As filed with the Securities and Exchange Commission on August 12, 1998
Registration Statement No. 333-56029
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
------------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
MITSUI VENDOR LEASING ASSET TRUST 1998-1
(Issuer of Securities)
MITSUI VENDOR LEASING FUNDING CORP. II
(Depositor of the above-referenced Trust)
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 6799 APPLIED FOR
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification Number)
Organization) Code Number)
MITSUI VENDOR LEASING FUNDING CORP. II
6363 GREENWICH DRIVE, SUITE 100
SAN DIEGO, CALIFORNIA 92122
(619) 558-5004
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
JOHN L. PLUNKETT, ESQ.
MITSUI VENDOR LEASING FUNDING CORP. II
6363 GREENWICH DRIVE, SUITE 100
SAN DIEGO, CALIFORNIA 92122
(619) 558-5004
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
----------
COPIES TO:
Siegfried P. Knopf, Esq. James J. Croke, Jr., Esq.
Brown & Wood LLP Cadwalader, Wickersham & Taft
One World Trade Center 100 Maiden Lane
New York, New York 10048 New York, New York 10038
-------------
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, 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(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering./ /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box./ /
<TABLE>
-------------
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE(2)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receivable Backed-Notes........................ $1,000,000 $100% $1,000,000 $303.03
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
(2) Previously paid.
(3) Pursuant to Rue 457(o) under the Securities Act of 1993, the registration
fee has been calculated on the basis of the proposed maximum offering price for
the Notes.
__________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted without the delivery of a final prospectus. 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.
Preliminary Prospectus dated August 11, 1998; Subject to Completion
PROSPECTUS
MITSUI VENDOR LEASING ASSET TRUST 1998-1
ISSUER
$____% CLASS A-1 RECEIVABLE-BACKED NOTES $____% CLASS B RECEIVABLE-BACKED NOTES
$____% CLASS A-2 RECEIVABLE-BACKED NOTES $____% CLASS C RECEIVABLE-BACKED NOTES
$____% CLASS A-3 RECEIVABLE-BACKED NOTES
MITSUI VENDOR LEASING FUNDING CORP. II
TRUST DEPOSITOR
MITSUI VENDOR LEASING (U.S.A.) INC.
SELLER AND SERVICER
- --------------------------------------------------------------------------------
Mitsui Vendor Leasing Asset Trust 1998-1 (the "Trust" or the "Issuer")
is a limited purpose business trust to be formed under the laws of the State of
Delaware pursuant to a Trust Agreement, dated as of _________, 1998, between
Mitsui Vendor Leasing Funding Corp. II ("MVLFC II"), as trust depositor (in such
capacity, the "Trust Depositor"), and Wilmington Trust Company, as owner trustee
(the "Owner Trustee"). MVLFC II is a wholly owned subsidiary of Mitsui Vendor
Leasing (U.S.A.) Inc. ("Mitsui Vendor Leasing"). The Trust will issue the five
Classes of Notes listed above pursuant to an indenture, dated as of
__________________, 1998, (the "Indenture"), between the Trust and Bankers Trust
Company, as indenture trustee (in such capacity, the "Indenture Trustee"). To
the extent described herein, payments of interest and principal on the Class B
Notes will be subordinated in priority of payment to interest and principal,
respectively, on the Class A Notes, and payments of interest and principal on
the Class C Notes will be subordinated in priority of payment to interest and
principal, respectively, on the Class A Notes and the Class B Notes. The Notes
will represent asset-backed debt obligations of the Trust and will be secured
pursuant to the Indenture, as more fully described herein, by (i) a pool of
manufacturing, business and healthcare equipment leases and conditional sale
agreements, (the "Contracts"), (ii) all of the Seller's interest in the related
equipment, and (iii) rights in the Sale and Servicing Agreement and Transfer and
Sale Agreement. See "Description of the Notes" herein. (cover continued on next
page)
- --------------------------------------------------------------------------------
THERE ARE MATERIAL RISKS ASSOCIATED WITH AN INVESTMENT IN THE NOTES.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE 17 OF THIS PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF MITSUI VENDOR LEASING (U.S.A.) INC.,
MITSUI VENDOR LEASING FUNDING CORP. II OR ANY OF THEIR AFFILIATES, OTHER THAN
THE TRUST.
- --------------------------------------------------------------------------------
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.
<TABLE>
<CAPTION>
================================================================== ----------------- ----------------- --------------------
PRICE TO PUBLIC UNDERWRITING PROCEEDS TO ISSUER
(1) DISCOUNTS AND (1)(3)
COMMISSIONS(2)
- ------------------------------------------------------------------ ----------------- ----------------- --------------------
<S> <C> <C> <C>
Per Class A-1 Note............................................... % % %
- ------------------------------------------------------------------ ----------------- ----------------- --------------------
Per Class A-2 Note............................................... % % %
- ------------------------------------------------------------------ ----------------- ----------------- --------------------
Per Class A-3 Note............................................... % % %
- ------------------------------------------------------------------ ----------------- ----------------- --------------------
Per Class B Note................................................. % % %
- ------------------------------------------------------------------ ----------------- ----------------- --------------------
Per Class C Note................................................. % % %
================================================================== ================= ================= ====================
Total............................................................ $ $ $
================================================================== ================= ================= ====================
</TABLE>
(1) Plus accrued interest, if any, at the applicable Interest Rate from
___________, 1998.
(2) MVLFC II and Mitsui Vendor Leasing have agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act
of 1933. See "Plan of Distribution."
(3) Before deducting expenses of this offering estimated to be $_______.
The Notes are offered by First Union Capital Markets, a division of
Wheat First Securities, Inc. (the "Underwriter"), subject to prior sale, when,
as and if issued to and accepted by it and subject to its 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 ,
1998.
- --------------------------------------------------------------------------------
FIRST UNION CAPITAL MARKETS
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS _________, 1998.
(cover page continued)
The Contracts and related interests will be conveyed by Mitsui Vendor
Leasing (in such capacity, the "Seller") to the Trust Depositor pursuant to a
transfer and sale agreement dated as of __________________, 1998 (the "Transfer
and Sale Agreement") by and between the Seller and the Trust Depositor. The
Trust Depositor will concurrently convey such assets to the Trust pursuant to a
sale and servicing agreement dated as of __________, 1998 (the "Sale and
Servicing Agreement") among the Trust, the Trust Depositor, Mitsui Vendor
Leasing, as servicer (in its capacity as servicer, the "Servicer") and Bankers
Trust Company, as back-up servicer (in such capacity, the "Back-up Servicer")
and as Indenture Trustee.
Interest on the Notes will be payable monthly in arrears on the
twenty-fifth (25th day) day of the month (or, if such day is not a Business Day,
the next succeeding Business Day) beginning on ___________, 1998 (each, a
"Payment Date") with respect to the period from and including the immediately
preceding Payment Date (or, with respect to the initial Payment Date, the date
of issuance of the Notes) to and excluding such Payment Date. Principal payments
with respect to the Notes will be payable on each Payment Date to the extent
described herein. The stated maturity date with respect to the Class A-1 Notes
is the ________ ____ Payment Date, with respect to the Class A-2 Notes is the
________ ____ Payment Date and, with respect to the other Classes of Notes is
the ________ ____ Payment Date. The actual payment in full, however, of the
Notes could and is expected to occur earlier than such stated maturity dates.
See "Summary of Terms--Terms of the Notes--B. Principal" herein. In addition,
the Trust Depositor will have the option to repurchase all remaining Contracts
and related assets, and thus effect early redemption of the Notes, on any
Payment Date on or after which the aggregate of Discounted Contract Balances
(determined as described herein) of all Contracts included in the Contract Pool
has declined to 15% or less of such aggregate amount as of the initial Cutoff
Date. See "Summary of Terms--Terms of the Notes--C. Optional Redemption" 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 Trust Depositor does not intend to apply for listing of the Notes
on any securities exchange or for the inclusion of the Notes on any automated
quotation system.
There currently is no secondary market for the Notes and there is no
assurance that one will develop, or if one does develop, that it will continue
or provide sufficient liquidity.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER 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 and the Notes, will be prepared by the Servicer and sent on behalf of
the Issuer 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" herein. 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.
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. However, in accordance with the
Exchange Act and the rules and regulations of the Commission thereunder, the
Servicer expects that the Trust's obligation to file such reports will be
terminated following the end of 1998.
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 Underwriter 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.
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Capitalized terms
used in this summary are defined elsewhere in this Prospectus on the pages
indicated under the heading "Index of Terms" commencing on page 76.
There are material risks associated with an investment in the Notes.
See "Risk Factors" on page 18 for a discussion of certain factors that investors
should consider before making an investment in the Notes.
Issuer...................... Mitsui Vendor Leasing Asset Trust
1998-1, (the "Issuer" or the "Trust"), a
Delaware business trust to be formed by
the Trust Depositor and the Owner
Trustee pursuant to the Trust Agreement,
dated as of __________, 1998 (the "Trust
Agreement"), between the Trust Depositor
and the Owner Trustee. The principal
executive offices of the Trust will be
in Wilmington, Delaware, in care of the
Owner Trustee, at the address of the
Owner Trustee specified below.
Trust Depositor............. Mitsui Vendor Leasing Funding Corp. II,
a Delaware corporation (the "Trust
Depositor") and a wholly-owned, limited
purpose subsidiary of Mitsui Vendor
Leasing (U.S.A.) Inc. The Trust
Depositor's principal executive offices
are located at 6363 Greenwich Drive,
Suite 100, San Diego, California 92122
and its telephone number is (619)
558-5004. See "The Trust" herein.
Seller/Servicer............. Mitsui Vendor Leasing (U.S.A.) Inc., a
Delaware corporation ("Mitsui Vendor
Leasing," or, in its separate capacities
as a Seller under the Transfer and Sale
Agreement, or as Servicer under the Sale
and Servicing Agreement described
herein, the "Seller" and the "Servicer",
respectively). Mitsui Vendor Leasing's
offices are located at 6363 Greenwich
Drive, Suite 100, San Diego, California
92122 and its telephone number is (619)
558-5050. See "Mitsui Vendor Leasing
(U.S.A.) Inc." herein.
Indenture Trustee........... Bankers Trust Company, a New York
banking corporation as indenture trustee
under the Indenture described herein (in
such capacity, the "Indenture Trustee").
The Indenture Trustee's corporate trust
office is located at Four Albany Street,
New York, New York 10004. See "The
Indenture--The Indenture Trustee"
herein.
Owner Trustee............... Wilmington Trust Company, a Delaware
Trust Company as owner trustee under the
Trust Agreement (the "Owner Trustee").
The Owner Trustee's offices are located
at 1100 North Market Street, Wilmington,
Delaware 19890.
Back-up Servicer............ Bankers Trust Company, a New York
banking corporation as back-up servicer
under the Sale and Servicing Agreement
described herein (in such capacity, the
"Back-up Servicer"). Pursuant to the
Sale and Servicing Agreement, the
Back-up Servicer will become the
successor Servicer upon any resignation
or termination of the Servicer. See "The
Transfer and Sale Agreement and Sale and
Servicing Agreement Generally--Back-up
Servicer" herein.
Cutoff Date................. With respect to the Contracts
transferred to the Trust on the Closing
Date, August 1, 1998, and with respect
to any Additional Contract or Substitute
Contract 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, the "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 Contracts, 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 included
in the Contracts, unless otherwise
specified or unless the context
otherwise clearly requires.
Closing Date................ On or about ________ __, 1998 (the
"Closing Date").
Collection Periods,
Calculation Dates,
Payment Dates
and Record Dates............ The period from and including the first
day of each calendar month to and
including the last day of the calendar
month (such last day, the "Calculation
Date" and each such period, a
"Collection Period").
A "Payment Date" is the twenty-fifth
(25th) 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 San Diego,
California or New York, New York are
authorized or obligated by any law or
regulation to be closed or a day that
Mitsui Vendor Leasing is not open for
business, then on the next succeeding
Business Day) of each calendar month
commencing ________ __, 1998. The
"Collection Period" relating to any
particular Payment Date shall be the
calendar month preceding the month in
which such Payment Date occurs.
With respect to any Payment Date and the
Notes, the "Record Date" is the day
immediately preceding each Payment Date
(or, with respect to any Definitive
Note, the last day of the calendar month
preceding the month in which such
Payment Date occurs).
The Notes................... $___________ aggregate principal amount
(the "Initial Class A-1 Note Principal
Balance") of _____% Class A-1
Receivable-Backed Notes (the "Class A-1
Notes"), $___________ aggregate
principal amount (the "Initial Class A-2
Note Principal Balance") of _____% Class
A-2 Receivable-Backed Notes (the "Class
A-2 Notes"), and $___________ aggregate
principal amount (the "Initial Class A-3
Note Principal Balance" and together
with the Initial Class A-1 Note
Principal Balance and the Initial Class
A-2 Principal Balance, the "Initial
Class A Note Principal Balance") of
_____% Class A-3 Receivable-Backed Notes
(the "Class A-3 Notes" and together with
the Class A-1 Notes and the Class A-2
Notes, the "Class A Notes"); $__________
aggregate principal amount (the "Initial
Class B Note Principal Balance") of
_____% Class B Receivable-Backed Notes
(the "Class B Notes"); and $__________
aggregate principal amount (the "Initial
Class C Note Principal Balance") of
_____% Class C Receivable-Backed Notes
(the "Class C Notes"; and together with
the Class A Notes and the Class B Notes,
the "Notes"). The Initial Class A Note
Principal Balance is equal to
approximately ____% of the sum of the
Discounted Contract Balances of all
Contracts included in the Contract Pool
(such sum, the "ADCB") as of the initial
Cutoff Date (with the Initial Class A-1
Note Principal Balance, the Initial
Class A-2 Note Principal Balance and the
Initial Class A-3 Principal Balance
equal to approximately __%, __% and __%,
respectively, of the initial ADCB of the
Contract Pool), the Initial Class B Note
Principal Balance is equal to
approximately _____% of the initial ADCB
of the Contract Pool, and the Initial
Class C Note Principal Balance is equal
to approximately _____% of the initial
ADCB of the Contract Pool.
The Notes will be issued by the Trust
pursuant to an indenture dated as of
________ __, 1998 (the "Indenture")
between the Issuer and the Indenture
Trustee. The Notes will be secured by
the Contracts and the other Trust Assets
pledged by the Issuer to the Indenture
Trustee under the Indenture. The Notes
will be available for purchase in
book-entry form only in minimum
denominations of $1,000 and integral
multiples thereof (except for one Note
of each Class which, for rounding
purposes, may be less than an integral
multiple thereof). The holders of
beneficial interests in the Notes held
in book-entry form ("Note Owners") will
not be entitled to receive Definitive
Notes except in the limited
circumstances described herein. See
"Description of the Notes--General" and
"--Definitive Notes" and "--Book-Entry
Registration" herein.
The Class B Notes and the Class C Notes
will be subordinated to the Class A
Notes to the extent described herein and
the Class C Notes will be subordinated
to the Class B Notes to the extent
described herein. See "Description of
the Notes--Allocations" herein.
Trust Assets................ The assets pledged to the Indenture
Trustee to secure the Notes will consist
the following (the "Trust Assets"): (i)
all right, title and interest of the
Seller conveyed pursuant to the Transfer
and Sale Agreement in and to (A) the
Contracts (including all Additional
Contracts and Substitute Contracts, if
any), (B) all monies due or to become
due in payment of such Contracts after
the related Cutoff Date, including any
Prepayments, and any Recoveries received
with respect thereto, but excluding any
Scheduled Payments due prior to the
related Cutoff Date and any Excluded
Amounts, (C) the related Equipment
(which may be limited to a security
interest therein) including all proceeds
from any sale or other disposition of
such Equipment, (D) all related Contract
Files, (E) any proceeds with respect to
each such Contract under any related
Vendor Assignment, Vendor Program
Agreement and any other guarantee or
similar credit enhancement with respect
thereto and (F) any Insurance Proceeds
with respect to each Contract, (ii) such
amounts as from time to time may be held
in the Collection Account, together with
all net investment earnings on funds
therein, (iii) the rights of the Trust
Depositor under the Transfer and Sale
Agreement, (iv) the rights of the Trust
under the Sale and Servicing Agreement
and (v) proceeds of any of the
foregoing. See "The Transfer and Sale
Agreement and Sale and Servicing
Agreement Generally--Conveyance of
Contracts" herein. For a description of
Excluded Amounts, see "The Contracts
Generally".
A. Contracts............... The Contracts to be included in the pool
of Contracts pledged by the Issuer to
the Indenture Trustee pursuant to the
Indenture (the "Contract Pool") consist
of leases (each, a "Lease") or
conditional sale agreements (each, a
"CSA") relating to the lease or sale of
Equipment.
