exceptions to such statement, if any.
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(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
and/or the Indenture Trustee'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 Assets 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
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 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.
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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.
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
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.
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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 transfer 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 transfer or disposition of Equipment or Applicable
Security relating to a Defaulted Contract in accordance with Section 7.01 net of
any amounts payable to a Vendor.
SECTION 5.16. MAINTENANCE OF INSURANCE POLICIES. The Servicer will use
its best efforts to ensure that each Obligor maintains an Insurance Policy with
respect to the related Equipment in an amount at least equal to the sum of the
Discounted Contract Balance of the related Contract in the Contracts Pool;
PROVIDED that the Servicer, in accordance with its customary servicing
procedures, may allow Obligors to self-insure. Additionally, the Servicer will
require that each Obligor maintain property damage liability insurance during
the term of each Contract in the Contracts Pool in amounts and against risks
customarily insured against by the Obligor on equipment owned by it. If an
Obligor fails to maintain property damage insurance, the Servicer may purchase
and maintain such insurance on behalf of, and at the expense of, the Obligor.
In connection with its activities as Servicer of the Contracts, the Servicer
agrees to present, on behalf of itself, the Trust, the Indenture Trustee and the
Holders, claims to the insurer under each Insurance Policy and any such
liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Contract. The Servicer's Insurance
Policies with respect to the related Equipment will insure against liability for
personal injury and property damage relating to such Equipment, will name the
Indenture Trustee as an insured thereunder and will contain a breach of warranty
clause.
SECTION 5.17. OTHER SERVICER COVENANTS. The Servicer hereby covenants
that:
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(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 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.
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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 transfer (other than with respect to
Equipment that is replaced pursuant to Section 5.03). In connection with any
transfer 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 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 transfer.
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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 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 or non recourse financing transactions involving Newcourt USA or
any of its affiliates.
SECTION 6.08. INDEBTEDNESS. The Trust Depositor shall not create, incur,
assume or suffer to exist any Indebtedness or other liability whatsoever, except
(i) obligations incurred under this Agreement, or (ii) liabilities incident to
the maintenance of its corporate existence in good standing.
SECTION 6.09. GUARANTEES. The Trust Depositor shall not become or remain
liable, directly or contingently, in connection with any Indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other than
endorsements of negotiable instruments for deposit or collection in the ordinary
course of business), agreement to purchase or repurchase, agreement to supply or
advance funds, or otherwise.
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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; TRANSFERS. 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.
(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
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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 (and any of their
respective officers, directors, employees or agents) 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, Indiana 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 transfer 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.
The Trust Depositor shall be liable directly to and will indemnify any
injured party or any other creditor of the Trust for all losses, claims,
damages, liabilities and expenses of the Trust to the extent that the Trust
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Trust Depositor were a
general partner; PROVIDED, HOWEVER, that the Trust Depositor shall not be liable
for any losses incurred by a Certificateholder in the capacity of an investor in
the Certificate or a Noteholder in the capacity of an investor in the Notes. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the immediately preceding sentence for which the
Trust Depositor shall not be liable) shall be deemed third party beneficiaries
of this paragraph. The obligations of the Trust Depositor under this paragraph
shall be evidenced by the Certificate.
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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;
PROVIDED, FURTHER, any indemnity payments to be made pursuant to this Section
shall not be made from the Trust Assets and such indemnity payments, if
unpaid, do not constitute a general recourse claim against the Trust. 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 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 and Reserve Fund, each in the name of the Indenture
Trustee for the benefit of the Noteholders and the Certificateholder. 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 the corporate trust department of the Indenture Trustee or any
successor Indenture Trustee; provided that the Indenture Trustee be a
Qualified Institution. If any institution with which any of the accounts
established pursuant to this Section 7.01(a) ceases to be a Qualified
Institution, the Servicer shall within 10 Business Days after notice of such
event establish a replacement account at a Qualified Institution.
(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 Contracts 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 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
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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 other than the Reserve Fund
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 New York) of collateral comprised of "INVESTMENT PROPERTY" (within the
meaning of Section 9-115 of the UCC as enacted in New York) 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. On
each Determination Date prior to an Event of Default, the Servicer, pursuant
to written monthly payment instructions and notification, shall instruct the
Indenture Trustee to withdraw, and on the succeeding Distribution Date the
Indenture Trustee acting in accordance with such written instructions shall
withdraw, the amounts required to be withdrawn from the Collection Account
and Reserve Fund, if necessary, 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;
(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
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;
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(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 E
Noteholders an amount equal to interest accrued thereon at the Class E
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to the Holder of
each Class E Note PRO RATA based on the outstanding principal amount
thereof;
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(xi) 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 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;
(xii) 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 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;
(xiii) 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 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;
(xiv) 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 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;
(xv) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Class B Principal Payment Amount for such Distribution
Date; PROVIDED that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class B
Note PRO RATA based on the outstanding principal amount thereof;
(xvi) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Class C Principal Payment Amount for such Distribution
Date; PROVIDED that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class C
Note PRO RATA based on the outstanding principal amount thereof;
(xvii) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Class D Principal Payment Amount for such Distribution
Date; PROVIDED that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class D
Note PRO RATA based on the outstanding principal amount thereof;
(xviii) pay to the Indenture Trustee, on behalf of the Class E
Noteholders, the Class E Principal Payment Amount for such Distribution
Date; PROVIDED that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class E
Note PRO RATA based on the outstanding principal amount thereof;
(xix) pay Additional Principal, if any, to the Class A-1 Notes
until the Principal Amount of the Class A-1 Notes has been reduced to
zero, then to the Class A-2 Notes until the Principal Amount of the Class
A-2 Notes has been reduced to zero, then to the Class A-3 Notes until the
Principal Amount of the Class A-3 Notes has been reduced to zero, then to
the Class A-4 Notes until the Principal Amount of the Class A-4 Notes has
been reduced to zero, then to the Class B Notes until the Principal Amount
of the Class B Notes has been reduced to zero, then to the Class C Notes
until the Principal Amount of the Class C Notes has been reduced to zero,
then to the Class D Notes until the Principal Amount of the Class D Notes
has been reduced to zero, then to the Class E Notes until the Principal
Amount of the Class E Notes has been reduced to zero;
(xx) 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
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(xxi) pay any remaining Available Amounts to the Holder of the
Class F Certificate.
Prior to the occurrence of an Event of Default, if the Available Amounts
are less than the amount required to make in full the payments and allocations
set forth in Sections 7.05(a)(i)-(xix), 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.
(b) ALLOCATIONS AND PAYMENTS AFTER AN EVENT OF DEFAULT. On each
Determination Date after the occurrence of an Event of Default, the Servicer,
pursuant to monthly payment instructions and notification, shall instruct the
Indenture Trustee to withdraw, and on the succeeding Distribution Date the
Indenture Trustee acting in accordance with such instructions shall withdraw,
the amounts required to be withdrawn from the Collection Account and Reserve
Fund, if necessary, 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) 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 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
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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 E
Noteholders, an amount equal to the interest accrued thereon at the Class E
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
PROVIDED, that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be paid to the Holder of each Class E
Note PRO RATA based on the outstanding principal amount thereof;
(ix) 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;
(x) 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;
(xi) 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;
(xii) 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;
(xiii) 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;
(xiv) 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;
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(xv) 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 Note;
(xvi) pay to the Indenture Trustee, on behalf of the Class E
Noteholders, the Class E 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 E
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 E Note principal in full, then such
excess shall be applied in repayment of principal on the Class F
Certificate; and
(xvii) pay all other remaining Available Amounts to the Holder of
the Class F Certificate.
Following the occurrence of an Event of Default, if the Available
Amounts are less than the amount required to make in full the payments and
allocations set forth in Sections 7.05(b)(i)-(xvi), 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.
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 the Seller Representations and
Warranties 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 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, 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 affected Contract
with a Subsequent 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 Subsequent 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 Subsequent 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 and interest in the repurchased or substituted Contract and
related Trust Assets
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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 Closing 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 F Certificate) plus accrued unpaid interest thereon as
of the current Distribution Date, 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 to make any payment, transfer or deposit pursuant to this
Agreement on or before the date occurring five (5) Business Days after
notice from the Indenture Trustee or the date the Servicer becomes aware
thereof; 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 thirty (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 thirty
(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 (5) Business Days or
referred to under clause (b) or (c) for a period of sixty (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 (5) Business
Days or sixty (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.
(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
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"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. The Indenture
Trustee shall seek bids from potential servicers which are established
financial institutions each having a net worth of at least $50,000,000 and
whose regular business includes the servicing of contracts similar to the
Contracts. If within sixty (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 Indenture Trustee or Required Holders that such
retransfer would not constitute a fraudulent conveyance of the Trust
Depositor or the Seller; provided, further, the Seller may not accept such
retransfer unless it shall have delivered to each Rating Agency an Opinion of
Counsel that such retransfer would not constitute a fraudulent conveyance of
the Trust Depositor or the Seller or that such retransfer would not
constitute a preferential payment by 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 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. The Owner Trustee,
Securityholders and the Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. To the extent the terminated Servicer has made Servicer
Advances, it shall be entitled to reimbursement of the same notwithstanding
its termination hereunder, to the same extent as if it had continued to
service the Contracts hereunder. In addition, it is understood and agreed
that if an Event of Default has occurred and a Servicer
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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 ten (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
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
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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.
The parties hereto acknowledge that the Indenture Trustee has no obligation
to verify the accuracy of the Monthly Report.