The Contracts included in the Contract
Pool have the characteristics specified
in the Transfer and Sale Agreement and
described herein, and will be purchased
by the Trust Depositor from the Seller
on the Closing Date pursuant to the
Transfer and Sale Agreement and
concurrently conveyed to the Trust by
the Trust Depositor pursuant to the Sale
and Servicing Agreement. The Seller,
will make certain representations and
warranties concerning the Contracts,
including that all of the Contracts are
commercial, rather than consumer, leases
or financing arrangements, and that no
adverse selection process was employed
in the selection of Contracts for sale
under the Transfer and Sale Agreement.
See "The Transfer and Sale Agreement and
Sale and Servicing Agreement
Generally--Representations and
Warranties," "Use of Proceeds" and "The
Contract Pool" herein.
As of the initial Cutoff Date, the
Contract Pool had the following
characteristics (unless otherwise noted,
percentages are calculated by reference
to Discounted Contract Balances of the
related Contracts as a percentage of the
ADCB of the Contract Pool):
(i) there were Contracts in
the Contract Pool;
(ii) the ADCB of the Contracts
in the Contract Pool was $ ;
(iii) the final scheduled
payment date of the Contract with the
latest maturity or expiration was ,
200_;
(iv) the average Discounted
Contract Balance was approximately $ ;
(v) all of the Contracts had
(A) original terms to maturity of not
less than months and not more than
months, with a weighted average original
term to maturity of approximately months
and (B) a remaining term to maturity of
not less than 1 month and not more than
months, with a weighted average
remaining term to maturity of
approximately months; and
(vi) the End-Users in respect
of approximately % of the Contracts were
located in the State of California;
approximately % were located in the
State of ; approximately % were located
in the State of ; and in no other state
represented more 5.00% of the Contracts.
See "Risk Factors -- Certain Risks
Associated with Geographic
Concentrations of Contracts" and "The
Transfer and Sale Agreement and Sale and
Servicing Agreement
Generally--Concentration Amounts"
herein.
None of the Contracts was originated
outside the United States or was sold to
an End-User located, or permits the
related equipment to be located, outside
the United States. For further
information regarding the Contracts
included in the Contract Pool, see "The
Contract Pool" and "The Contracts
Generally," as well as "The Sale and
Servicing Agreement
Generally--Representations and
Warranties" and "--Concentration
Amounts" herein.
The statistical information concerning
the Contracts set forth in this
Prospectus is based upon information as
of the opening of business on the Cutoff
Date and, to the extent it involves
calculations of Discounted Contract
Balances or the ADCB, upon an assumed
discount rate for the Contracts that is
equal to _____% (the "Statistical
Discount Rate"). The actual Discount
Rate for the Contracts will be
calculated as determined under "ADCB"
below. Although the Discounted Contract
Balances and the ADCB calculated at the
Discount Rate will vary somewhat from
the Discounted Contract Balances and
ADCB calculated at the Statistical
Discount Rate, such variance will not be
material.
Between the initial Cutoff Date and the
Closing Date some amortization of the
Contracts included in the Contract Pool
is expected to occur. In addition,
certain Contracts included in the
Contract Pool as of the initial Cutoff
Date may be determined not to meet the
eligibility requirements for the final
Contract Pool, and may not be included
in the final Contract Pool. To the
extent a Contract is determined not to
meet the eligibility requirements for
the Contract Pool, the Seller will
pursue one of two options: (i)
repurchase the ineligible Contract or
(ii) substitute for the ineligible
Contract a new Contract having similar
characteristics and meeting the
requirements described herein (a
"Substitute Contract"). The combined
effect of amortization of the Contract
Pool, and any such repurchases or
substitutions, together with the
calculation in this Prospectus of
Discounted Contract Balances and the
ADCB using the Statistical Discount Rate
will be to cause the statistical
distribution of the characteristics as
of the Closing Date for the Contract
Pool to vary somewhat from the
statistical distribution of such
characteristics as of the initial Cutoff
Date as presented in this Prospectus.
Such variance will in no case be greater
than 5% (plus or minus) of the ADCB.
In addition, in connection with any
Contract for which a full contractual
payment has not been received from the
End-User for more than 120 days or which
the Servicer determines, in accordance
with its customary and usual practices,
is not collectible (each, a "Defaulted
Contract"), the Seller will have the
option under the Sale and Servicing
Agreement to substitute for such
Defaulted Contract one or more
Substitute Contracts. See "Mitsui Vendor
Leasing (U.S.A.) Inc.--Write-Off Policy"
herein.
Also, the Servicer may, at its option,
make a modification to or adjustment of
the terms of a Contract that would not
otherwise be permissible under the Sale
and Servicing Agreement (unless the
Contract was to be prepaid in full)
(each, an "Adjusted Contract"), if the
Servicer contemporaneously substitutes
one or more Substitute Contracts for
such Adjusted Contract. See "The
Transfer and Sale Agreement and Sale and
Servicing Agreement Generally --
Collection and Other Servicing
Procedures" for a description of
Contract modifications or adjustments
that are permissible servicing
activities under the Sale and Servicing
Agreement.
The ADCB of the Defaulted Contracts and
Adjusted Contracts for which the Seller
or Servicer may cause the substitution
of Substitute Contracts is limited to an
amount not in excess of 10% of the ADCB
of the Contract Pool as of the initial
Cutoff Date.
In addition, the Servicer may at its
option, under the terms of the Sale and
Servicing Agreement, permit or agree to
the early termination or full prepayment
of any Contract in certain
circumstances, and on the terms and
subject to the conditions more fully
specified in the Sale and Servicing
Agreement (any such Contract for which
there is an early termination or full
prepayment, a "Prepaid Contract"). Such
circumstances may include, without
limitation, a full or partial buyout of
the Equipment which is the subject of
the Contract, or an Equipment upgrade.
With respect to any Prepaid Contract the
Servicer may at its option either (x)
include such prepayment in full in the
Available Amount for the related Payment
Date or (y) reinvest the prepayment
proceeds of such Prepaid Contract in one
or more new Contracts having similar
characteristics to such Prepaid Contract
(each, an "Additional Contract").
Additional Contracts and Substitute
Contracts included in the Contract Pool
(i) will be conveyed to the Trust
Depositor pursuant to the Transfer and
Sale Agreement, by the Trust Depositor
to the Issuer pursuant to the Sale and
Servicing Agreement, and in turn pledged
by the Issuer to the Indenture Trustee
pursuant to the Indenture and (ii) must
meet the Contract Pool concentration
limitations and the other substitution
or addition requirements described
herein. See "The Transfer and Sale and
Sale and Servicing Agreement
Generally--Representations and
Warranties" herein. In addition, either
the final scheduled payment on such
Substitute Contract or Additional
Contract will be on or prior to the
_______ ______ Payment Date or, to the
extent the final payment on such
Contract is due after the ______ ______
Payment 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 Sale and Servicing
Agreement.
B. Equipment............... All of the Seller's right, title and
interest (which may be limited to a
security interest) in the Equipment
subject to each Lease and the security
interest of the Seller in the Equipment
subject to each CSA included in the
Contract Pool will be transferred to the
Trust Depositor pursuant to the Transfer
and Sale Agreement and to the Issuer
pursuant to the Sale and Servicing
Agreement and will be pledged by the
Issuer to the Indenture Trustee pursuant
to the Indenture. Equipment will include
a variety of machine tools (such as
machining centers, lathes, milling
machines and cutting machinery), medical
equipment (such as diagnostic and
therapeutic examination equipment for
radiology, nuclear medicine and
ultrasound and laboratory analysis
equipment), photo-finishing equipment,
plastic injection molding equipment,
textile equipment (such as knitting
machines and textile manufacturing
machines), computer equipment (such as
inventory control and tracking computer
equipment, computer work stations,
personal computers, data storage devices
and other computer related peripheral
equipment). See "The Contracts
Generally--Equipment" and "The Contract
Pool" herein. In the event the End-User
defaults in its obligation to make
payments under any Contract, 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 from such sale
shall constitute Available Amounts. See
"The Contracts Generally--Equipment,"
and "Description of the Notes--Defaulted
Contracts" 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 in
respect of the Contracts will be
deposited in accordance with the Sale
and Servicing Agreement and the
Indenture. See "Description of the
Notes--Collection Account" herein.
D. Vendor
Agreements............ The Seller acquired the Contracts
included in the Contract Pool by an
assignment (each, a "Vendor Assignment")
from equipment manufacturers, dealers
and distributors (each, a "Vendor") who
originated such Contracts in connection
with the acquisition or use by an
End-User of a Vendor's Equipment.
A substantial portion of the Vendor
Assignments (representing approximately
___% of the ADCB of the Contract Pool as
of the initial Cutoff Date) will be made
pursuant to finance program agreements
(each, a "Vendor Program Agreement")
with the Vendors pursuant to which the
Seller finances transactions relating to
the acquisition or use by an End-User of
the Vendor's Equipment. The Vendor
Assignments, the Vendor Program
Agreements or a combination thereof
generally provide for various forms of
support from Vendors with respect to the
Contracts. Such support generally
includes representations and warranties
by Vendors with respect to the Contracts
(and repurchase obligations in case of a
breach of such representations and
warranties) and remarketing support by
the Vendor with respect to the Equipment
in the event of an End-User default. The
Vendor Assignments and Vendor Program
Agreements generally do not provide
direct recourse against the Vendor for
End-User defaults. See "The Contracts
Generally--Vendor Program Agreements"
and "--Other Vendor Arrangements"
herein.
All of the Seller's right, title and
interest in the Vendor Assignments and
the Vendor Program Agreements (to the
extent related to the Contracts included
in the Contract Pool) will be conveyed
to the Issuer on the Closing Date and in
turn will be pledged by the Issuer to
the Indenture Trustee under the
Indenture.
Terms of the Notes.......... The principal terms of the Notes will be
as described below:
A. Interest................ Interest on the outstanding principal
amount of the Notes will accrue on the
basis of a year of 360 days consisting
of twelve 30 day months from and
including the most recent Payment Date
on which interest has been paid (or, in
the case of the initial Payment Date,
from and including the Closing Date) to
but excluding the following Payment Date
(each period for which interest accrues
on the Notes, an "Accrual Period"),
except that interest on the Class A-1
Notes will be calculated on the basis of
the actual number of days in each
Accrual Period divided by 360. Interest
on the Notes will be payable on each
Payment Date to the holders of record of
the Class A Notes (the "Class A
Noteholders"), the holders of record of
the Class B Notes (the "Class B
Noteholders") and the holders of record
of the Class C Notes (the "Class C
Noteholders"; together with the Class A
Noteholders and the Class B Noteholders,
the "Noteholders") as of the related
Record Date. See "Description of the
Notes--General" and "--Interest" herein.
Interest on the Notes will be payable on
each Payment Date from Available Amounts
for such Payment Date, to the extent
Available Amounts remain after payment
of any unpaid Servicer Advances, and the
Servicing Fee. If on any Payment Date,
after any unpaid Servicer Advances and
the Servicing Fee have been paid,
Available Amounts are insufficient to
pay all interest due on the Notes, the
remaining Available Amounts will be
allocated first to pay all interest due
on the Class A Notes (and will be
allocated among each Class of the Class
A Notes pro rata based on the ratio of
the interest payable on the Class A-1,
Class A-2 and Class A-3 Notes, as
applicable, to the interest payable on
the Class A Notes as a whole), second to
pay all interest due on the Class B
Notes, and third to pay all interest due
on the Class C Notes.
Available Amounts represent primarily
collections of payments due under the
Contracts, certain amounts received upon
the prepayment or repurchase of
Contracts or liquidation of the
Contracts and disposition of the related
Equipment upon defaults thereunder, and
proceeds of Servicer Advances, if any,
amounts available in the Reserve Fund,
if any, as well as earnings on amounts
held in the Collection Account and the
Reserve Fund. See "Description of the
Notes--Allocations" herein.
B. Principal............... Principal of the Class A Notes will be
payable on each Payment Date in an
amount equal to the Class A Principal
Payment Amount for such Payment Date, to
the extent Available Amounts remain,
after payment of any unpaid Servicer
Advances, the Servicing Fee and interest
payments due on the Notes. The Class A
Principal Payment Amount will be
allocated sequentially among the Class
A-1, Class A-2 and Class A-3 Notes so
that the entire Class A Principal
Payment Amount will be allocated, first,
to the Class A-1 Notes until the Class
A-1 Notes are paid in full, second, to
the Class A-2 Notes until the Class A-2
Notes are paid in full and, third, to
the Class A-3 Notes until the Class A-3
Notes are paid in full; provided that,
should any Event of Default or
Restricting Event have occurred and be
continuing, the Class A Principal
Payment Amount will continue to be
allocated first to the Class A-1 Notes
until the Class A-1 Notes are paid in
full but will otherwise be allocated
among the Class A-2 and Class A-3 Notes
on a pro rata basis. See "Description of
the Notes--Allocations" herein.
Principal of the Class B Notes will be
payable on each Payment Date in an
amount equal to the Class B Principal
Payment Amount for such Payment Date, to
the extent Available Amounts are
available therefor, after payment of any
unpaid Servicer Advances, the Servicing
Fee, interest payments due on the Notes,
and the payment of the Class A Principal
Payment Amount. See "Description of the
Notes--Allocations" herein.
Principal of the Class C Notes will be
payable on each Payment Date in an
amount equal to the Class C Principal
Payment Amount for such Payment Date, to
the extent Available Amounts are
available therefor, after payment of any
unpaid Servicer Advances, the Servicing
Fee, interest payments due on the Notes,
and the payment of the Class A Principal
Payment Amount and the Class B Principal
Payment Amount. See "Description of the
Notes--Allocations" herein.
The Class A Principal Payment Amount,
the Class B Principal Payment Amount and
the Class C Principal Payment Amount for
any Payment Date represent the
Applicable Percentage for each such
Class for such Payment Date times the
Aggregate Principal Paydown Amount for
such Payment Date. As a result of the
levels of the Applicable Percentage
described below, all amounts to be
distributed as principal of the Notes
will be distributed on the Class A-1
Notes until the Class A-1 Notes are paid
in full. In addition principal payment
amounts on the Notes of each Class are
payable on any Payment Date only to the
extent that Available Amounts for such
Payment Date remain after payment of any
unpaid Servicer Advances, the Servicing
Fee, interest payments on the Notes and,
in the case of the Class B Notes, the
Class A Principal Payment Amount and, in
the case of the Class C Notes, the Class
A Principal Payment Amount and the Class
B Principal Payment Amount. As a result,
any deficiency in the payment of such
principal payment amounts on any Payment
Date that is due to the limited
Available Amounts remaining after
payment of all amounts payable therefrom
having a higher priority will not
constitute an Event of Default under the
Indenture. To the extent the Notes of
any Class remain outstanding on the
stated maturity of such Class, failure
to pay the Notes of such Class in full
on such date will constitute an Event of
Default. See "Description of the
Notes--Events of Default."
The "Aggregate Principal Paydown Amount"
means, for any Payment Date, an amount
(not less than zero) equal to (a) the
ADCB of the Contract Pool as of the
beginning of business on the first day
of the immediately preceding Collection
Period, minus (b) the ADCB of the
Contract Pool as of the close of
business on the last day of the
immediately preceding Collection Period.
Such decline in the ADCB of the Contract
Pool for such immediately preceding
Collection Period may be through
payment, prepayment, default and
writeoff, determination of
ineligibility, substitution or addition
of the Contracts or as may otherwise be
described herein.
The "Applicable Percentage" means, (i)
for the Class A Notes, 100% until the
Class A-1 Notes are paid in full, and
thereafter ______%, (ii) for the Class B
Notes, 0% until the Class A-1 Notes are
paid in full, and thereafter _____% and
(iii) for the Class C Notes, 0% until
the Class A-1 Notes are paid in full,
and thereafter ___%. As of the Closing
Date, the aggregate initial principal
amount of the Notes will be equal to
approximately ___% of the initial ADCB
of the Contract Pool.
After the occurrence of an Event of
Default, or upon the occurrence and
during the continuance of a Restricting
Event, principal on the Notes will be
allocated among the Class A, Class B and
Class C Notes sequentially (i.e., no
principal will be paid on the Class B
Notes or the Class C Notes until the
Class A Notes have been paid in full,
and no principal will be paid on the
Class C Notes until the Class B Notes
have been paid in full); provided that
principal allocated in such manner to
the Class A Notes will be distributed
first to the Class A-1 Notes until the
Class A-1 Notes have been paid in full
and among the Class A-2 and Class A-3
Notes pro rata. See "Description of the
Notes--Allocations" herein.
Stated Maturity Date........ The stated maturity of the Class A-1
Notes is the Payment ---------- Date;
the stated maturity of the Class A-2
Notes is the Payment Date; and the
stated maturity of each other Class of
Notes is the Payment Date. However, if
all payments on the ---------- Contracts
are made as scheduled, final payment
with respect to the Notes (other than
the Class A-1 Notes) would occur earlier
than stated maturity.