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 ninety (90)
days after the end of the Servicer's fiscal year, if other than December 31)
of each year, beginning on March 31, 1999 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 (the "ACCOUNTANT'S REPORT"), to the effect that such Independent
Accountants have, at the request of the Servicer, (i) audited the financial
statements of the Servicer and issued its report thereon and that such audit
was made in accordance with generally accepted auditing standards, which
require that such accounting firm plan and perform the audit to obtain
reasonable assurance as to whether the financial statements of the Servicer
are free of material misstatement, and (ii) examined management's assertion
that the Servicer maintained effective control over the servicing of
equipment lease contracts, installment sales contracts, promissory notes,
loan and security agreements and/or other similar types of receivables under
servicing agreements substantially similar to one another, in accordance with
established or stated criteria, and that such examination was performed in
accordance with standards established by the American Institute of Certified
Public Accountants. A copy of the Accountant's Report may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, in the case
of a Noteholder, or to the Owner Trustee, in the case of a Certificateholder,
addressed to its respective Corporate Trust Office.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
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, 1999, 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
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this Agreement and no Servicer Default has occurred or is continuing, or, if
there has been a Servicer Default, specifying each such default known to such
officer and the nature and status thereof and the steps being taken or
necessary to be taken to remedy such event. A copy of such certificate may
be obtained by any Securityholder by a request in writing to the Indenture
Trustee, with respect to any Noteholder, or the Owner Trustee, with respect
to any Certificateholder.
SECTION 9.06. ANNUAL SUMMARY STATEMENT. On or prior to January 31 of
each year, commencing January 31, 1999, 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 transfer 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 transfer 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 7.05) 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 7.05(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.
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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; (ii) change in any manner (including through amendment of
related definitions), the Holders which are required to consent to any such
amendment; (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; or (iv) change in any manner
the duties of the Indenture Trustee under this Agreement without its written
consent.
(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 (i) 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 and (ii) the Opinion of Counsel required by Section 11.02(f).
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 sixty (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 sixty (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 transfer 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.
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 (1) 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:
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(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:
Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Attention: Robert D. Foltz
Fax No.: (312) 461-3525
Telephone No.: (312) 461-4662
(iv) If to the Owner Trustee:
The Bank of New York (Delaware)
White Clay Center
Newark, Delaware 19711
Attention: Corporate Trust Administration
Fax No.: [ ]
Telephone No.: [ ]
with a copy to:
Bank of New York
101 Barclay Street, 12 East
New York, New York 10286
Attention: Asset Backed Finance Unit
Fax No.: (212) 815-5544
Telephone No.: (212) 815-5826
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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
(vii) If to Duff & Phelps:
Duff & Phelps Credit Rating Company
17 State Street
New York, New York 10004
Attention:
Fax No.:
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 11.05. SEVERABILITY OF PROVISIONS. If 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,
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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 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.
SECTION 11.13. LIMITATION OF LIABILITY OF OWNER TRUSTEE.
Notwithstanding anything contained herein to the contrary, the Agreement
has been executed by The Bank of New York (Delaware), not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall The Bank of New York (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.
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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 EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (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:
------------------------------------------
HARRIS TRUST AND SAVINGS BANK, 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 Pooling and Servicing Agreement (the "POOLING AND
SERVICING AGREEMENT") dated as of October [ ], 1998 made by and between the
undersigned, as Trust Depositor ("TRUST DEPOSITOR"), Newcourt Financial USA
Inc., as Servicer, Harris Trust and Savings Bank as Indenture Trustee and the
Newcourt Equipment Trust Securities 1998-1 (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 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.
Capitalized terms used herein have the meaning given such terms in the
Pooling 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 [ ], 1998.
NEWCOURT RECEIVABLES CORPORATION II
By:
------------------------------------------------
Printed Name:
Title:
By:
------------------------------------------------
Printed Name:
Title:
A-1
<PAGE>
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 Pooling and Servicing
Agreement (the "AGREEMENT") dated as of October [ ], 1998 (the
"EFFECTIVE DATE") by and among the Trust Depositor, Harris Trust and Savings
Bank (the "INDENTURE TRUSTEE"), as Indenture Trustee, Newcourt Financial USA
Inc. ("NEWCOURT USA"), as Servicer, and the Newcourt Equipment Trust
Securities 1998-1 ("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 [ ], 1998 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 [ ], 1998, 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 Bank of New York (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 Agreement (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.
B-1
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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 transfer 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 [ ], 1998.
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 Pooling and Servicing Agreement (the
"AGREEMENT") dated as of October [ ], 1998 (the "EFFECTIVE DATE") by and
among Newcourt USA, as Servicer, Newcourt Receivables Corporation II ("NRC"),
Harris Trust and Savings Bank, as Indenture Trustee, and Newcourt Equipment
Trust Securities 1998-1 ("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 [______], 1998 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 Agreement (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 Harris Trust and Savings Bank, 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 Pooling 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 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.
C-1
<PAGE>
(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 Pooling Agreement, the Pooling and Servicing Agreement,
the Underwriting Agreement, 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 Pooling 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 Pooling 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 Pooling 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
Pooling 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 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.
C-2
<PAGE>
IN WITNESS WHEREOF, I have affixed my signature hereto this [____] day
of [_____________________], 1998.
By:
------------------------------------------------
Printed Name:
Title:
<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 Pooling
and Servicing Agreement (the "AGREEMENT") dated as of October [ ], 1998
by and among Newcourt Receivables Corporation II, as Trust Depositor, the
Servicer, Harris Trust and Savings Bank, as Indenture Trustee, and Newcourt
Equipment Trust Securities 1998-1 (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 Pooling Agreement.