C. Optional
Redemption.............. The Trust Depositor will have the option
to repurchase all remaining Contracts
and related assets, and thus effect the
early redemption of the Notes on any
Payment Date on or after which the ADCB
of the Contract Pool is less than or
equal to 15% of the ADCB of the Contract
Pool as of the initial Cutoff Date. The
price at which the Trust Depositor will
be required to purchase the Contracts in
order to exercise such option will be
equal to the greater of (i) the ADCB of
the Contract Pool and (ii) the amount
that when applied pursuant to the
Indenture together with all other
amounts available thereunder will be
sufficient to redeem the Notes at a
price equal to the unpaid principal
amount of the Notes plus accrued and
unpaid interest thereon through the
related Payment Date.
ADCB........................ The "ADCB" means, at any time, the sum
of the Discounted Contract Balances of
all Contracts included in the Contract
Pool at such time.
"Discounted Contract Balance" means with
respect to any Contract, (a) as of the
related Cutoff Date, the present value
of all of the remaining Scheduled
Payments becoming due under such
Contract after the applicable Cutoff
Date but not later than the _________
________ Payment Date, discounted at the
Discount Rate and (b) as of any other
date of determination, the sum of (i)
the present value of all of the
remaining Scheduled Payments becoming
due under such Contract on or after such
date of determination but not later than
the _________ ________ Payment Date,
discounted at the Discount Rate and (ii)
the aggregate amount of all Scheduled
Payments due and payable under such
Contract after the applicable Cutoff
Date and prior to such date of
determination that have not then been
received by the Servicer; provided that
the Discounted Contract Balance of any
Defaulted Contract will be equal to
zero. The Discounted Contract Balance
for each Contract shall be calculated
assuming:
(a) all payments due in any
Collection Period are due on
the last day of the Collection
Period;
(b) payments are discounted on a
monthly basis using a 30 day
month and a 360 day year; and
(c) all security deposits and
drawings under letters of
credit, if any, issued in
support of a Contract are
applied to reduce Scheduled
Payments in inverse order of
the due date thereof.
"Discount Rate" means, at any date of
determination, a per annum rate 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 B Interest Rate and Class C
Interest Rate, each weighted by (x) the
Initial Class A Note Principal Balance,
Initial Class B Note Principal Balance
or Initial Class C Note Principal
Balance, as applicable, and (y) the
expected weighted average life of each
Class of Notes, as applicable, assuming
a CPR of ___% and (ii) the Servicing Fee
Percentage.
"Scheduled Payments" means, with respect
to any Contract, the rent or financing
payment (whether principal or principal
and interest) scheduled to be made by
the related End-User under the terms of
such Contract after the related Cutoff
Date (provided that Scheduled Payments
do not include any Excluded Amounts).
Substantially all of the Contracts
included in the Contract Pool provide
for Scheduled Payments to be made
monthly.
Subordination............... The Class A Notes will be senior in
right of payment to the Class B Notes
and Class C Notes, and the Class B Notes
will be senior in right of payment to
the Class C Notes; in each case to the
extent described herein. See
"Description of the Notes--Allocations."
Servicing; Servicing
Fee; Servicer Advances...... The Servicer will be responsible for
servicing, managing and administering
the 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 Servicer will be entitled on each
Payment Date to receive (a) a monthly
fee (the "Servicing Fee") equal to the
product of (i) one-twelfth of ___% (the
"Servicing Fee Percentage") and (ii) the
ADCB of the Contract Pool as of the last
day of the second preceding Collection
Period, payable out of Available
Amounts. In addition as compensation for
acting as Servicer, the Servicer will be
entitled to all late charges,
documentation fees, administrative
charges and extension fees paid by the
End-Users.
Under certain limited circumstances, the
Servicer may resign or be removed, in
which event the Back-up Servicer will be
appointed as successor Servicer. See
"The Sale and Servicing Agreement
Generally--Resignation and Certain Other
Matters Regarding the Servicer" and
"--Servicer Default" herein.
The Servicer will be required to cause
amounts collected on the Contracts 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
Equipment. The Servicer will also make
advances (each, a "Servicer Advance")
for delinquent Scheduled Payments, but
only to the extent it determines in its
sole discretion that such advances will
be recoverable in future periods from
Recoveries on the related Contract. Such
Servicer Advances are reimbursable from
Available Amounts as described herein.
See "The Transfer and Sale Agreement and
Sale and Servicing Agreement
Generally--Collection and Other
Servicing Procedures" herein.
Repurchase or
Substitution
for Certain Breaches
of Representations
and Warranties.............. Pursuant to the Transfer and Sale
Agreement and the Sale and Servicing
Agreement, the Seller will be obligated
to accept the reconveyance of a Contract
and the interest in the related
Equipment from the Indenture Trustee and
to deposit the corresponding Repurchase
Amount, if the interest of the Issuer or
the Noteholders in any of the related
Equipment, the related Contract, or the
related Contract File is materially
adversely affected by a breach of a
representation or warranty made by the
Seller with respect to such Contract and
if such breach has not been cured within
90 days of discovery of such breach. In
the alternative, and at the 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 Conditions....... CSAs are generally prepayable by their
terms, and the Servicer will be
authorized to accept prepayments on
Leases in certain circumstances. Each
prepayment on a Contract, if such
Contract is not replaced by the Issuer'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 in whole or in part to
Noteholders on the Payment Date
following the Collection Period in which
such prepayment was received, as set
forth herein. The rate of prepayments on
the Contracts will also be affected
under certain circumstances relating to
breaches of representations, warranties
or covenants with respect to the
Contracts, since the Seller will be
obligated to repurchase materially
adversely affected Contracts from the
Contract Pool unless it provides a
Substitute Contract for the Contract
related to the breached representation
or warranty. Additionally, the rate of
payments on the Contracts will also be
affected by the timing of Recoveries on
Defaulted Contracts unless the Servicer
provides a Substitute Contract for the
Defaulted Contract, which substitution
is in the sole and absolute discretion
of the Servicer. 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. Such reinvestment risks
include the risk that interest rates may
be lower at the time such holders
received payments from the Issuer 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
Consequences................ In the opinion of Brown & Wood LLP,
federal tax counsel to the Issuer, for
federal income tax purposes, the Notes
will be characterized as debt, and the
Issuer 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 "Federal Income Tax
Consequences" 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 "P-1" and
"F-1", that the Class A-2 and Class A-3
Notes be rated at least "Aaa" and "AAA",
that the Class B Notes be rated at least
_____ and that the Class C Notes be
rated at least _____ by Moody's
Investors Service, Inc. and Fitch IBCA,
Inc., 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.
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 Underwriter expects, but is 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 in
advance of its scheduled due date and which will be applied on such due date),
and any and all cash proceeds or rents realized from the sale, lease, re-lease
or re-financing of Equipment under any Prepaid Contract, payments upon the
liquidation of Defaulted Contracts (net of liquidation expenses), and payments
upon repurchases by the Seller through the Trust Depositor as a result of the
breach of certain representations and warranties or covenants in the Transfer
and Sale Agreement and the Sale and Servicing Agreement (any such voluntary or
involuntary prepayment, purchase or termination, a "Prepayment"). The Servicer
may permit the End-User under a Contract that is not prepayable by its terms to
make an optional prepayment so long as such Prepayment is in an amount which is
not less than the Prepayment Amount of the related Contract.
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 option or request of customers, whose
motivations may not be known to the Servicer. No assurance can be given that
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. In addition, since prevailing interest rates are
subject to fluctuation, there can be no assurance that Noteholders will be able
to reinvest the distributions on the Notes at yields equaling or exceeding the
yields on the Notes. It is possible that yields on any such reinvestments will
be lower, and may be significantly lower, that the yields on the Notes.
Noteholders will therefore bear all reinvestment risk resulting from the rate of
Prepayments on the Contracts.
NO ASSURANCES GIVEN AS TO CHANGES IN THE RATINGS OF THE NOTES
A rating is not a recommendation to purchase, hold or sell Notes
inasmuch as such rating does not comment as to market price or suitability for a
particular investor. Ratings of Notes will address the likelihood of timely
payment of interest and the ultimate payment of principal on the Notes pursuant
to their terms. The ratings of Notes will not address the likelihood of an early
return of invested principal. In addition, any such rating will not address the
possibility of the occurrence of an Event of Default or Restricting Event. There
can be no assurance that a rating will remain for a given period of time or that
a rating will not be lowered or withdrawn entirely by a Rating Agency if in its
judgment circumstances (i.e., such as the performance of the Contracts or the
Servicer) in the future so warrant. In the event that the rating initially
assigned to any Note is subsequently lowered for any reason, no person or entity
is obligated to provide any additional credit support therefor. For more
detailed information regarding the ratings assigned to any Class of the Notes,
see "Rating of the Notes" herein.
SUBORDINATION OF THE CLASS B NOTES AND THE CLASS C NOTES
To the extent described herein under the heading "Description of the
Notes -- Allocations": (i) payments of interest and principal on the Class B
Notes will be subordinated in priority of payment to interest and principal,
respectively, on the Class A Notes and (ii) payments of interest and principal
on the Class C Notes will be subordinated in priority of payment to interest and
principal, respectively, on the Class A Notes and the Class B Notes.
Delinquencies and defaults on the Contracts could eliminate the
protection offered the Class B Noteholders by the subordination of the Class C
Notes, and such Class B Noteholders could incur losses on their investment as a
result. Further, delinquencies and defaults on the Contracts could eliminate the
protection offered the Class A Noteholders, by the subordination of the Class B
Notes and the Class C Notes, and such Class A 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 End-Users thereon located in the States of __________, _____
and __________ equal to ____%, ___% and ___%, respectively, of the ADCB of the
Contract Pool as of the initial Cutoff Date. No other state accounts for more
than 5.00% of the Contract Pool. To the extent adverse events or economic
conditions particularly affect any of these states or the related geographic
regions, 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.
RATE AT WHICH EQUIPMENT 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."
DECLINES IN MARKET VALUE OF EQUIPMENT; 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 End-User under the Defaulted Contract. Since the
market value of the Equipment may decline faster than the Discounted Contract
Balance and may be subject to sudden, significant declines in value due to
technological advances, the Servicer might not recover the entire amount due on
the Contract and might not receive any Recoveries on the Equipment. To the
extent such deficiencies are realized, such deficiencies may create a shortfall
with respect to payments on the Notes.
CERTAIN LEGAL RISKS
Legal Risks Associated With Servicer's Retention of Contract Files. To
facilitate servicing and reduce administrative costs, the Contract Files 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. UCC financing statements will be filed reflecting the sale and
assignment of the Contracts and related interests described herein by the Seller
to the Trust Depositor pursuant to the Transfer and Sale Agreement, and by the
Trust Depositor to the Trust pursuant to the Sale and Servicing Agreement, and
the pledge of Trust Assets by the Issuer to the Indenture Trustee pursuant to
the Indenture. The Servicer's accounting records and computer files will be
marked to reflect such conveyances and pledge. Because the Contract Files will
remain in the Servicer's possession, however, if the Servicer, the Indenture
Trustee or a third party, while in possession of the Contracts, sells or pledges
and delivers such Contracts to another party in violation of the Sale and
Servicing Agreement and the Indenture, there is a risk that such party could
acquire an interest in the Contracts that would have priority over that of the
Noteholders. In such event, distributions to Noteholders could be adversely
affected. See "Certain Legal Aspects of the Contracts--Transfer of Contracts"
herein.
Legal Risks Associated With Transfers of Interests in Equipment. In
connection with the conveyance of the Contracts to the Trust, the Seller's
right, title and interest in the related Equipment will be assigned by the
Seller to the Trust Depositor pursuant to the Transfer and Sale Agreement, and
by the Trust Depositor to the Trust pursuant to the Sale and Servicing
Agreement, and pledged by the Trust to the Indenture Trustee pursuant to the
Indenture. 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. Due, however, 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
security interest in the related Equipment granted pursuant to such Contract) or
perfection of the Indenture Trustee's interest in such Contracts, 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 or impede the Trust's (and the Indenture Trustee's)
enforcement, as assignee, of the Seller's right, title and 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 Defaulted
Contracts. Additionally, statutory liens for repairs or unpaid taxes and other
liens arising by operation of law may have priority even over prior perfected
security interests in the Equipment assigned to the Indenture Trustee. See
"Certain Legal Aspects of the Contracts--Transfers of Interests in Equipment"
herein.
Risk of Ineffective Sale in Vendor Bankruptcy. The Seller initially
acquired the Contracts from Vendors. If the acquisition of a Contract by the
Seller is treated as a sale of such Contract from the applicable Vendor to the
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, if an unpaid creditor of such Vendor or a
representative of such creditor, 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 Issuer could occur and, 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 Contracts to
the Seller 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
Issuer's and the Indenture Trustee's) interest in the Contracts. In addition, to
the extent a Vendor has agreed under the related Vendor Assignment or Vendor
Program Agreement to perform certain obligations in connection with its sale of
Contracts to the Seller, application of federal and state bankruptcy and
insolvency laws in the event of the bankruptcy of such Vendor could affect the
interests of the Noteholders in the related Contracts if such laws result in any
obligations being written off as uncollectible or result in delay in payments
due in respect of such obligations. See "Certain Legal Aspects of the
Contracts--Certain Matters Relating to Bankruptcy."
Risk of Ineffective Sale in Bankruptcy of Mitsui Vendor Leasing. In the
Transfer and Sale Agreement, the Seller will warrant that the conveyance of the
Contracts to the Trust Depositor thereunder is a valid sale and transfer of such
Contracts to the Trust Depositor. Also pursuant to the Transfer and Sale
Agreement, the Seller and the Trust Depositor will covenant that they will each
treat the transactions described herein as a sale of the Contracts to the Trust
Depositor, and the Seller will agree to take all actions that are required under
applicable law to perfect the Issuer's ownership interest in the Contracts. See
"Certain Legal Aspects of the Contracts--Transfer of Contracts."
If, however, the transfer of the Contracts to the Trust Depositor were
treated as a pledge of the Contracts to secure a borrowing by the Seller, the
distribution of proceeds of the Contracts to the Issuer (and hence the
Noteholders) might be subject to the automatic stay provisions of the United
States Bankruptcy Code (Title 11 U.S.C. Section 101 et seq.) (the "Bankruptcy
Code") in the event of a bankruptcy proceeding with respect to the Seller, 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 Bankruptcy Code.
Risk of Rejection of "True Leases." A bankruptcy trustee or debtor in
possession under 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 Contracts may be "true leases" under applicable law and thus
subject to rejection by the lessor under the Bankruptcy Code. Any such Contract
which is a "true lease" under applicable law and which is 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 Contract or a transfer by a Vendor to the Seller of an
interest in the right to payments only under any such 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 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.
The Seller will represent as of the initial Cutoff Date that, in the
Seller's reasonable judgment, the Discounted Contract Balance of the Contracts
in the Contract Pool that are "true leases" under applicable law does not exceed
__% of the ADCB of the Contract Pool as of such date.
Risks Associated with Insolvency of the Trust Depositor or the Trust.
Certain restrictions have been imposed on the Trust Depositor and the Trust and
certain other parties to the transactions described herein which are intended to
reduce the risk of an insolvency proceeding involving the Trust Depositor or the
Trust. These restrictions include incorporating the Trust Depositor as a
separate, special purpose corporation pursuant to a certificate of incorporation
containing certain restrictions on the nature and scope of its business.
Additionally, the Trust Depositor may commence a voluntary case or proceeding
under any bankruptcy or insolvency law, or cause the Trust to commence a
voluntary case or proceeding under any bankruptcy or insolvency law, only upon
the affirmative vote of all its directors, including its independent directors,
as long as the Trust Depositor is solvent and does not reasonably foresee
becoming insolvent. The Trust Depositor's certificate of incorporation requires
that the Trust Depositor have at all times at least two independent directors.
However, no assurance can be given that insolvency proceedings involving either
the Trust Depositor or the Trust will not occur. In the event the Trust
Depositor becomes subject to insolvency proceedings involving the Trust, the
Trust's interest in the Trust Assets and the Trust's obligation to make payments
on the Notes might also become subject to such insolvency proceedings. In the
event of insolvency proceedings involving the Trust, the Trust's interest in the
Trust Assets and the Trust's obligation to make payments on the Notes would
become subject to such insolvency proceedings. No assurance can be given that
insolvency proceedings involving the Seller would not lead to insolvency
proceedings of either, or both, of the Trust Depositor or the Trust. In either
such event, or if an attempt were made to litigate any of the foregoing issues,
delays of distributions on the Notes, possible reductions in the amount of
payment of principal of and interest on the Notes and limitations (including a
stay) on the exercise of remedies under the Indenture and the Sale and Servicing
Agreement could occur, although the Noteholders would continue to have the
benefit of the Indenture Trustee's security interest in the Trust Assets under
the Indenture.
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 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.