2. Upon deposit of the Transfer Deposit Amount for such Contracts (or the
effective conveyance of one or more Subsequent 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
[Reserved]
J-1
<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 Equipment Trust Securities 1998-1 (the "TRUST"), Newcourt
Receivables Corporation II, a Delaware corporation (the "TRUST DEPOSITOR"),
Harris Trust and Savings Bank, as Indenture Trustee (the "INDENTURE TRUSTEE")
and Newcourt Financial USA Inc., a Delaware corporation, as Servicer pursuant
to the Pooling and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, the Trust, the Trust Depositor, the Servicer and the Indenture
Trustee, are parties to the Pooling and Servicing Agreement, dated as of
October [ ], 1998 (the "POOLING AND SERVICING AGREEMENT");
WHEREAS, pursuant to the Pooling 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 Pooling 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 Pooling 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 Pooling 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 Pooling 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 Pooling and Servicing
Agreement and this Agreement, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust:
(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
M-1
<PAGE>
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 Amount;
(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 and any Excluded
Residual Investment);
(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 Pooling Agreement related to such Contracts (to the
extent not already conveyed under Section 2.01(b) of the Pooling 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 Excluded
Residual Investment.
It is the intention of the Trust Depositor and Owner Trustee that the
transfer contemplated by this Agreement shall constitute an absolute
assignment and sale of the 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 Pooling 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 Pooling 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 Pooling and Servicing Agreement have been satisfied as of the Subsequent
Transfer Date.
SECTION 5. RATIFICATION OF AGREEMENT. As supplemented by this
Agreement, the Pooling and Servicing Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
SECTION 6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
SECTION 7. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of 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.
M-2
<PAGE>
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 EQUIPMENT TRUST SECURITIES 1998-1
By: Bank of New York, not in its individual
capacity but solely as Owner Trustee on
behalf of the Trust
By:
Printed Name:
Title:
HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity but solely as Indenture
Trustee
By:
---------------------------------------------
Printed Name:
Title:
M-3
<PAGE>
Exhibit 10.2
- -------------------------------------------------------------------------------
ADMINISTRATION AGREEMENT
among
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1,
as Issuer,
NEWCOURT FINANCIAL USA INC.
as Administrator
NEWCOURT RECEIVABLES CORPORATION II,
as Trust Depositor,
and
HARRIS TRUST AND SAVINGS BANK,
as Indenture Trustee
Dated as of October [ ], 1998
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 15. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 16. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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
</TABLE>
<PAGE>
This Administration Agreement, dated as of October [ ], 1998 (this
"AGREEMENT"), is among Newcourt Equipment Trust Securities 1998-1 (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 Harris Trust and Savings
Bank, 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, Series 1998-1, [ ]% Class A-2 Receivable-Backed Notes, Series
1998-1, [ ]% Class A-3 Receivable-Backed Notes, Series 1998-1, [ ]%
Class A-4 Receivable-Backed Notes, Series 1998-1, [ ]% Class B
Receivable-Backed Notes, Series 1998-1, [ ]% Class C Receivable-Backed
Notes, Series 1998-1, [ ]% Class D Receivable-Backed Notes, Series 1998-1
and [ ]% Class E Receivable-Backed Notes, Series 1998-1 (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 Pooling 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 Pooling and Servicing Agreement, dated as of
the date hereof (the "POOLING 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
to which the Issuer is a party;
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 F
Certificate (the registered holder of such interests being referred to herein
as the "OWNER");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner
Trustee referred to in the preceding clause and to provide such additional
services consistent with the terms of this Agreement and the 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 Transaction Documents.
(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 Transaction Documents. 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 Transaction Documents. 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 Transaction
Documents. 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 New York, New York, 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 Pooling and Servicing Agreement;
(M) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10(b));
(N) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.01);
(O) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Collateral in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.04);
2
<PAGE>
(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 filing of reports required by the Commission (Section 7.03);
(T) 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);
(U) 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);
(V) 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);
(W) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.06);
(X) the duty to notify Noteholders of redemption of the Notes or to
cause the Indenture Trustee to provide such notification (Section 10.02);
(Y) 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));
(Z) 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));
(AA) the notification of the Rating Agencies, upon the failure of the
Issuer, the Owner Trustee or the Indenture Trustee to provide notification;
(BB) 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
(CC) the recording of the Indenture, if applicable (Section 11.14).
(ii) The Administrator will:
(A) except as otherwise expressly provided in the Indenture or the
Pooling 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
3
<PAGE>
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 officers, directors,
employees or 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 and this 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 Indenture; and
(C) indemnify the Owner Trustee and its officers, directors,
employees or 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 and this 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 the Owner
as contemplated in Section 5.02(c) of the Trust Agreement. Any such notice
shall specify the amount of any withholding tax required to be withheld by
the Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Transaction Documents to the contrary, the Administrator shall be
responsible for performance of the duties of the Owner Trustee set forth in
Section 5.05(a), (b), (c) and (d), the penultimate sentence of Section 5.05
and Section 5.06(a) of the Trust Agreement with respect to, among other
things, accounting and reports to the Owner; PROVIDED, HOWEVER, that the
Owner Trustee shall retain responsibility for the distribution of
information forms necessary to enable the Owner to prepare its federal and
state income tax returns.