RISKS ASSOCIATED WITH LIMITED ASSETS OF THE ISSUER -- NO RECOURSE TO MITSUI
VENDOR LEASING OR ITS AFFILIATES
Neither the Seller nor any of its affiliates is generally obligated to
make any payments in respect of the Notes or the Contracts. However, in
connection with the sale of Contracts by the Seller to the Trust Depositor, and
the concurrent conveyance of such Contracts by the Trust Depositor to the Trust,
the Seller will make representations and warranties with respect to the
characteristics of such Contracts and, in certain circumstances, the Seller may
be required to repurchase Contracts from the Trust Depositor (and the Trust
Depositor concurrently from the Trust) with respect to which such
representations and warranties have been breached. See "The Transfer and Sale
Agreement and the Sale and Servicing Agreement Generally--Representations and
Warranties" herein. Because the Trust will be a limited purpose trust with no
assets other than the Trust Assets, the Noteholders must rely solely upon the
Contracts, the Equipment and related security described herein for payment of
principal and interest on the Notes. If payments made or realized from the
Contracts and the disposition proceeds of the Equipment are insufficient to make
payments on the Notes, no other assets will be available for the payment of the
deficiency.
BOOK-ENTRY REGISTRATION -- NOTEHOLDERS LIMITED TO EXERCISING THEIR RIGHTS
THROUGH DTC, EUROCLEAR OR CEDEL
The Notes offered hereby initially will be represented by one or more
Notes registered in the name of Cede & Co. and will not be registered in the
names of the beneficial owners or their nominees. As a result of this, unless
and until Definitive Notes are issued, beneficial owners will not be recognized
by the Issuer or the Indenture Trustee as Noteholders, as that term is used in
the Indenture. Hence, until such time, beneficial owners will only be able to
exercise the rights of Noteholders indirectly, through DTC, Euroclear or CEDEL
and their respective participating organizations, and will receive reports and
other information provided for under the Indenture only if, when and to the
extent provided by DTC, Euroclear or CEDEL, as the case may be, and its
participating organizations. See "Description of the Notes--Book-Entry
Registration."
USE OF PROCEEDS
The proceeds from the sale of the Notes, after paying the expenses of
the Issuer and the Trust Depositor, will be paid to Trust Depositor and in turn
the Seller in consideration of the transfer to the Trust of the Contracts and
related rights.
THE TRUST
The Notes offered hereby will be issued by the Trust which will be
established by the Trust Depositor at or prior to the Closing Date pursuant to
the Trust Agreement. The Contract Pool will be formed and transferred to the
Trust pursuant to the Sale and Servicing Agreement and pledged to the Indenture
Trustee pursuant to the Indenture.
The Trust will be organized as a business trust formed in accordance
with the laws of the State of Delaware, pursuant to the Trust Agreement, solely
for the purpose of effectuating the transactions described herein. Prior to
formation, the Trust will have had no assets or obligations and no operating
history. The Trust will not engage in any business activity other than (a)
acquiring, managing and holding the Contracts and related interests described
herein, (b) issuing the Notes, (c) making distributions and payments thereon and
(d) engaging in those activities, including entering into agreements, that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith. As a consequence, the Trust is not expected to
have any source of capital resources other than the Trust Assets. As of the date
of this Prospectus, neither the Trust Depositor nor the Trust is subject to any
legal proceedings. As of the date of this Prospectus, Mitsui Vendor Leasing is
involved in various lawsuits arising in the ordinary course of its business. In
the opinion of management of Mitsui Vendor Leasing, the outcome of these matters
will not have a material adverse effect on the financial condition or results of
operations of Mitsui Vendor Leasing.
THE CONTRACT POOL
THE CONTRACTS
The Contracts will be purchased by the Trust Depositor from the Seller
on the Closing Date (and as of the initial Cutoff Date) under a transfer and
sale agreement dated as of __________, 1998 (the " Transfer and Sale Agreement")
between the Trust Depositor and the Seller, as well as any Additional Contracts
and Substitute Contracts conveyed thereunder as described herein as of their
applicable Cutoff Dates. The Contracts will in turn be purchased by the Trust
from the Trust Depositor on the Closing Date (and as of the initial Cutoff Date)
under a sale and servicing agreement dated as of ______________, 1998 (the "Sale
and Servicing Agreement") among the Trust, the Trust Depositor, the Seller, the
Servicer, the Back-up Servicer and the Indenture Trustee, as well as any
Additional Contracts and Substitute Contracts conveyed thereunder as described
herein as of their applicable Cutoff Dates. The 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. See "The Transfer and Sale
Agreement Generally--Representations and Warranties" and "--Concentration
Amounts" herein which specifically describe the criteria for eligibility in the
Contract Pool. The Seller will make certain representations and warranties
concerning the Contracts, including that all of the Contracts are commercial,
rather than consumer, leases or financing arrangements, and that no adverse
selection process was employed in the selection of Contracts for sale under the
Transfer and Sale Agreement.
For further information regarding the Contracts, see "The Contracts
Generally" herein and "The Contract Pool--Other Pool Data" below.
OTHER POOL DATA
The statistical information concerning the Contracts set forth below is
based upon information as of the opening of business on the Cutoff Date and the
Statistical Discount Rate. Certain Contracts included in the Contract Pool as of
the initial Cutoff Date may be determined not to meet the eligibility
requirements for the final Contract 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 initial Cutoff Date and calculated at the Statistical
Discount Rate as presented in this Prospectus, such variance will in no case be
greater than 5% (plus or minus) of the ADCB. The percentages and balances set
forth in each of the following tables may not sum to the indicated totals due to
rounding.
Contracts representing approximately _____% of the ADCB of the Contract
Pool as of the initial Cutoff Date provide for payments by the End-User
thereunder on a basis other than monthly payments. The composition and
distribution of the Contracts by remaining term, original term, Discounted
Contract Balance, End-User industry, geographic distribution, type of equipment
and type of Contract are set forth in the following tables and are reported as
of the initial Cutoff Date. Classification by End-User industry and type of
equipment are based on Mitsui Vendor Leasing's customary procedures for
determining such classifications. The largest End-User industry concentration,
which represents an ADCB of $__________ or ____% of the ADCB of the Contract
Pool as of the initial Cutoff Date, relates to the industrial equipment
industry. See "Risk Factors--Certain Risks Associated with Geographic or
Industry Concentrations of Contracts" herein, and "The Contract
Pool--Delinquency and Loss Information" below.
None of the Contracts were originated outside the United States or were
sold to an End-User located, or permits the related equipment to be located,
outside the United States.
At origination, the Contracts typically finance an amount substantially
equal to the dealer invoiced cost of the related Equipment. The value of the
Equipment may decline faster than the Discounted Contract Balance and may be
subject to sudden, significant declines in value. See "Risk Factors --Declines
in Market Value of Equipment; Shortfalls with respect to Available Amounts to
pay Notes." The Equipment includes three general equipment categories: machining
equipment, medical equipment and photographic equipment. Machining equipment
consists of both cutting machines, such as lathes and grinders, and forming
machines, such as press brakes. Medical equipment consists of ultrasound and
mammography imagers and analyzers used for testing in laboratories. Photographic
equipment consists of film processors used in retail sales locations for on-site
photo processing. See "Distributions of Contracts by Equipment Type" in the
tables below.
COMPOSITION OF THE CONTRACT POOL
ADCB $___________
Number of Contracts _____
Weighted Average Original Term (Range) _____
(in months)
Weighted Average Remaining Term ____
(Range)(in months)
Average Discounted Contract Balance $______
DISTRIBUTION OF CONTRACTS BY CONTRACT TYPE
Percentage of Number
Number of ADCD Percentage of
Contracts ADCD
CSAs % $ %
Leases % $ %
Total % $ %
DISTRIBUTION OF CONTRACTS BY STATE IN WHICH END-USERS ARE LOCATED
<TABLE>
<CAPTION>
State Number of Percentage of Number Discounted Percentage
Contracts of Contracts Contract Balance of ADCB
<S> <C> <C> <C>
Alabama % $ %
Alaska % $ %
Arizona % $ %
Arkansas % $ %
California % $ %
Colorado % $ %
Connecticut % $ %
Delaware % $ %
District of Columbia % $ %
Florida % $ %
Georgia % $ %
Hawaii % $ %
Idaho % $ %
Illinois % $ %
Indiana % $ %
Iowa % $ %
Kansas % $ %
Kentucky % $ %
Louisiana % $ %
Maine % $ %
Maryland % $ %
Massachusetts % $ %
Michigan % $ %
Minnesota % $ %
Mississippi % $ %
Missouri % $ %
Montana % $ %
Nebraska % $ %
Nevada % $ %
New Hampshire % $ %
New Jersey % $ %
New Mexico % $ %
New York % $ %
North Carolina % $ %
North Dakota % $ %
Ohio % $ %
Oklahoma % $ %
Oregon % $ %
Pennsylvania % $ %
Rhode Island % $ %
South Carolina % $ %
South Dakota % $ %
Tennessee % $ %
Texas % $ %
Utah % $ %
Vermont % $ %
Virginia % $ %
Washington % $ %
West Virginia % $ %
Wisconsin % $ %
Wyoming % $ %
------ ---- - -
Total % $ %
</TABLE>
DISTRIBUTION OF CONTRACTS BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Equipment Type Number of Percentage of Discounted Percentage of
Contracts Number of Contract Contract Balance ADCB
<S> <C> <C> <C> <C>
Machining Centers % $ %
Miscellaneous Machine Tools % $ %
Photo Finishing % $ %
Medical Diagnostic % $ %
Ultrasound
Lathes % $ %
Miscellaneous Medical % $ %
Diagnostic
Metal Working Tools % $ %
(Cutting Machinery)
Milling % $ %
Battery Chargers % $ %
Other % $ %
--- - - ----
Total % $ %
</TABLE>
DISTRIBUTION OF CONTRACTS BY CONTRACT BALANCE
<TABLE>
<CAPTION>
Discounted Contract Number of Percentage of Discounted Percentage of
Balance Contracts Number of Contracts Contract Balance ADCB
<S> <C> <C> <C>
$ 0 - $25,000 % $ %
$25,001 - $50,000 % $ %
$50,001 - $75,000 % $ %
$75,001 - $100,000 % $ %
$100,001 - $150,000 % $ %
$150,001 - $200,000 % $ %
$200,001 - $250,000 % $ %
$250,001 - $300,000 % $ %
$300,001 - $350,000 % $ %
$350,001 - $400,000 % $ %
greater than $400,000 % $ %
- - -
TOTAL % $ %
</TABLE>
DISTRIBUTION OF CONTRACTS BY
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Remaining Term Number of Contracts Percentage of Discounted Percentage of
(Months) Number of Contracts Contract Balance ADCB
<S> <C> <C> <C> <C>
0-6 % $ %
7-12 % $ %
13-24 % $ %
25-36 % $ %
37-48 % $ %
49-60 % $ %
61-72 % $ %
73-84 % $ %
-- - - -
Total % $ %
</TABLE>
DISTRIBUTION OF CONTRACTS BY
ORIGINAL CONTRACT TERM
<TABLE>
<CAPTION>
Original Term Number of Percentage of Discounted Percentage of
(Months) Contracts Number of Contract Balance ADCB
Contracts
<S> <C> <C> <C>
% $ %
% $ %
% $ %
% $ %
% $ %
% $ %
% $ %
% $ %
% $ %
% $ %
% $ %
% $ %
Total % $ %
</TABLE>
DELINQUENCY AND LOSS INFORMATION
Set forth below is certain information regarding the delinquency and
loss experience of Mitsui Vendor Leasing with respect to its portfolio of leases
and/or loan contracts (including, but not limited to, the Contracts) for users
of a variety of manufacturing, business and medical equipment, consisting
primarily of machine tools (such as machining centers, lathes, milling machines
and cutting machinery), medical equipment (such as diagnostic and therapeutic
examination equipment for radiology, nuclear medicine and ultrasound and
laboratory analysis equipment), photo-finishing equipment, plastic injection
molding equipment, textile equipment (such as knitting machines and textile
manufacturing machines) and computer equipment (such as inventory control and
tracking computer equipment, computer work stations, personal computers, data
storage devices and other computer related peripheral equipment). There can be
no assurance that the levels of delinquency and loss experience on the Contracts
will be comparable to that set forth below. Moreover, due to the acquisition of
contract portfolios from various Vendors and the development of additional
finance programs with various Vendors, the data set forth is not necessarily
comparable on a year-to-year basis.
MITSUI VENDOR LEASING (U.S.A.) INC. PORTFOLIO
DELINQUENCY EXPERIENCE
AT
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
June 30, 1998 December 31, 1997 December 31, 1996 December 31, 1995
------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net Portfolio $266,697,095 $253,174,525 $216,607,094 $137,386,576
INVESTMENT(1)
Delinquencies(2)
31-60 days 3.43% 1.95% 2.27% 3.29%
61-90 days 0.82% 0.65% 0.33% 2.21%
Over 90 days 0.67% 0.72% 0.24% 0.85%
Total (% of Net 4.92% 3.32% 2.84% 6.35%
Portfolio Investment)
(3)
</TABLE>
- ---------------------
(1) Net Portfolio Investment equals the sum of the aggregate amount of all
payments required to be made under the terms of the related contracts
plus the booked residual value, if any, plus the unamortized initial
direct costs, less the unearned income.
(2) Mitsui Vendor Leasing classifies contracts 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 contracts are
written-off in their entirety when a determination is made that the
contract is uncollectible. See "Mitsui Vendor Leasing (U.S.A.)
Inc.--Write-Off Policy" herein.
(3) The percentages in any column may not total 100% due to rounding.
For purposes of the following table, "gross losses" indicates the Net
Portfolio Investment represented by those contracts that were written-off as
uncollectible by Mitsui Vendor Leasing during the periods indicated, measured by
the Net Portfolio Investment of each such contract outstanding at the time of
such write-off; and "net losses" represents gross losses after giving effect to
recoveries on such contracts from all sources, including vendor recourse, sales
or other dispositions of the related equipment or recoveries on guarantees or
other sources of credit enhancement for the related contract.
MITSUI VENDOR LEASING (U.S.A.) INC. PORTFOLIO
LOSS EXPERIENCE
FOR
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Six Months Twelve Months Ended Twelve Months Ended Twelve Months Ended
Ended December 31, 1997 December 31, 1996 December 31, 1995
June 30, 1998
<S> <C> <C> <C> <C>
Net Portfolio Investment 266,697,095 253,174,525 216,607,094 137,386,576
(1)
Gross Losses $ 88,475 $ 326,684 $ 396,771 $ 126,697
Recoveries $ 34,389 $ 121,513 $ 120,369 $ 9,597
Net Losses $ 54,085 $ 200,571 $ 276,402 $ 117,090
Net Losses as a Percentage 0.04%(2) 0.09% 0.16% 0.12%
of Average Net Portfolio
Investment (3)
</TABLE>
- ---------------------
(1) Net Portfolio Investment equals the sum of the aggregate amount of all
payments required to be made under the terms of the related contracts
plus the booked residual value, if any, plus the unamortized initial
direct costs, less the unearned income.
(2) Annualized.
(3) Average Portfolio Net Investment is the average of the Net Portfolio
Investment beginning at the end of each period indicated.
Mitsui Vendor Leasing's delinquency and net loss experience has
historically been affected by prevailing economic conditions, particularly in
industries and geographic regions in which it has end-user concentrations.
Recently, for example, certain segments of the machine tool industry have
evidenced declining demand and pricing. It cannot be predicted whether these or
other trends will continue or increase with a resulting increase in delinquency
and net loss levels.
Proceeds from the resale or other disposition of the related equipment
constitute a significant component of Mitsui Vendor Leasing's recoveries on
defaulted contracts. The resale value of individual items of equipment may be
subject to obsolescence and sudden, significant decreases in value, whether or
not caused by changes in general economic conditions or conditions affecting
particular industries or geographic areas. Contractual recourse to Vendors, if
available, may be an additional source for recoveries on defaulted contracts.
The availability of such recourse is subject to economic conditions affecting
Vendors and the particular terms of the applicable Vendor Program Agreements.
See "The Contracts Generally - Vendor Program Agreements".
THE DATA PRESENTED IN THE FOREGOING TABLES ARE FOR ILLUSTRATIVE PURPOSES ONLY
AND THERE IS NO ASSURANCE THAT THE DELINQUENCY OR LOSS EXPERIENCE OF THE
CONTRACTS WILL BE SIMILAR TO THAT SET FORTH ABOVE. SEE "RISK FACTORS" AND
"CERTAIN LEGAL ASPECTS OF THE CONTRACTS."
THE CONTRACTS GENERALLY
The Issuer will be entitled to all collections in respect of the
Contracts in the Contract Pool, except for (i) collections 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 due on or after the
applicable Cutoff Date for such Contracts, (iii) all late charges and certain
other fees paid under the Contracts by the End-Users, (iv) collections (other
than amounts paid by the Seller or Servicer) in respect of Ineligible Contracts,
Warranty Contracts, Defaulted Contracts, Prepaid Contracts and Adjusted
Contracts which have been conveyed to the Seller or the Servicer as described
herein (amounts described in clauses (i) through (iv), "Excluded Amounts") and
(v) collections relating to payments which were scheduled to be made by the
End-Users on the Contracts pursuant to the terms of such Contracts prior to the
related Cutoff Date.
CONTRACTS
The Contracts to be included in the Contract Pool are either leases
("Leases") or conditional sale agreements ("CSAs"). There is no limit on the
number of Contracts in the Contract Pool which may consist of any of the
foregoing types, although each Contract included in the Contract Pool is
required to be an "Eligible Contract" as of the applicable Cutoff Date.
Contracts Generally. The initial terms of the Contracts in the Contract
Pool generally range from one to seven years. Each Contract in the Contract Pool
is originated in the ordinary course of business by the related Vendor on its
standard, pre-printed forms and is assigned to the Seller pursuant to the
related Vendor Program Agreements or, in the case of one Vendor, is assigned to
the Seller as described below under "--Other Vendor Arrangements." The Contract
forms set forth the description of the Equipment and the amount and number of
rental or installment payments the End-User is unconditionally obligated to pay;
provided that certain of the Contracts in the Contract Pool allow the End-User
to terminate the Contract prior to its stated maturity under a formula which
provides a return in excess of the rate of return that would be earned from
receipt of the Scheduled Payments due under such Contract. Generally, each
Scheduled Payment is due in arrears on a monthly basis from the End-User and
represents the amortization, on a level basis, of the total amount than End-User
is required to pay throughout the term of a Contract.
While the terms and conditions of the Contracts do not generally permit
modification or termination by the End-User, such modification or termination
may be permitted with the consent of the Servicer. It is expected that the
Servicer will be allowed to consider and accommodate these modifications and
terminations with respect to Contracts included in the Contract Pool, pursuant
to the authority delegated to it in the Sale and Servicing Agreement, subject to
certain conditions and covenants of the Servicer.
Contracts generally include the End-User's undertaking, at its expense,
or agreement to: (i) maintain the Equipment in accordance with manufacturer
specifications; (ii) keep the Equipment free and clear of liens and
encumbrances; (iii) pay all taxes related to the Contract payments and the
Equipment; (iv) not modify the Equipment if that would change its originally
intended use; (v) not dispose of the Equipment or assign the Contract; (vi)
waive any rights to assert defects in the Equipment as a basis for setoff,
counterclaim or nonperformance under the Contract; (vii) indemnify against
liabilities arising from the use, possession or ownership of the Equipment; and
(viii) insure the Equipment against casualty loss and from liability claims in
amounts customary to the End-User's business. The Contracts provide specifically
identifiable events of default and remedies therefor. In most cases, the Seller
is (or its assignees are) authorized to perform the End-User's obligations under
the Contract at the End-User's expense, if it so elects, in cases where the
End-User has failed to perform.
The Leases to be included in the Contract Pool are substantially all
"net leases" under which the End-User assumes responsibility for the Equipment
as described in the preceding paragraph. Substantially all of the Leases are
leases intended for security as defined in Section 1-201(37) of the UCC. 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, but
generally such terms provide for the purchase of the Equipment at a prestated
price, which may be nominal. It is not expected that any Leases will be included
in the Contract Pool that are "true leases" (that is, whereby the lessor bears
the risk of ownership and takes any tax benefits associated with the ownership
of depreciable property under applicable law and no title is conferred upon the
lessee).
EQUIPMENT
The Contracts cover a variety of new and used equipment relating
primarily to machine tools (such as machining centers, lathes, milling machines
and cutting machinery), medical equipment (such as diagnostic and therapeutic
examination equipment for radiology, nuclear medicine and ultrasound and
laboratory analysis equipment), photo-finishing equipment, plastic injection
molding equipment, textile equipment (such as knitting machines and textile
manufacturing machines), computer equipment (such as inventory control and
tracking computer equipment, computer work stations, personal computers, data
storage devices and other computer related peripheral equipment) (collectively,
the "Equipment"). All of the interests of the Seller in the Equipment (which
consists or will consist of either title to the Equipment or a security interest
in the Equipment) will be transferred to the Trust Depositor and in turn to the
Issuer and then pledged by the Issuer to the Indenture Trustee under the
Indenture as collateral security for the Issuer's obligations in respect of the
Notes.
VENDOR PROGRAM AGREEMENTS
A substantial portion of the Contracts included in the Contract Pool
(representing approximately __% of the ADCB of the Contract Pool as of the
initial Cutoff Date) consist of Contracts originated by Vendors and assigned to
the Seller pursuant to the Vendor Program Agreements. The Vendor Program
Agreements are agreements between the Seller and equipment manufacturers,
dealers and distributors ("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. The Vendor Program Agreements provide the
Seller with a steady, sustainable flow of new business, generally with lower
costs of origination than asset-based financing marketed directly to End-Users.
Many of the Vendor Program Agreements provide various forms of support from the
Vendor to the Seller, including representations and warranties by the Vendor in
respect of the Contracts and related Equipment, credit support with respect to
defaults by End-Users and Equipment repurchase and remarketing arrangements upon
early termination of Contracts for default by the End-User. Some of the Vendor
Program Agreements are exclusive and provide that the Seller will finance all of
the Vendor's equipment sales (other than equipment sales financed independently
by End-Users). Other Vendor Program Agreements are non-exclusive and permit the
Vendor to finance its Equipment sales through other entities.
Each Vendor Program Agreement generally includes the following
provisions, among others:
1. Vendor representations, warranties and covenants regarding
each Contract assigned to the Seller, including among other things
that: the obligations of the End-User under the assigned 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 Contract and has either title
to or a first priority perfected security interest in the Equipment;
the Equipment has been irrevocably accepted by the End-User and will
perform as warranted to the End-User; and the assigned 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 Contract,
usually require the Vendor to repurchase the affected Contract for the
Seller's investment balance in the 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 Equipment, remarketing support from the
Vendor in the event of an End-User default and subsequent repossession
or return of the Equipment under the 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 Contract).
4. The right of the Seller to further assign its interests in
assigned Contracts, all payments thereunder and any related interest in
Equipment.
In addition to the foregoing, a Vendor Program Agreement may include
recourse against the Vendor with respect to End-User defaults under certain
identified Contracts, (i) by specifying that the assignment of the Contract from
the Vendor to the Seller is with full recourse against the Vendor for such
End-User defaults, (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 Contract in an "ultimate net loss pool" ("UNL Pool") created
under the Vendor Program Agreement or (iv) by providing for Vendor repurchase of
the 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 a Contract which was assigned by the
Vendor to the Seller subject to a 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 Contract, but not in excess of the UNL Pool balance then available.
Drawings may also be made against a UNL Pool with respect to Contracts that are
not included in the Contract Pool and, accordingly, there can be no assurance
that the UNL Pool will be available in the event of an End-User default under a
Contract included in the Contract Pool.
OTHER VENDOR ARRANGEMENTS
Some Contracts (representing approximately __% of the ADCB of the
Contract Pool as of the initial Cutoff Date) have been originated by Vendors and
assigned to the Seller without a Vendor Program Agreement in place. Like the
assignments of Contracts under the Vendor Program Agreements, these Contracts
are typically assigned by a Vendor Assignment from the Vendor. These Vendor
Assignments will also generally contain many, if not all, of the
representations, warranties and covenants typically contained in Vendor Program
Agreements, as well as, in most cases, a Vendor repurchase requirement in the
event of a breach by the Vendor of such representations, warranties or covenants
and Vendor remarketing support in the event of an End-User default. These
assignments may or may not provide recourse against the Vendor for End-User
defaults.
CONTRACT FILES
The Seller will indicate in the appropriate computer files relating to
the Transferred Contracts that such Contracts have been transferred to the
Issuer and pledged by the Issuer to the Indenture Trustee under the Indenture as
collateral security for the Issuer's obligations in respect of the Notes. 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 are
included in the Contract Pool, identified by account number and by the
Discounted Contract Balance as of the Cutoff Date.
COLLECTIONS ON CONTRACTS
All collections received with respect to the Contracts will be
allocated as described herein. See "Description of the Notes--Allocations."
Prepayments will be given effect as of the last day of the Collection Period in
which they are received and Scheduled Payments of principal made in advance of
their due date will be given effect on their due date.
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the Notes, the aggregate amount of
interest payments 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, made at the option or request of the related End-User or
liquidations due to default, casualty and other events, the likelihood of which
cannot be predicted. 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 Seller or the Servicer pursuant to the Transfer and Sale
Agreement or Sale and Servicing Agreement, as applicable, of Ineligible
Contracts, Warranty Contracts and Defaulted Contracts. In the event of a
repurchase, the repurchase price will decrease the ADCB 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 or a Warranty Contract, the Seller or the Servicer, as applicable, 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 Contract Pool as of the initial
Cutoff Date. In addition, the Servicer may at its option, under the terms of the
Sale and Servicing Agreement, permit or agree to the early termination or full
prepayment of any Contract in certain circumstances, and on the terms and
subject to the conditions more fully specified in the Sale and Servicing
Agreement (any such Contract for which there is an early termination or full
prepayment, a "Prepaid Contract"). Such circumstances may include, without
limitation, a full or partial buyout of the Equipment which is the subject of
the Contract, or an equipment upgrade. With respect to any Prepaid Contract the
Servicer may at its option either (x) include such prepayment in full in the
Available Amount for the related Payment Date or (y) reinvest the prepayment
proceeds of such Prepaid Contract in one or more new Contracts having similar
characteristics to such Prepaid Contract (each, an "Additional Contract"). The
Additional Contracts and the Substitute Contracts will have a Discounted
Contract Balance equal to or greater than that of the Contracts being replaced
and the monthly payments on the Additional Contracts and Substitute 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 beyond the ____ ____ Payment Date, or to the extent the last Scheduled
Payment on such Contract is due after the ____ ____ Payment Date, only Scheduled
Payments due on or prior to such date may be included in the Discounted Contract
Balance of such Contract.
The yield to maturity to the holders of the Notes will also be effected
by the exercise of the Trust Depositor of its right of optional redemption of
the Notes if the ADCB of the Contract Pool at such time is equal to 15% or less
of the ADCB of the Contract Pool as of the initial Cutoff Date. See "Description
of the Notes--Optional Redemption" herein.
The following chart sets forth the percentage of the Initial Principal
Amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class B Notes and the C Notes which would be outstanding on the Payment Dates
set forth below assuming a conditional payment rate (a "Conditional Payment
Rate" or "CPR") of ____%, ____%, ____% and ____%, 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 Payment
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 initial Cutoff Date, assume that the Trust Depositor exercises its option to
cause a redemption of the Notes when the ADCB of the Contract Pool at such time
is equal to 15% of the ADCB of the Contract Pool as of the initial Cutoff Date,
assumes the Closing Date is _______ __, 1998 and is based upon the Statistical
Discount Rate.
PERCENTAGE OF THE
INITIAL CLASS A PRINCIPAL AMOUNT,
INITIAL CLASS B PRINCIPAL AMOUNT,
AND INITIAL CLASS C PRINCIPAL AMOUNT
AT THE RESPECTIVE CPR SET FORTH BELOW
<TABLE>
<CAPTION>
% CPR % CPR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Distribution Class Class Class Class Class Class Class Class Class Class
Date A-1 A-2 A-3 B C A-1 A-2 A-3 B C
Closing Date
</TABLE>
<TABLE>
<CAPTION>
% CPR % CPR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Distribution Class Class Class Class Class Class Class Class Class Class
Date A-1 A-2 A-3 B C A-1 A-2 A-3 B C
Closing Date
</TABLE>
WEIGHTED AVERAGE LIFE (YEARS)
If the Trust Depositor does not exercise its option to cause a
redemption of the Notes when the ADCB of the Contract Pool at such time is equal
to 15% or less of the ADCB of the Contract Pool as of the initial Cutoff Date,
the average life of the Class A-1 Notes would be ____ years, ____ years, ____
years and ____ years, the average life of the Class A-2 Notes would be ____
years, ____ years, ____ years and ____ years, the average life of the Class A-3
Notes would be ____ years, ____ years, ____ years and ____ years, the average
life of the Class B Notes would be ____ years, ____ years, ____ years and ____
years, and the average life of the Class C Notes would be ____ years, ____
years, ____ years and ____ years for the ____% CPR, ____% CPR, ____% CPR and
____% 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 B Note or a Class C Note is determined by (a)
multiplying the amount of cash distributions in reduction of the outstanding
Principal Amount of the Class A-1 Notes, outstanding Principal Amount of the
Class A-2 Notes, outstanding Principal Amount of the Class A-3 Notes,
outstanding Principal Amount of the Class B Notes or outstanding Principal
Amount of the Class C Notes, as the case may be, on any given Payment Date by
the number of months from the Closing Date to such Payment 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 B Principal Amount or Initial
Class C Principal Amount, as the case may be.
MITSUI VENDOR LEASING (U.S.A.) INC.
Mitsui Vendor Leasing (U.S.A.) Inc. ("Mitsui Vendor Leasing," and in
its capacity as the seller pursuant to the Transfer and Sale Agreement and as
servicer pursuant to the Sale and Servicing Agreement, the "Seller" and the
"Servicer," respectively) is a full service vendor leasing company which
originates and manages asset-based financing. Mitsui Vendor Leasing acquires
equipment leases and conditional sales contracts through various vendor programs
covering primarily machine tool equipment, medical diagnostic equipment,
photo-finishing equipment, plastic injection molding equipment, textile
equipment and computer equipment.
Mitsui Vendor Leasing, formerly known as Vendor Financial Services
Corporation, was incorporated in December 1992 in the State of Delaware. In
October 1993 it was acquired by Mitsui Leasing Capital Corporation (which
acquired 95.1% of its voting capital stock) and The Sakura Bank Limited (which
acquired 4.9% of its voting capital stock). Mitsui Leasing Capital Corporation
is a wholly-owned subsidiary of Mitsui Leasing and Development, Limited. As of
the date of this Prospectus, these shareholders continue to hold these
respective percentages of Mitsui Vendor Leasing's voting capital stock.
Mitsui Vendor Leasing's strategy has been to specialize in providing
vendors with fully functional captive finance capabilities. In filling this need
of vendors, Mitsui Vendor Leasing promotes a long-term, tightly coupled
strategic alliance with its vendor customers and becomes integrated into the
sales and administrative processes of these vendors.
Mitsui Vendor Leasing's principal executive offices are located at 6363
Greenwich Drive, Suite 100, San Diego, California 92122.
CREDIT UNDERWRITING PROCESS
Mitsui Vendor Leasing's Risk Policy Manual provides the compliance
standards to be followed by all Mitsui Vendor Leasing credit analysts relating
to investment and risk management, credit underwriting and due diligence
standards. The primary factors involved in the extension of credit are (in order
of importance) (1) the credit strength of the underlying user of the Equipment
(each, an "End-User"), (2) the value of the equipment to be financed including
Vendor equipment remarketing support and (3) Vendor recourse.
A credit analyst must underwrite all credit requests. Each credit
analyst has an assigned approval authority based on experience and seniority
(reflecting an understanding of Mitsui Vendor Leasing's business), including
credit approval limits, applicable single transaction size and individual
End-User exposure. Personnel at Mitsui Vendor Leasing's offices have credit
approval authority up to $2,000,000.
Credit review procedures require the preparation of a credit
application setting out the structure and purpose of the transaction, the
background and business of the proposed End-User and the reasons for
recommending approval. Credit scoring is not used. In general, transactions in
excess of $75,000 require financial statement disclosure consisting of at least
the three most recent fiscal year-end financial statements and interim financial
statements. Additionally, information from credit reporting agencies, bank and
other credit references, trade references, and other information may be
evaluated. Transactions involving small, privately held companies exhibiting
limited financial resources require financial disclosure by their principals. An
approval may contain restrictive conditions including a reduced financing term,
related party guarantees or down payments.
In initially establishing a Vendor Program Agreement or other form of
financing arrangement with a Vendor, Mitsui Vendor Leasing completes a formal
underwriting review of such Vendor to ensure that the Vendor can perform the
financial and other obligations contained in any Vendor Program Agreement. This
review encompasses financial information analysis, equipment evaluation, a
review of the quality of the End-User customer base and of relevant industry
data. Vendors are generally required to be established in their field and must
market industry-accepted equipment or other products. The Vendor must have
sufficient financial resources to support the financing relationship
contemplated by Mitsui Vendor Leasing, and the Vendor's equipment must maintain
a substantial market position or in some other appropriate manner demonstrate
marketplace acceptance.