4
<PAGE>
(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.
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
5
<PAGE>
which shall be solely an obligation of the Servicer as contemplated in
Section 5.19 of the Pooling 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
sixty (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 sixty (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 (10) days
(or, if such default cannot be cured in such time, shall not
give within ten (10) 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 (7) days after the occurrence of such
event.
(d) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator
shall have been appointed by the Issuer and (ii) such successor
Administrator shall have agreed in writing to be bound by the
terms of this Agreement in the same manner as the Administrator
is bound hereunder.
(e) The appointment of any successor Administrator shall be effective
only after the satisfaction of the Rating Agency Condition with
respect to the proposed appointment.
6
<PAGE>
(f) Subject to Section 8(d) and 8(e), the Administrator acknowledges
that upon the appointment of a Successor Servicer pursuant to the
Pooling 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: Scott Herbst
Fax No.: (317) 592-1116
(iii) If to the Indenture Trustee:
Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Attn: Robert D. Foltz
Fax No.: (312) 461-3525
7
<PAGE>
(iv) If to the Issuer or the Owner Trustee:
The Bank of New York (Delaware)
White Clay Center
Newark, New Jersey 1971
Attn: [ ]
Fax No.: [ ]
with a copy to:
The Bank of New York
Asset Backed Finance Unit
101 Barclay Street, 12 East
New York, New York 10286
Attn: Cheryl Laser
Fax No.: (212) 815-5544
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 the Certificateholder; 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 the 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 the Certificateholder or (ii) reduce the aforesaid percentage
of the Holders of Notes and the Certificate which are required to consent to
any such amendment, without the consent of the Holders of all outstanding
Notes and the Certificate. Notwithstanding the foregoing, the Administrator
may not amend this Agreement without the permission of the Trust Depositor,
which permission shall not be unreasonably withheld. Promptly after the
execution of any amendment to this Agreement, the Administrator shall furnish
written notification of the substance of such amendment, together with a copy
thereof, to each Rating Agency.
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 all or substantially all
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 WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS,
8
<PAGE>
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 The Bank of New York (Delaware), not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall The Bank of New York (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 Harris Trust and Savings Bank not in its
individual capacity but solely as Indenture Trustee and in no event shall
Harris Trust and Savings Bank 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.
[signature page follows]
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 EQUIPMENT TRUST SECURITIES 1998-1
By: The Bank of New York (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:
------------------------------
HARRIS TRUST AND SAVINGS BANK,
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 The Bank of New York
(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 Equipment Trust
Securities 1998-1 (the "TRUST") as Issuer under the Administration Agreement,
dated as of October [ ], 1998 (the "ADMINISTRATION AGREEMENT"), among the
Trust, Newcourt Receivables Corporation II, Harris Trust and Savings Bank, 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 New York without reference to
principles of conflicts of law.
Executed as of this ____ day of ______________, 1998.
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely as
Owner Trustee
By:
--------------------------------------
Printed Name:
-----------------------
Title:
------------------------------
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT OF
NOTARY PUBLIC
State of )
) SS.
County of )
On_______________, 1998 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>
Exhibit 10.3
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TRANSFER AND SALE AGREEMENT
by and among
NEWCOURT FINANCIAL USA INC.
as Seller
AND
NEWCOURT RECEIVABLES CORPORATION II
as Purchaser
Dated as of October [ ], 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-1-
ARTICLE II
TRANSFER 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 III
REPRESENTATIONS 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 . . . . . . . . . . . . . . . . . . . . . . . . . . .-6-
Section 3.04. Representations and Warranties Regarding the Contract Files.. . . .-7-
Section 3.05. Representations and Warranties Regarding Concentrations of
Initial Contracts . . . . . . . . . . . . . . . . . . . . . . . . .-7-
Section 3.06 Representations and Warranties Regarding Secondary Contracts. . . .-7-
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS. . . . . . . . . . . .-8-
Section 4.01. Custody of Contracts. . . . . . . . . . . . . . . . . . . . . . . .-8-
Section 4.02. Filing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-8-
Section 4.03. Name Change or Relocation.. . . . . . . . . . . . . . . . . . . . .-8-
Section 4.04. Chief Executive Office. . . . . . . . . . . . . . . . . . . . . . .-8-
Section 4.05. Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . .-8-
Section 4.06. Sale Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . .-8-
Section 4.07. Power of Attorney.. . . . . . . . . . . . . . . . . . . . . . . . .-9-
ARTICLE V
REMEDIES 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 VI
INDEMNITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Section 6.01. Seller Indemnification. . . . . . . . . . . . . . . . . . . . . . -11-
Section 6.02. Liabilities to Obligors . . . . . . . . . . . . . . . . . . . . . -11-
Section 6.03. Tax Indemnification . . . . . . . . . . . . . . . . . . . . . . . -11-
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Section 6.04. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
Section 6.05. Operation of Indemnities. . . . . . . . . . . . . . . . . . . . . -12-
ARTICLE VII
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 7.01. Prohibited Transactions with Respect to the Trust . . . . . . . . -13-
Section 7.02. Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . -13-
Section 7.03. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 7.04. Assignment or Delegation by the Seller. . . . . . . . . . . . . . -13-
Section 7.05. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Section 7.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Section 7.07. Merger and Integration. . . . . . . . . . . . . . . . . . . . . . -15-
Section 7.08. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 7.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
Section 7.10. No Bankruptcy Petition. . . . . . . . . . . . . . . . . . . . . . -15-
Section 7.11. Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . -15-
Section 7.12. Severability of Provisions. . . . . . . . . . . . . . . . . . . . -15-
Section 7.13. No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . -15-
Section 7.14. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
EXHIBITS
Exhibit A Form of Assignment
Exhibit B Form of Subsequent Purchase Agreement
</TABLE>
-ii-
<PAGE>
This TRANSFER AND SALE AGREEMENT, dated as of October [ ], 1998 (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 Equipment Trust Securities 1998-1 (the "TRUST")
pursuant to the Pooling and Servicing Agreement dated as of the date hereof
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 "POOLING 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 Pooling 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, on the Closing Date 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 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 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) and any Guaranteed Residual
Investment;
(iii) the Contract Files;
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(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.
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
Pooling 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 Pooling
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 Pooling 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 the Seller substantially in the form of
EXHIBIT C to the Pooling and Servicing Agreement.
(c) An opinion of counsel for the Seller substantially in the form of
EXHIBIT D to the Pooling 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
performed specific procedures for such sample with respect to certain contract
terms and identifying those Contracts which do not so conform.
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(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 Pooling 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 Pooling 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 Pooling and
Servicing Agreement, the Trust Depositor will assign all of its right, title and
interest in and to the Contract Assets (excluding title to any Equipment and any
Excluded Residual Investment) 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 Pooling 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 Pooling 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 Pooling and Servicing Agreement
(and the Trust Depositor shall be required to purchase 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) and any Guaranteed Residual
Investment;
(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.
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,
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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 Pooling 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 Pooling 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 Pooling 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 Pooling
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 Pooling 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 Pooling 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 Pooling 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 7.06 of the Pooling 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 as of the Statistic Calculation 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 Pooling
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, 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.
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(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 Pooling 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 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 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, 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 Statistic Calculation Date; the
information set forth in the List of Contracts as amended or deemed
amended in respect of a conveyance of Subsequent Contracts on a
Subsequent Transfer Date is true, complete and correct as of such
Subsequent Transfer Date.
(b) ELIGIBLE CONTRACT. Such Contract satisfies the criteria for
the definition of Eligible Contract set forth in the Pooling and
Servicing Agreement as of the Statistic Calculation Date or Subsequent
Cutoff Date, as applicable (or as of such later date as provided in the
definition of Eligible Contract).
(c) CONTRACTS SECURED BY VEHICLES. None of the Contracts secured
by Equipment constituting Vehicles are "true leases."
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL
CONTRACTS IN THE AGGREGATE. Each Seller represents and warrants, as of the
Closing Date, that:
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(a) AMOUNTS. The ADCB of the Contracts as of the Closing Date
equals the sum of the principal balance of the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B
Notes, the Class C Notes, the Class D Notes and the Class E Notes on the
Closing Date.
(b) CHARACTERISTICS. As of the Statistic Calculation Date, 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 as of the
Statistic Calculation Date) 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 Pooling and Servicing Agreement had possession of
the original Contracts and related complete Contract Files identified on
Schedule 1 to the Pooling 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 Pooling
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
Statistic Calculation Date, that:
(i) the ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities does not exceed [ ]%
of the ADCB as of the Statistic Calculation Date of the Contracts
Pool;
(ii) the ADCB of all End-User Contracts which finance, lease or are
related to Software does not exceed [ ]% of the ADCB as of
the Statistic Calculation Date of the Contracts Pool; and
(iii) the ADCB of all End-User Contracts with Obligors who comprise the
five (5) largest Obligors (measured by ADCB as of the Statistic
Calculation Date) does not exceed [ ]% as of the ADCB as
of the Statistic Calculation Date 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 as of the
Statistic Calculation Date or Subsequent Cutoff Date, as applicable, (or such
later date as provided in 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 Pooling 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 Pooling 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) of
the Pooling 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 thirty (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 Pooling 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 (5) 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.
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
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federal income tax purposes so long as the Trust is disregarded as a separate
entity pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii).
SECTION 4.07. POWER OF ATTORNEY. After the occurrence and during the
continuance of an Event of Default as defined in the Indenture, the Seller will
execute a power of attorney appointing the Indenture Trustee as attorney-in-fact
for the Seller to take such action to designate the Indenture Trustee as the
first and sole lienholder on the certificate of title for Vehicles relating to
the Contracts.
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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
Closing 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 F Certificates) plus accrued unpaid
interest thereon as of the current Distribution Date, 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 Pooling 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 Pooling and Servicing Agreement, without recourse, representation or
warranty.