DOCUMENTATION AND PRICING
Most Contracts are written as full-payout finance leases, although in
some instances they are documented as CSAs (see "The Contracts Generally"
above). Mitsui Vendor Leasing's documentation department both originates
Contracts for Vendors that do not have such capabilities and reviews Vendor
originated documentation. As a key control point within Mitsui Vendor Leasing,
pricing and credit approval is verified by this group and, when all requirements
are satisfied, transaction funding is authorized.
The interest rate to be received by Mitsui Vendor Leasing, or yield at
which Mitsui Vendor Leasing acquires a Contract from a Vendor, is set at the
time the End-User credit is approved. The Mitsui Vendor Leasing buy rate is
generally not the same rate as the End-User is paying under the Contract;
consequently, the Mitsui Vendor Leasing buy rate may result in the Vendor
receiving an amount other than the invoice cost of the equipment. End of the
Contract term fixed equipment purchase options under Contracts are priced at no
more than such fixed amount. Most Contracts acquired by Mitsui Vendor Leasing
provide for a end of Contract term fixed equipment purchase option (see "The
Contracts Generally" above).
PAYMENT PROCESSING
Payments by End-Users of amounts payable under their respective
Contracts are made by check mailed to a Mitsui Vendor Leasing post office box or
by wire transfer to a Mitsui Vendor Leasing lock-box account. Invoices are
mailed to End-Users instructing the End-Users to forward payments to such Mitsui
Vendor Leasing post office box for processing by the lock-box bank at which such
Mitsui Vendor Leasing lock-box account is maintained. End-Users that wish to
remit by wire transfer are provided with wire transfer instructions to remit to
such Mitsui Vendor Leasing lock-box account.
Invoices sent to End-Users contain a remittance advice. The lock-box
bank processes the deposits and credits Mitsui Vendor Leasing's lock-box account
daily. The lock-box bank transmits the data electronically to Mitsui Vendor
Leasing's accounts receivable system. Mitsui Vendor Leasing's accounts
receivable system matches remittance information to cash deposits and applies
payments to End-User accounts. The following day, a daily summary of deposits
received by the lock-box bank is forwarded to Mitsui Vendor Leasing, together
with copies of checks and remittance advices and any other information passed
along with the payment. Unmatched deposits are recorded as unapplied cash for
further review and processing after investigation by Mitsui Vendor Leasing.
CONTRACT COLLECTIONS
Portfolio administrators are responsible for monitoring any change in
the status of a Contract as well as collection of delinquent Contracts.
Information on the activity of the Mitsui Vendor Leasing portfolio is available
through lease management software licensed by Mitsui Vendor Leasing. All
collection activity is entered into the system which includes collection
tracking capabilities. Portfolio administrators have available at their computer
terminals the latest status and collection history on each Contract and related
End-User. Activity notes are input directly into the collection system in order
to facilitate monitoring of routine collection activity. Monthly portfolio
quality review meetings are held with senior managers to review the status of
various Contracts and related End-Users and of repossessed Equipment.
When a payment is determined to not have been received within 10 days
of its contractual due date, Mitsui Vendor Leasing's lease management system
automatically assesses a late charge and generates a computerized invoice which
is sent directly to the End-User. Telephone contact is normally initiated when a
Contract payment is 15 days past due. Generally, a demand letter is sent to the
End-User and all guarantors when a Contract payment becomes 45 days past due.
Telephone contact will be continued throughout the delinquency period. In most
instances Mitsui Vendor Leasing will accelerate and demand payment from the
End-User of the balance due under a Contract when a Contract payment becomes
more than 90 days past due, but such action may be initiated more quickly, which
subjects the End-User to repossession of equipment and legal action to collect
the balance due.
Mitsui Vendor Leasing's Risk Policy Manual provides the compliance
standards to be followed by all Mitsui Vendor Leasing portfolio administrators
relating to the rewriting of transactions, transfers of interest and the
extension of time to make payments due under contracts. The approval required in
the case of End-User requests for contract restructuring or payment rescheduling
is the same as that required for a new transaction. Such restructuring or
rescheduling generally will only be approved in cases where it is believed that
an End-User's financial difficulties are only temporary and that the equipment
value will not be seriously impaired by such undertaking.
WRITE-OFF POLICY
Mitsui Vendor Leasing's Credit and Collections Manual provides the
standards to be followed for write-off of a Contract balance, or a portion
thereof as uncollectible. Generally, such write-off is deemed appropriate when
one of two conditions is present. The first condition is when Mitsui Vendor
Leasing has determined that all or a portion of a receivable is uncollectible.
The second is when there is uncertainty as to the source or timing of the
eventual payoff of the Contract but certainty that such payoff, if it occurs,
will be protracted as described below. Mitsui Vendor Leasing's classification
system is designed so that when a Contract (or any portion thereof) is
classified as a loss, it must be written off as uncollectible within 30 days
after such classification.
When a Scheduled Payment under a Contract reaches 180 days
contractually past due, the portion of the account that exceeds the net asset
value of the related Equipment must be classified as a loss and written-off as
uncollectible. Mitsui Vendor Leasing then generally takes a reasonable period of
time (up to 6 months) to liquidate such Equipment. If after such period the
Equipment has not been liquidated, then the liquidation effort is considered
protracted and the remaining balance of the account is written-off in full
(regardless of the net asset value of Equipment securing the Contract).
THE TRUST DEPOSITOR
Mitsui Vendor Leasing Funding Corp. II (the "Trust Depositor") is
incorporated under the laws of the State of Delaware and is a wholly owned
subsidiary of the Seller. On the Closing Date, the Contracts and related
interests described herein will be transferred by the Seller to the Trust
Depositor, and in return the Trust Depositor will pay to the Seller the net
proceeds received from the offering and sale of the Notes. See "Use of Proceeds"
herein.
The Trust Depositor has been formed solely for the purposes of the
transactions described in this Prospectus; and under its incorporation documents
and the Sale and Servicing Agreement, the Trust Depositor is not permitted to
engage in any activity other than (i) acquiring the Contracts and related
interests described herein, (ii) transferring and conveying the Contracts and
related interests described herein and its rights under the Transfer and Sale
Agreement to the Trust, and (iii) engaging in other transactions, including
entering into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith. The
Trust Depositor is prohibited from incurring any debt, issuing any obligations
or incurring any liabilities, except in connection with the formation of the
Trust and the issuance of the Notes. The Trust Depositor is not liable,
responsible or obligated, directly or indirectly, for payment of any principal,
interest or any other amount in respect of any of the Notes and will have no
significant assets other than those conveyed to the Trust.
DESCRIPTION OF THE NOTES
The statements under this caption are summaries, do not purport to be
complete and are subject to and qualified in their entirety by reference to the
Sale and Servicing Agreement and the Indenture (the "Operative Documents").
Forms of the Operative Documents have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.
GENERAL
The Notes will consist of three Classes: the Class A Notes, the Class B
Notes and the Class C Notes. The Class A Notes are further divided into three
sub-Classes: the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes.
The Notes will be issued pursuant to the Indenture between the Issuer and the
Indenture Trustee. The following summary describes the material terms of the
Notes and is qualified in its entirety by reference to the Operative Documents.
The Class A-1 Notes, the Class A-2 Notes, the Class A-3 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 Issuer, the "Depositary"), except as set
forth below under the heading "--Definitive Notes." 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 & Co. See "--Book-Entry Registration" and
"--Definitive Notes" below.
The Indenture Trustee will be granted a first priority lien on the
Trust Assets to secure the Notes. Distributions on the Notes (and each Class
thereof) will be allocated as provided herein. The Notes are nonrecourse
obligations of the Issuer only and do not represent interests in or obligations
of the Seller, the Servicer, the Trust Depositor, or any affiliate thereof.
INTEREST
Interest on the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class B Notes and the Class C Notes will accrue on the outstanding
Principal Amount thereof as of the preceding Payment Date (after giving effect
to all distributions and allocations on such date) (or, in the case of the
initial Payment Date, as of the Closing Date) at the applicable Class A-1
Interest Rate, the Class A-2 Interest Rate, the Class A-3 Interest Rate, the
Class B Interest Rate or the Class C Interest Rate, respectively, on the basis
of a year of 360 days consisting of twelve 30 day months from and including the
most recent Payment Date (or, in the case of the initial Payment Date, from and
including the Closing Date) to but excluding the following Payment Date (each
period for which interest accrues on the Notes, an "Accrual Period"), except
that interest on the Class A-1 Notes will be calculated on the basis of the
actual number of days in each Accrual Period divided by 360. Interest on the
Notes will be payable on each Payment Date to the holders of record of the Class
A Notes (the "Class A Noteholders"), the holders of record of the Class B Notes
(the "Class B Noteholders") and the holders of record of the Class C Notes (the
"Class C Noteholders"; together with the Class A Noteholders and the Class B
Noteholders, the "Noteholders") as of the related Record Date.
Interest on the Class A Notes is payable on a Payment 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).
Interest on the Class B Notes is payable on a Payment 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 Notes. Interest on the Class C Notes is payable on a
Payment 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 Notes and the Class B Notes.
If on any Payment Date, after any unpaid Servicer Advances and the
Servicing Fee have been paid, Available Amounts are insufficient to pay all
interest due on the Notes, the remaining Available Amounts will be allocated
first to pay all interest due on the Class A Notes (and will be allocated among
each Class of the Class A Notes pro rata based on the ratio of the interest
payable on the Class A-1, Class A-2 and Class A-3 Notes, as applicable, to the
interest payable on the Class A Notes as a whole), second to pay all interest
due on the Class B Notes, and third to pay all interest due on the Class C
Notes.
PRINCIPAL
The stated maturity of the Class A-1 Notes is the Payment Date; the
stated maturity of the Class A-2 Notes is the Payment Date; the stated maturity
of each other Class of Notes is the Payment Date. However, if all payments on
the Contracts are made as scheduled, final payment with respect to the Notes
(other than the Class A-1 Notes) would occur earlier than stated maturity.
Principal of the Class A Notes will be payable on each Payment Date in
an amount equal to the Class A Principal Payment Amount for such Payment Date to
the extent Available Amounts are available therefor, but after payment from such
Available Amounts of any unpaid Servicer Advances, the Servicing Fee and
interest payments due on the Notes. Principal of the Class B Notes will be
payable on each Payment Date in an amount equal to the Class B Principal Payment
Amount for such Payment Date to the extent Available Amounts are available
therefor, but after payment from such Available Amounts of any unpaid Servicer
Advances, the Servicing Fee, interest payments due on the Notes, and the payment
of the Class A Principal Payment Amount. Principal of the Class C Notes will be
payable on each Payment Date in an amount equal to the Class C Principal Payment
Amount for such Payment Date to the extent Available Amounts are available
therefor, but after payment from such Available Amounts of any unpaid Servicer
Advances, the Servicing Fee, interest payments due on the Notes, and the payment
of the Class A Principal Payment Amount and the Class B Principal Payment
Amount. See "--Allocations" herein.
As a result of the levels of the Applicable Percentage described below,
all amounts to be distributed as principal of the Notes will be distributed on
the Class A-1 Notes until the Class A-1 Notes are paid in full. In addition,
failure to pay the Class A Principal Payment Amount, the Class B Principal
Payment Amount or the Class C Principal Payment Amount on any Payment Date prior
to the stated maturity date for such Class of Notes will not constitute an Event
of Default under the Indenture, except to the extent caused by any failure to
remit or allocate Available Amounts to be used to make such Class A Principal
Payment Amount, Class B Principal Payment Amount or Class C Principal Payment
Amount. See "--Events of Default."
As used herein, the following terms shall have the following meanings:
The "ADCB" 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.
The "Aggregate Principal Paydown Amount" means, for any
Payment Date, an amount (not less than zero) equal to (a) the ADCB of
the Contract Pool as of the beginning of business on the first day of
the immediately preceding Collection Period, minus (b) the ADCB of the
Contract Pool as of the close of business on the last day of the
immediately preceding Collection Period. Such decline in the ADCB of
the Contract Pool for such immediately preceding Collection Period may
be through payment, prepayment, default and writeoff, determination of
ineligibility, substitution or addition of the Contracts or as may
otherwise be described herein.
The "Applicable Percentage" means, (i) for the Class A Notes,
100% until the Class A-1 Notes are paid in full, and thereafter _____%,
(ii) for the Class B Notes, 0% until the Class A-1 Notes are paid in
full, and thereafter _____%, and (iii) for the Class C Notes, 0% until
the Class A-1 Notes are paid in full, and thereafter ____%.
"Class A Principal Payment Amount" means, with respect to any
Payment Date, the lesser of (a) the aggregate Principal Amount of the
Class A Notes and (b) (i) the Applicable Percentage for the Class A
Notes for such Payment Date, multiplied by (ii) the Aggregate Principal
Paydown Amount for such Payment Date.
"Class B Principal Payment Amount" means, with respect to any
Payment Date, the lesser of (a) the Principal Amount of the Class B
Notes and (b) (i) the Applicable Percentage for the Class B Notes for
such Payment Date, multiplied by (ii) the Aggregate Principal Paydown
Amount for such Payment Date.
"Class C Principal Payment Amount" means, with respect to any
Payment Date, the lesser of (a) the Principal Amount of the Class C
Notes and (b) (i) the Applicable Percentage for the Class C Notes for
such Payment Date, multiplied by (ii) the Aggregate Principal Paydown
Amount for such Payment 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
after the applicable Cutoff Date but not later than the ____________
_______ Payment Date, discounted monthly at the Discount Rate and (b)
as of any other date of determination, the sum of (i) the present value
of all of the remaining Scheduled Payments becoming due under such
Contract on or after such date of determination but not later than the
____________ _______ Payment Date, discounted monthly at the Discount
Rate and (ii) the aggregate amount of all Scheduled Payments due and
payable under such Contract after the applicable Cutoff Date and prior
to such date of determination that have not then been received by the
Servicer; provided that the Discounted Contract Balance of any
Defaulted Contract will be equal to zero. 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 means, as of any date,
the aggregate initial principal amount thereof reduced by the aggregate
amount of any Distributions applied in reduction of such principal
amount on or prior to such date.
"Scheduled Payments" means, with respect to any Contract, rent
or financing payment (whether attributable to principal or interest)
scheduled to be made by the related End-User under the terms of such
Contract after the related Cutoff Date; provided that Scheduled
Payments will not include any Excluded Amounts. Substantially all of
the Contracts included in the Contract Pool provide for Scheduled
Payments to be made monthly.
ALLOCATIONS
As Long As No Event of Default or Restricting Event Has Occurred and Is
Continuing. So long as no Event of Default or Restricting Event has occurred and
is continuing, on the second Business Day prior to each Payment Date (each, a
"Determination Date"), the Servicer shall instruct the Indenture Trustee to
withdraw, and on such Payment Date the Indenture Trustee acting in accordance
with such instructions shall withdraw, the amounts required to be withdrawn from
the Collection Account in order to make the following payments or allocations
from the Available Amounts for the related Payment Date, in the following order
of priority (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 Payment Date have been made):
(A) pay to the Owner Trustee, the Indenture Trustee and
the Administrator, the amount of any unpaid fees and
expenses;
(B) pay to the Servicer, the amount of any unreimbursed
Servicer Advances;
(C) pay to the Servicer, the monthly Servicing Fee for
the preceding Collection Period together with any
amounts in respect of the Servicing Fee that were due
in respect of prior Collection Periods that remain
unpaid;
(D) pay to the Indenture Trustee, on behalf of the Class
A Notes, an amount equal to (i) interest accrued in
respect of such Class A Notes for the Accrual Period
immediately preceding such Payment Date, plus (ii)
any accrued and unpaid interest from prior Accrual
Periods; provided that, if the Available Amounts
remaining to be allocated as described in this clause
are less than the full amount required to be so paid,
such remaining Available Amounts shall be allocated
among each Class of the Class A Notes pro rata based
on the ratio of the interest payable on the Class
A-1, Class A-2 and Class A-3 Notes, as applicable, to
the interest payable on the Class A Notes as a whole;
(E) pay to the Indenture Trustee, on behalf of the Class
B Notes, an amount equal to (i) the interest accrued
thereon for the Accrual Period immediately preceding
such Payment Date, plus (ii) any accrued and unpaid
interest from prior Accrual Periods;
(F) pay to the Indenture Trustee, on behalf of the Class
C Notes, an amount equal to (i) interest accrued
thereon for the Accrual Period immediately preceding
such Payment Date, plus (ii) any accrued and unpaid
interest from prior Accrual Periods;
(G) pay to the Indenture Trustee, on behalf of the Class
A Notes, an amount equal to (i) the Class A Principal
Payment Amount for such Payment Date, plus (ii) any
unpaid Class A Principal Payment Amount from prior
Payment Dates;
(H) pay to the Indenture Trustee, on behalf of the
holders of the Class B Notes, an amount equal to (i)
the Class B Principal Payment Amount for such Payment
Date, plus (ii) any unpaid Class B Principal Payment
Amount from prior Payment Dates;
(I) pay to the Indenture Trustee, on behalf of the
holders of the Class C Notes, an amount equal to (i)
the Class C Principal Payment Amount for such Payment
Date, plus (ii) any unpaid Class C Principal Payment
Amount from prior Payment Dates; and
(J) Available Amounts remaining, after the allocations
described in paragraphs (A) through (I) above, shall
be paid to the holder of the subordinate interests in
the Trust (which will initially be the Trust
Depositor) and will thereafter not be available to
make payments in respect of the Notes or otherwise be
part of Available Amounts.