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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 Pooling and Servicing Agreement,
(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 Pooling 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, any taxes which may at any time be asserted
with respect to, and as of the date of, the transfer of the Contracts to
the Trust Depositor hereunder and the concurrent reconveyance to the Trust
and the further pledge by the trust to the Indenture Trustee, including,
without limitation, any sales, general corporation, personal property,
privilege or license taxes (but not including any federal, state or other
taxes arising out of the creation of the Trust and the issuance of the
Notes and Certificates including but not limited to gross receipt taxes,
income taxes or franchise taxes) and costs, expenses and reasonable counsel
fees in defending against the same, whether arising by reason of the acts
to be performed by a Seller or the Servicer under this Agreement or the
Pooling and Servicing Agreement or imposed against the Trust, a Noteholder,
a Certificateholder or otherwise. Notwithstanding any other provision of
this Agreement, the obligation of the Seller under this Section 6.03 shall
not terminate upon a Service Transfer pursuant to Article VIII of the
Pooling and Servicing Agreement and shall survive any termination of this
Agreement; provided, however, to the extent any of such taxes for which the
Seller is obligated to indemnify for are payable by an End-User or Vendor
pursuant to the terms of a Contract or Program Agreement, the Seller or the
Successor Servicer shall have the right to rebill the respective End-User
or Vendor for such tax payment.
(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 any state or local personal property taxes, gross rent
taxes, leasehold taxes or similar taxes which may at any time be asserted
with respect to the ownership of the Contracts (including security
interests therein) and the receipt of rentals therefrom by the Trust, and
costs, expenses and reasonable counsel fees in defending against the same,
excluding, however, taxes based upon or measured by gross or net income or
receipts (other than taxes imposed specifically with respect to rentals);
provided, however, to the extent any of such taxes for which the Seller is
obligated to indemnify for are payable by an End-User or Vendor pursuant to
the terms of a Contract or Program Agreement, the Seller or the Servicer
shall have the right to rebill
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<PAGE>
the respective End-User of Vendor for such tax payments. As used in
this Section, the term "after-tax basis" shall mean, with respect to any
payment to be received by an indemnified person, that the amount to be
paid by the Seller shall be equal to the sum of (i) the amount of to be
received without regard to this sentence, plus (ii) any additional
amount that may be required so that after reduction by all taxes imposed
under any federal, state and local law, and taking into account any
current credits or deductions arising therefrom, resulting either from
the receipt of the payments described in both clauses (i) and (ii)
hereof, such sum shall be equal to the amount described in clause (i)
above.
SECTION 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 amount equal to the difference between the
amount, if any, received from the related Vendor and the Required Lease
Cancellation Payment.
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.
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<PAGE>
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 Pooling 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
Pooling 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, Class E Notes and the Class
F Certificates is reduced to zero; PROVIDED, that the Seller's representations
and warranties and indemnities by the Seller shall survive termination.
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
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<PAGE>
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.: (317) 592-1116
(ii) If to the Trust Depositor:
Newcourt Receivables Corporation II
2700 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46204
Fax No.: (317) 592-1116
(iii) If to the Indenture Trustee, Owner Trustee or the
Rating Agencies
At their respective addresses for notices specified for
notices in the Pooling 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.
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<PAGE>
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, 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.
[signature page follows]
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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: ____________________________
By: _________________________________
Printed Name:______________________
Title: ____________________________
NEWCOURT FINANCIAL USA INC.
By:___________________________________
Printed Name:_______________________
Title:_______________________________
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 October [ ], 1998 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 to the exclusion
and release in the Agreement of Excluded Amounts) and any Guaranteed
Residual Investment;
(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.
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: ____________________________
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 October [ ], 1998 (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 Pooling and Servicing Agreement dated as
of October [ ], 1998 among Newcourt USA (in the capacity of Servicer
thereunder), the Trust Depositor and the Indenture Trustee as defined therein
(the "POOLING 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 Pooling 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 Pooling 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.
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
<PAGE>
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) and any Guaranteed Residual
Investment;
(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.
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 Pooling 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.
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.
B-2
<PAGE>
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.
[signature page follows]
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:
By:
-----------------------------------------
Printed Name:
Title:
NEWCOURT FINANCIAL USA INC.
By:
-----------------------------------------
Printed Name:
Title:
By:
-----------------------------------------
Printed Name:
Title:
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated October 15, 1998 on our audit of the balance sheet of
Newcourt Equipment Trust Securities 1998-1 in this Registration Statement (Form
S-1 No. 333-58677) of Newcourt Equipment Trust Securities 1998-1 per the
registration of receivable-backed notes.
Ernst & Young LLP
New York, New York
October 20, 1998
ii
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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) ______
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer
Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Rory Nowakowski, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
312-461-5180 phone 312-461-3525 facsimile
(Name, address and telephone number for agent for service)
NEWCOURT EQUIPMENT TRUST SECURITIES 1998-1
(Note Issuer)
Delaware To be applied for
(State of Incorporation) (I.R.S. Employer
Identification No.)