So long as no Event of Default or Restricting Event has occurred and is
continuing, on each Payment Date the Class A Principal Payment Amount will be
allocated sequentially among the Class A-1, Class A-2 and Class A-3 Notes so
that the entire Class A Principal Payment Amount will be allocated, first, to
the Class A-1 Notes until the Class A-1 Notes are paid in full, second, to the
Class A-2 Notes until the Class A-2 Notes are paid in full and, third, to the
Class A-3 Notes until the Class A-3 Notes are paid in full.
As used herein, "Available Amounts" means as of any Payment 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, but
excluding the Excluded Amounts due on or before, as well as Prepayments received
on or before, the last day of the Collection Period immediately preceding such
Payment Date (in each case other than Excluded Amounts); (ii) Recoveries on
account of previously Defaulted Contracts received as of the immediately
preceding Determination Date; and (iii) such amounts as from time to time may be
held in the Collection Account, together with earnings on funds therein.
Pursuant to the Indenture, on each Payment Date the Indenture Trustee
will distribute all amounts paid to it on behalf of any one of the Class A-1,
Class A-2, Class A-3, Class B or Class C Notes as described in the foregoing
paragraphs to the Noteholders of such Class pro rata in accordance with the
respective amounts owed thereto.
Following an Event of Default or Restricting Event. On each
Determination Date after the occurrence and during the continuance of an Event
of Default or Restricting Event, the Servicer shall instruct the Indenture
Trustee to withdraw, and on the related Payment Date the Indenture Trustee,
acting in accordance with such instructions, shall withdraw, the amounts
required to be withdrawn from the Collection Account in order to make the
following payments or allocations from the Available Amounts, in the following
order of priority (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 Payment Date have been made):
(A) pay to the Owner Trustee, the Indenture Trustee and
the Administrator, the amount of any unpaid fees and
expenses;
(B) pay to the Servicer, the amount of any unreimbursed
Servicer Advance;
(C) pay to the Servicer, the monthly Servicing Fee for
the preceding Collection 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 Notes, an amount equal to (i) interest accrued in
respect of such Class A Notes for the Accrual Period
immediately preceding such Payment Date, plus (ii)
any accrued and unpaid interest from prior Accrual
Periods; provided that, if the Available Amounts
remaining to be allocated as described in this clause
are less than the full amount required to be so paid,
such remaining Available Amounts shall be allocated
among each Class of the Class A Notes pro rata based
on the ratio of the interest payable on the Class
A-1, Class A-2 and Class A-3 Notes, as applicable, to
the interest payable on the Class A Notes as a whole;
(E) pay to the Indenture Trustee, on behalf of the Class
B Notes, an amount equal to (i) the interest accrued
thereon for the Accrual Period immediately preceding
such Payment Date, plus (ii) any accrued and unpaid
interest from prior Accrual Periods;
(F) pay to the Indenture Trustee, on behalf of the Class
C Notes, an amount equal to (i) interest accrued in
respect of the Class C Notes for the Accrual Period
immediately preceding such Payment Date, plus (ii)
any accrued and unpaid interest from prior Accrual
Periods;
(G) pay to the Indenture Trustee, on behalf of the Class
A Notes, an amount equal to all remaining Available
Amounts for such Payment Date, until the aggregate
Principal Amount of the Class A Notes has been paid
in full; with all amounts paid as described in this
clause to be allocated first to the Class A-1 Notes
until the Class A-1 Notes have been paid in full and
then among the Class A-2 and Class A-3 Notes, pro
rata, based on the outstanding principal amounts
thereof;
(H) after the Class A Notes have been paid in full, pay
to the Indenture Trustee, on behalf of the Class B
Notes, an amount equal to all remaining Available
Amounts for such Payment Date, until the aggregate
Principal Amount of the Class B Notes has been paid
in full; and
(I) after the Class B Notes have been paid in full, pay
to the Indenture Trustee, on behalf of the Class C
Notes, an amount equal to all remaining Available
Amounts until the aggregate Principal Amount of the
Class C Notes has been paid in full.
DEFAULTED CONTRACTS
A Contract will be deemed to be in default (a "Defaulted Contract") if
(i) it is more than 120 days past due; or (ii) if at any time the Servicer
determines, in accordance with its customary and usual practices, that such
Contract is not collectible (taking into account any available Vendor recourse).
The current policy of the Servicer with respect to writing off Contracts is
described in "Mitsui Vendor Leasing (U.S.A.) 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 the related Equipment on behalf of the
Issuer. In the event of a failure to pay and an inability to collect amounts due
from the End-User, the Trust will dependent on recoveries from the sale of the
related Equipment and, if available, Insurance Proceeds and amounts received in
respect of Vendor recourse to pay the Discounted Contract Balance and any
delinquent Scheduled Payments or other amounts due on the Defaulted Contract.
Any recoveries on account of a previously Defaulted Contract (including proceeds
of repossessed Equipment or other property, Insurance Proceeds and amounts
subsequently received pursuant to a Vendor 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, shall cause to be
established and maintained in the name of the Indenture Trustee, with an office
or branch of a depositary institution or trust company (which may include the
Indenture Trustee) organized under the laws of the United States of America or
any one of the states thereof and located in the state designated by the
Servicer, a segregated corporate trust account (the "Collection Account")
bearing a designation clearly indicating that the funds deposited therein are
held in trust for the benefit of the Noteholders; provided 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," and any such depositary institution or trust
company, a "Qualified Institution"). Funds in the Collection Account generally
will be invested in (i) obligations fully guaranteed by the United States of
America, (ii) demand deposits, time deposits or certificates of deposit of
depositary institutions or trust companies having commercial paper with the
highest rating from each Rating Agency, (iii) commercial paper (or other
short-term obligations) having, at the time of the Indenture Trustee'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 banker's 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 each Rating Agency
(collectively, "Eligible Investments"). Any earnings (net of losses and
investment expenses) on funds in the Collection Account will be held therein and
be treated as Available Amounts. The Servicer will have the revocable power to
instruct the Indenture Trustee to make withdrawals and payments from the
Collection Account for the purpose of carrying out its duties under the Sale and
Servicing Agreement.
REPLACEMENT ACCOUNTS
If any institution with which any of the accounts established pursuant
to the Sale and Servicing Agreement or the Indenture are established ceases to
be a Qualified Institution, the Servicer or the Indenture Trustee (as the case
may be) shall, within ten Business Days, establish a replacement account at a
Qualified Institution after notice thereof.
EVENTS OF DEFAULT
Allocations of Available Amounts will be made as described above under
"--Allocations--As Long As No Event of Default or Restricting Event Has Occurred
and Is Continuing" unless and until an Event of Default or Restricting Event has
occurred, in which case allocations of Available Amounts will be made as
described above under "--Allocations--Following an Event of Default or
Restricting Event." An "Event of Default" refers to any of the following events:
(a) failure to pay on each Payment Date the full amount
of accrued and unpaid interest on any Class A Note,
Class B Note or Class C Note;
(b) failure to pay the Principal Amount of any Note, if
any, on its related stated maturity date;
(c) (i) failure on the part of the Seller or the Servicer
to make any payment or deposit required under the
Sale and Servicing Agreement or the Indenture 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 Servicer or the Issuer to
observe or perform any other covenants or agreements
of such entity set forth in the Sale and Servicing
Agreement or the Indenture, which failure has a
material adverse effect on the Noteholders and which
continues unremedied for a period of 60 days after
written notice; provided that only a five (5) day
cure period shall apply in the case of a failure by
the Seller or the Issuer 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 Issuer,
the Trust Depositor or the Seller in the Sale and
Servicing Agreement or the Indenture or any
information required to be given by the Seller or the
Trust Depositor to the Indenture Trustee to identify
the Contracts proves to have been incorrect in any
material respect when made and continues to be
incorrect in any material respect, which failure has
a material adverse effect on the Noteholders and
which continues unremedied for a period of 60 days
after written notice (it being understood and
acknowledged that, if any such breach occurs with
respect to one or more Contracts, the Seller, through
the Trust Depositor, may remedy such breach by the
repurchase of such Contracts during such period in
accordance with the provisions of the Sale and
Servicing Agreement and the Transfer and Sale
Agreement);
(e) if a conservator, receiver or liquidator of the
Seller, the Issuer or the Trust was appointed or if
certain other events relating to the bankruptcy,
insolvency or receivership of the Seller, the Issuer
or the Trust were to occur (an "Insolvency Event");
or
(f) the Issuer becomes an "investment company" within the
meaning of the Investment Company Act of 1940, as
amended.
An Event of Default may be waived if the Required Controlling Holders
provide written notice to the Issuer, the Trust Depositor, the Servicer and the
Indenture Trustee of such waiver. In the event the Trustee has actual knowledge
of an Event of Default, it will be required to notify, among others, the Issuer,
the Servicer and the Sellers.
If an Insolvency Event relating to the Trust Depositor or the Issuer
occurs, pursuant to the Sale and Servicing Agreement, on the day of such
Insolvency Event, the Trust Depositor will promptly give notice to the Trustee
of the Insolvency Event, and the Indenture Trustee will, if directed by the
Required Controlling Holders, promptly act to sell, dispose of or otherwise
liquidate the Contracts in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from any such sale, disposition or liquidation of
Contracts will be deposited in the Collection Account and allocated as described
in the Sale and Servicing Agreement and herein. If the proceeds of any
collections on Contracts in the Collection Account allocated to Noteholders of
any Class is not sufficient to pay the Principal Amount of the Notes of such
Class in full, such Noteholders will incur a loss.
As used herein, "Required Controlling Holders" means (i) prior to the
payment in full of the Class A Notes outstanding, Class A Noteholders evidencing
more than 66 2/3% of the 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 Principal Amount of
the Class B Notes outstanding and (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 Principal Amount of the Class C Notes
outstanding.
RESTRICTING EVENTS
Prior to the occurrence of a Restricting Event, allocations of
Available Amounts will be made as described above under "--Allocations--As Long
As No Event of Default or Restricting Event Has Occurred and Is Continuing"
unless and until an Event of Default or Restricting Event has occurred, in which
case allocations of Available Amounts will be made as described above under
"--Allocations--Following an Event of Default or Restricting Event." A
"Restricting Event" refers to any of the following events:
(a) as of any Payment Date, the weighted average ADCB during the
three (3) preceding Collection Periods of all Contracts in
respect to which a Scheduled Payment is more than sixty (60)
days past due at any time during such three (3) preceding
Collection Periods, exceeds ___% of the weighted average of
ADCB of all Contracts in the Contract Pool during such three
Collection Periods; or
(b) as of any Payment Date, the product of (i) two (2) multiplied
by (ii) the difference between (x) the sum of the ADCB for
each of the six (6) preceding Collection Periods of all
Contracts that became Defaulted Contracts during such six (6)
preceding Collection Periods and (y) Recoveries received
during such six preceding Collection Periods on account of all
Defaulted Contracts, exceeds ____% of the weighted average
ADCB of all Contracts in the Contract Pool during such six
Collection Periods; or
(c) a Servicer Default has occurred and is continuing.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation with respect to its servicing activities
and reimbursement for its expenses for any Collection Period will be a servicing
fee (the "Servicing Fee") calculated monthly, and payable on each Payment Date,
in an amount equal to the product of (i) one-twelfth, (ii) _____% (such
percentage, the "Servicing Fee Percentage") and (iii) the ADCB of the Contract
Pool as of the beginning of the related Collection Period. The Servicing Fee
will be funded from Available Amounts and will be paid on the Payment Date with
respect to each Collection Period from the Collection Account. In addition as
compensation for acting as Servicer, the Servicer will be entitled to all late
charges, documentation fees, administrative charges and extension fees paid by
the End-Users.
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, Owner Trustee, the
Administrator and independent accountants, casualty insurance on Equipment (to
the extent the Contracts provide for the Seller to pay for such insurance) and
other fees which are not expressly stated in the Sale and Servicing Agreement to
be payable by the Trust or the Noteholders, 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 Mitsui Vendor Leasing is acting as Servicer and
fails to pay the fees and disbursements of the Indenture Trustee or the 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 payment of such
amounts, and any such amounts so paid to the Trustees will be treated as paid to
the Servicer for all purposes of the Sale and Servicing Agreement.
RECORD DATE
Payments on the Notes will be made as described herein to the
Noteholders in whose names the Notes were registered (expected to be Cede, as
nominee of DTC) at the close of business on the Record Date. However, the final
payment on the Notes offered hereby will be made only upon presentation and
surrender of such Notes. All payments with respect to the principal of and
interest on the Notes (each, a "Distribution") will be made to DTC in
immediately available funds. See "Description of the Notes--Book-Entry
Registration."
OPTIONAL REDEMPTION
The Trust Depositor may repurchase all remaining Contracts and related
assets, and thus effect the early redemption of the Notes on any Payment Date on
or after which the ADCB of the Contract Pool is equal to 15% or less of the ADCB
of the Contract Pool as of the initial Cutoff Date. The price at which the Trust
Depositor will be required to purchase the Contracts in order to exercise such
option will be equal to the greater of (i) the ADCB of the Contract Pool and
(ii) the amount that when applied pursuant to the Indenture together with all
other amounts available thereunder will be sufficient to redeem the Notes at a
price equal to the unpaid principal amount of the Notes plus accrued and unpaid
interest thereon through the date of redemption.
REPORTS
No later than the third Business Day prior to each Payment Date, the
Servicer will forward to the Indenture Trustee and each Rating Agency a
statement (the "Monthly Report") prepared by the Servicer setting forth certain
information with respect to the Contract Pool and the Notes, 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 Payment 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
Principal Payment Amount, the Class B Principal Payment Amount and the Class C
Principal Payment Amount (including the calculations utilized in the
determination thereof); (iii) the ADCB of Contracts held by the Issuer which
were more than 30, 60, and 90 days 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 Period; (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 Payment 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 interest on the Notes and each Class
thereof; and (iii) the amount allocable to principal on the Notes and each Class
thereof. On each Payment Date, the Indenture Trustee (or an agent on its
behalf), will forward to each Noteholder of record a copy of the Monthly Report.
On or before ______ 31 of each calendar year, commencing _______ 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 Sale and Servicing Agreement or the Notes. While the Notes are
held in book-entry form, holders of beneficial interests in the Notes will not
have access to a list of other holders of beneficial interests in the Notes,
which may impede the ability of such holders of beneficial interests to
communicate with each other. See "--Book-Entry Registration" below.
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 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 which in turn will hold such positions in
customers' securities accounts in the Depositaries' names on the books of DTC.
Citibank will act as depositary for CEDEL and Morgan Guaranty Trust will act as
depositary for Euroclear (in such capacities, the "Depositaries").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("Participants") and
facilitate the settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of notes. Participants include the
Underwriter, securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. Indirect access to the
DTC system also is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants and Euroclear Participants 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 hand, 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 "Federal Income Tax Consequences."
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 Payment
Date, as the case may be, because, while payments are required to be forwarded
to Cede, as nominee for DTC, on each such date, DTC will forward such payments
to its Participants which thereafter will be required to forward them to
Indirect Participants or holders of beneficial interests in the Notes. It is
anticipated that the only Class A-1 Noteholder, Class A-2 Noteholder, Class A-3
Noteholder, Class B Noteholder and Class C Noteholder will be Cede & Co., 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 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 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 Trust Depositor 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 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
Notes, Class B Notes or Class C Notes are credited. Additionally, DTC has
advised the Trust Depositor 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.
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 systems 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 "Federal Income Tax Consequences." CEDEL or the Euroclear Operator, as the
case may be, will take any other action permitted to be taken by a Noteholder
under the Indenture on behalf of a CEDEL 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 Indenture Trustee, the Servicer,
the Seller, the Trust Depositor or the Owner 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 Issuer (through the Administrator) 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 (through the Administrator) 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 re-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 Payment Date.
Additionally, upon the occurrence of any such event described above,
distribution of principal of and interest on the Notes will be made by the
Indenture Trustee directly to Holders in accordance with the procedures set
forth herein and in the Indenture. Distributions will be made by check, mailed
to the address of such Holder as it appears on the Note register. Upon at least
10 days' notice to Noteholders for such Class, however, the final payment on any
Note (whether the Definitive Notes or the Note for such Class registered in the
name of Cede representing the Notes of such Class) will be made only upon
presentation and surrender of such Note at the office or agency specified in the
notice of final distribution to Noteholders.