C/O The Bank of New York (Delaware)
White Clay Center
Newark, DE 19711
(Address of principal executive offices)
Class A-1 Receivable-Backed Notes, Series 1998-1
Class A-2 Receivable-Backed Notes, Series 1998-1
Class A-3 Receivable-Backed Notes, Series 1998-1
Class A-4 Receivable-Backed Notes, Series 1998-1
Class B Receivable-Backed Notes, Series 1998-1
Class C Receivable-Backed Notes, Series 1998-1
Class D Receivable-Backed Notes, Series 1998-1
Class E Receivable-Backed Notes, Series 1998-1
(Title of indenture securities)
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1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee as now in effect
which includes the authority of the trustee to commence business and
to exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between
Harris Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc.
which constitutes the articles of association of the Trustee as now
in effect and includes the authority of the Trustee to commence
business and to exercise corporate trust powers was filed in
connection with the Registration Statement of Louisville Gas and
Electric Company, File No. 2-44295, and is incorporated herein by
reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in
connection with the Registration Statement of Commercial Federal
Corporation, File No. 333-20711, and is incorporated herein by
reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
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SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 21st day of October, 1998.
HARRIS TRUST AND SAVINGS BANK
By: ------------------------------
/s/ Rory Nowakowski
Trust Officer
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
HARRIS TRUST AND SAVINGS BANK
By: ------------------------------
/s/ Rory Nowakowski
Trust Officer
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EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of March 31, 1998, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.
[LOGO] HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on March 31, 1998, a state banking institution organized and operating
under the banking laws of this State and a member of the Federal Reserve System.
Published in accordance with a call made by the Commissioner of Banks and Trust
Companies of the State of Illinois and by the Federal Reserve Bank of this
District.
Bank's Transit Number 71000288
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THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS:
NON-INTEREST BEARING BALANCES AND CURRENCY AND COIN.................................. $1,039,854
INTEREST BEARING BALANCES............................................................ $290,921
SECURITIES:...............................................................................
A. HELD-TO-MATURITY SECURITIES $0
B. AVAILABLE-FOR-SALE SECURITIES $4,266,201
FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL $82,000
LOANS AND LEASE FINANCING RECEIVABLES:
LOANS AND LEASES, NET OF UNEARNED INCOME............................................. $8,726,578
LESS: ALLOWANCE FOR LOAN AND LEASE LOSSES........................................... $101,318
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LOANS AND LEASES, NET OF UNEARNED INCOME, ALLOWANCE, AND RESERVE
(ITEM 4.A MINUS 4.B)................................................................. $8,625,260
ASSETS HELD IN TRADING ACCOUNTS........................................................... $120,674
PREMISES AND FIXED ASSETS (INCLUDING CAPITALIZED LEASES).................................. $219,475
OTHER REAL ESTATE OWNED................................................................... $699
INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED COMPANIES....................... $120
CUSTOMER'S LIABILITY TO THIS BANK ON ACCEPTANCES OUTSTANDING.............................. $46,688
INTANGIBLE ASSETS......................................................................... $266,411
OTHER ASSETS.............................................................................. $773,386
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TOTAL ASSETS $15,731,689
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<TABLE>
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LIABILITIES
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DEPOSITS:
IN DOMESTIC OFFICES................................................................. $8,270,648
NON-INTEREST BEARING.............................................................. $2,684,862
INTEREST BEARING.................................................................. $5,585,786
IN FOREIGN OFFICES, EDGE AND AGREEMENT SUBSIDIARIES, AND IBF'S...................... $1,307,928
NON-INTEREST BEARING.............................................................. $23,432
INTEREST BEARING.................................................................. $1,284,496
FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE IN DOMESTIC
OFFICES OF THE BANK AND OF ITS EDGE AND AGREEMENT SUBSIDIARIES, AND IN IBF'S:
FEDERAL FUNDS PURCHASED & SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE................. $3,599,510
TRADING LIABILITIES 74,487
OTHER BORROWED MONEY:....................................................................
A. WITH REMAINING MATURITY OF ONE YEAR OR LESS $471,692
B. WITH REMAINING MATURITY OF MORE THAN ONE YEAR $0
BANK'S LIABILITY ON ACCEPTANCES EXECUTED AND OUTSTANDING $46,688
SUBORDINATED NOTES AND DEBENTURES........................................................ $325,000
OTHER LIABILITIES........................................................................ $386,442
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TOTAL LIABILITIES $14,482,395
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EQUITY CAPITAL
COMMON STOCK............................................................................. $100,000
SURPLUS.................................................................................. $601,026
A. UNDIVIDED PROFITS AND CAPITAL RESERVES.............................................. $545,185
B. NET UNREALIZED HOLDING GAINS (LOSSES) ON AVAILABLE-FOR-SALE SECURITIES $2,802
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TOTAL EQUITY CAPITAL $1,249,294
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TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK, AND EQUITY CAPITAL...................... $15,731,689
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I, Pamela Piarowski, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
PAMELA PIAROWSKI
1/30/98
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
RICHARD E. TERRY
Directors.
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