Definitive Notes of each Class will be transferable and exchangeable at
the offices of the Indenture Trustee or its agent in New York, New York, which
the Indenture Trustee shall designate on or prior to the issuance of any
Definitive Notes with respect to such Class. No service charge will be imposed
for any registration of transfer or exchange, but the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
ADMINISTRATION AGREEMENT
Mitsui Vendor Leasing, in its capacity as administrator (in such
capacity, the "Administrator"), will enter into an administration agreement (the
"Administration Agreement") with the Trust, the Trust Depositor and the
Indenture Trustee pursuant to which the Administrator will agree, to the extent
provided in the Administration Agreement, to provide the notices and to perform
other administrative obligations required to be provided or performed by the
Trust or the Owner Trustee under the Indenture. The Administrator in the
Administration Agreement agrees to perform certain accounting functions of the
Trust which the Owner Trustee is required to perform pursuant to the Trust
Agreement, including but not limited to maintaining the books of the Trust and
filing tax returns for the Trust. 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, and will
not be separately payable from or reduce the Amount Available.
THE TRANSFER AND SALE AGREEMENT AND
SALE AND SERVICING AGREEMENT GENERALLY
The following is a summary of the material terms of the Transfer and
Sale Agreement and Sale and Servicing Agreement, the forms of which were filed
as exhibits to the Registration Statement of which this Prospectus is a part,
and this summary is qualified in its entirety by reference to the Transfer and
Sale Agreement and Sale and Servicing Agreement, respectively.
CONVEYANCE OF CONTRACTS
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 the Transfer and Sale Agreement) all
of the Seller's right, title and interest in and to (i) the Contracts (including
all Additional Contracts and Substitute Contracts, if any), (ii) all monies due
or to become due in payment of such Contracts on and after the related Cutoff
Date, any Prepayments, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date and any
Excluded Amounts, (iii) the related Equipment (which may be limited to a
security interest therein), including all proceeds from any sale or other
disposition of such Equipment, (iv) any related documents delivered to the
Seller or held by the Servicer with respect to each such Contract (the "Contract
Files"), (v) any proceeds with respect to each such Contract under any related
Vendor Assignment, Vendor Program Agreement and any other guarantee or similar
credit enhancement with respect thereto, (vi) all payments made with respect to
each such Contract under any insurance policy covering physical damage to the
related Equipment (the "Insurance Proceeds") and (vii) all income and proceeds
of the foregoing. Pursuant to the Sale and Servicing Agreement, the Trust
Depositor in turn will sell, transfer, assign, set over and otherwise convey to
the Issuer, without recourse (except as expressly set forth in the Sale and
Servicing Agreement) the assets described in clauses (i) through (vii) in the
preceding sentence and its rights under the Transfer and Sale Agreement
(referred to collectively as the "Transferred Assets"). Pursuant to the
Indenture, the Issuer will grant a lien on (i) the Transferred Assets and (ii)
such amounts as from time to time may be held in the Collection Account,
together with any net investment earnings on funds therein, (iii) the rights of
the Issuer under the Sale and Servicing Agreement, and (iv) proceeds of any of
the foregoing (collectively, the "Trust Assets"), in favor of the Indenture
Trustee to secure payment of its obligations under the Notes and the Indenture.
For a description of Excluded Amounts, see "The Contracts Generally".
The Servicer under the Sale and Servicing Agreement, will retain
custody of (but not title to) the Contracts, the Contract Files and any related
evidence of insurance payments, Scheduled Payments and any other similar
payments under the Contracts. From and after the conveyance of any Contracts to
the Trust Depositor, the Seller will cause its computer accounting systems to be
marked to show that the Contracts transferred thereunder have been conveyed to
the Issuer (and have been pledged by the Issuer to the Indenture Trustee under
the Indenture), and prior to conveyance the Seller or the Trust Depositor will
file UCC financing statements reflecting (A) the conveyance to the Trust
Depositor pursuant to the Transfer and Sale Agreement of the Transferred Assets
(other than the Trust Depositor's rights under the Transfer and Sale Agreement),
(B) the conveyance to the Issuer pursuant to the Sale and Servicing Agreement of
Transferred Assets and (C) the grant of a lien thereon and other Trust Assets in
favor of the Indenture Trustee pursuant to the Indenture. The Seller will notate
in the appropriate computer files relating to the Contracts, that all interests
in the Contracts have been conveyed to the Issuer pursuant to the Sale and
Servicing Agreement and have been pledged by the Issuer to the Indenture Trustee
pursuant to the Indenture. See "Certain Legal Aspects of the Contracts."
REPRESENTATIONS AND WARRANTIES
The Seller has made certain representations and warranties in the
Transfer and Sale Agreement with respect to the Contracts transferred thereunder
as of the Cutoff Date, and the Seller will similarly make or be deemed to have
made certain representations and warranties with respect to each Additional
Contract and Substitute Contract as of its related Cutoff Date, including that:
(i) the information with respect to the Contracts listed on the Schedule of
Contracts attached to the Sale and Servicing 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) to the Trust Depositor,
such Contract was owned by the Seller free and clear of any adverse claim; (iii)
no Scheduled Payment related to the Contract is (A) as of the date of sale or
transfer more than 60 days delinquent, (B) a payment as to which the related
Equipment has been repossessed or (C) a payment as to which the related
Equipment has been charged-off in accordance with the credit and collection
policies of the Servicer; (iv) no provision of the Contract has been either
waived, altered or modified in any respect, except as allowed under the Credit
and Collection policies of the Servicer and 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 End-User and is enforceable in accordance with its terms (except as may
be limited by applicable insolvency, bankruptcy, insolvency or other similar
laws affecting enforceability of creditors' rights generally and the
availability of equitable remedies); (vi) the Contract is not 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 state in any manner which would materially and adversely
affect the enforceability or collectibility of such Contract; (viii) (A) the
Contract and any related Equipment have not been sold, transferred, assigned or
pledged by the Seller to any other person and (B) such contract is secured by a
fully perfected Lien of the first priority on the related Equipment (except to
the extent such perfection is not required in accordance with the applicable
End-User UCC Filing Requirement); (ix) all filings and other actions required to
be made, taken or performed by any Person in any jurisdiction to give the Trust
a first priority perfected Lien or ownership interest in the Contracts and a
first priority perfected security interest in the Seller's interest in the
Equipment have been made, taken or performed; (x) the End-User is not to the
Seller's knowledge, subject to bankruptcy or other insolvency proceedings; (xi)
the Contract is a U.S. dollar-denominated obligation and the related End-User's
billing address is in the United States; (xii) the Contract provides for
periodic Scheduled Payments to be made, which are principally due and payable on
a monthly or quarterly basis; (xiii) the Contract does not require the prior
written consent of an End-User 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 Issuer); (xiv) the obligations of the related End-User under
such Contract are irrevocable and unconditional and non-cancelable (without the
right to set off for any reason and net of any maintenance or cost per copy
charges); (xv) the Contract does not have a stated maturity of longer than [___]
months; (xvi) no adverse selection procedure was used in selecting the Contract
for transfer; (xvii) the End-User under the Contract is required to maintain
casualty insurance or to self-insure with respect to the related Equipment;
(xviii) such Contract provides that in the event of a casualty loss in respect
of the related Equipment, the End-User is required to repair or replace the
related Equipment or pay an amount not less than the present value of all
remaining Scheduled Payments discounted at the Discount Rate plus any past due
amounts as of the date of determination; (xix) the Contract constitutes chattel
paper, an account, or a general intangible as defined under the UCC and if the
Contract constitutes "chattel paper" for purposes of the UCC, there exists an
original counterpart of the Contract in the Contract file; (xx) no Contract is a
"consumer lease" as defined in Section 2A-103(l)(e) of the UCC; (xxi) each Lease
is a "triple net lease" under which the End-User is responsible for the
maintenance of the related Equipment in accordance with general industry
standards applicable to such item of Equipment, which in all cases shall include
the payment of any taxes with respect to such Equipment; (xxii) no Contract
permits the End-User to make a prepayment of such Contract in full in an amount
less than the Prepayment Amount; (xxiii) [subject to revision] [by the Closing
Date or the related Cutoff Date (as applicable), the portions of the electronic
master record of the Seller relating to such Contract will have been clearly and
unambiguously marked to show that such Contract constitutes part of the Trust
Assets and is owned by the Trust in accordance with the terms of the Sale and
Servicing Agreement]; (xxiv) [subject to revision] [the computer tape prepared
by the Seller and containing information with respect to such Contract that was
made available by the Seller to the Indenture Trustee on the Closing Date or the
related Cutoff Date (as applicable) and was used to select such Contract was
complete and accurate in all material respects as of the applicable Cut-off
Date]; (xxv) such Contract was originated directly by the Seller or acquired by
the Seller pursuant to a Vendor Program Agreement and has sold and assigned by
the Seller to the Trust Depositor without any fraud or misrepresentation on the
part of the Seller; (xxvi) such Contract is not subject to any guarantee by the
Seller nor has the Seller established any specific credit reserve with respect
to the related End-User; (xxvii) such Contract provides that (A) the Seller (or
its assignees) may accelerate all remaining Scheduled Payments if the related
End-User is in default under any of its obligations under such Contract and (B)
the related End-User may not elect to utilize its security deposit to offset any
remaining Scheduled Payment; (xxviii) the related End-User is required to
maintain the related Equipment in good working order and bear all costs of
operating the related Equipment (including the payment of taxes); (xxix) such
Contract has not been terminated as a result of a casualty loss to the related
Equipment or for any other reason; (xxx) the Discounted Contract Balance of such
Contract does not include the amount of any security deposit held by the
Servicer or the Seller; (xxxi) the related End-User has represented to the
Seller that such End-User has accepted the related Equipment and has had a
reasonable opportunity to inspect and test such Equipment and the Seller has not
been notified of any defects therein; (xxxii) all payments in respect of such
Contract will be made free and clear of, and without deduction or withholding
for or on account of, any taxes, unless such withholding or deduction is
required by law; (xxxiii) the related End-User is unconditionally obligated to
make periodic lease payments (including taxes) notwithstanding damage to or
destruction of the related Equipment, or any other event in respect of the
related Equipment, including equipment obsolescence; and (xxxiv) such Contract
is not a Defaulted Contract;
As used above, "Prepayment Amount" shall mean, with respect to a
Contract, an amount not less than 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 Substitute Contract transferred 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 representations in clauses (iii) and (xxi) 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 reduction or withdrawal
of the then current ratings assigned to any Class of Notes. (A Contract that is
not an Eligible Contract is referred to herein as an "Ineligible Contract.") 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.
Neither the Owner Trustee (either as Owner Trustee or in its individual
capacity) nor the Indenture Trustee (either as Indenture Trustee or in its
individual capacity) 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 Issuer.
Under the terms of the Transfer and Sale Agreement and the Sale and
Servicing Agreement, each Contract must be an Eligible Contract as of its date
of transfer to the Issuer. The Indenture Trustee will reassign to the Trust
Depositor, and the Seller will concurrently be obligated to repurchase from the
Trust Depositor, any Ineligible Contract transferred by the Seller and any
interest in Equipment that is subject to such Ineligible Contract no later than
90 days after the Seller or the Trust Depositor becomes aware, or receives
written notice from the Servicer, the Issuer or the Indenture Trustee of the
breach of any representation or warranty made by the Seller in the Transfer and
Sale Agreement or by the Trust Depositor in the Sale and Servicing Agreement, as
the case may be, that materially adversely affects the interests of the Trust
Depositor, the Issuer or the Noteholders in such Contract or the related
Contract File, which breach has not been cured or waived in all material
respects. This repurchase obligation will constitute the sole remedy available
to the Issuer, the Indenture Trustee and the Noteholders for a breach of a
representation or warranty under the Sale and Servicing Agreement or the
Transfer and Sale Agreement made by the Trust Depositor, the Seller, as the case
may be, with respect to such a Contract.
Pursuant to the Sale and Servicing Agreement, an Ineligible Contract
shall be reassigned to the Trust Depositor (and in turn reassigned to the Seller
pursuant to the Transfer and Sale Agreement) as described in the preceding
paragraph, and the Trust Depositor shall make (or shall cause the Seller to
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 Issuer) 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
"Repurchase Amount" shall be considered payment in full of the Ineligible
Contract. Any such Repurchase Amount shall be treated as an Available Amount. In
the alternative, the Seller may convey to the Trust Depositor and in turn cause
the Trust Depositor to convey to the Issuer, for 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 Indenture Trustee and reconveyed
through the Trust Depositor to the Seller.
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 Seller and the Trust Depositor will
represent and warrant in the Transfer and Sale Agreement and the Sale and
Servicing Agreement, respectively, as of the initial Cutoff Date as follows:
(i) the ADCB of all Contracts with a single End-User as
of the initial Cutoff Date does not exceed ____% of
the ADCB of the Contract Pool as of the initial
Cutoff Date;
(ii) the ADCB of all Contracts with the twenty (20)
largest End-Users (by ADCB of Contracts with such
End-Users) as of the initial Cutoff Date does not
exceed ____% of the ADCB of the Contract Pool as of
the initial Cutoff Date;
(iii) the ADCB of all Contracts related to a single Vendor
as of the initial Cutoff Date does not exceed ____%
of the ADCB of the Contract Pool as of the initial
Cutoff Date;
(iv) the ADCB of all Contracts with End-Users located in a
single State of the United States as of the initial
Cutoff Date does not exceed ____% of the ADCB of the
Contract Pool as of the initial Cutoff Date; and
(v) the ADCB of all Contracts with related Equipment of a
single type as of the Cutoff Date does not exceed
____% of the ADCB of the Contract Pool as of the
initial Cutoff Date.
On the date an Additional Contract or Substitute Contract is added to
the Contract Pool and the Seller 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, as the case may be,
in lieu of the Contract being replaced or substituted and (ii) the Discounted
Contract Balance of such Additional Contract or Substitute Contract, as the case
may be, shall be equal to the Discounted Contract Balance thereof as of the
related Cutoff Date.
Pursuant to the Sale and Servicing Agreement, the Trust Depositor will
be obligated to repurchase from the Issuer and in turn pursuant to the Transfer
and Sale Agreement the Seller will be obligated to repurchase from the Trust
Depositor, at such time as there is a breach caused by any of the foregoing
representations or warranties proving to have been incorrect when made, which
breach has not been cured or waived in all material respects, any Additional
Contract or Substitute Contract causing such breach or such number of Contracts
as shall be necessary to remedy such breach (each such Contract, a "Warranty
Contract"). Such repurchase shall occur no later than 90 days after the Trust
Depositor or the Seller becomes aware, or receives written notice from the
Servicer, the Issuer or the Indenture Trustee of such breach. This repurchase
obligation will constitute the sole remedy against the Trust Depositor and the
Seller available to the Issuer, the Indenture Trustee and the Noteholders for a
breach of one of the foregoing representations or warranties.
Pursuant to the Sale and Servicing Agreement, the Trust Depositor shall
make (or cause the Seller to make pursuant to the Transfer and Sale Agreement) a
deposit in the Collection Account in immediately available funds in an amount
equal to the sum of the Discounted Contract Balance of the Warranty 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 a Warranty Contract shall be
considered payment in full thereof. Any such amount shall be considered a
Repurchase 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 Issuer 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 Warranty Contract, which shall
thereupon be deemed released by the Issuer (and Indenture Trustee) and
reconveyed through the Trust Depositor to the Seller.
INDEMNIFICATION
The Sale and Servicing Agreement provides that the Servicer will
indemnify the Issuer, the Trust Depositor, the Indenture Trustee, their
respective officers, directors, agents and employees and the holders of any
Notes from and against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Issuer, the Trust Depositor, the
Indenture Trustee or the holders of any Notes through the Servicer's breach of
the Sale and Servicing Agreement, the gross negligence willful misfeasance or
bad faith of the Servicer in the performance of its duties under the Sale and
Servicing Agreement or by reason of reckless disregard of its obligations and
duties under the Sale and Servicing Agreement. Except as provided in the
preceding sentence, the Sale and Servicing Agreement provides that the Servicer
or any of its directors, officers, employees or agents will be under any other
liability to the Issuer, the Trust Depositor, the Indenture Trustee, the holders
of Notes or any other person for any action taken, or for refraining from taking
any action, in good faith pursuant to the Sale and Servicing Agreement;
provided, however, the Servicer, or any of its directors, officers, employees or
agents will be protected against any liability which would otherwise be imposed
by reason of willful misfeasance, bad faith or gross negligence of any such
person in the performance of their duties or by reason of reckless disregard of
their obligations and duties thereunder.
In addition, the Sale and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its servicing responsibilities under the Sale
and Servicing Agreement. The Servicer may, in its sole discretion, undertake any
such legal action which it may deem necessary or desirable for the benefit of
holders of Notes with respect to the Sale and Servicing Agreement and the rights
and duties of the parties thereto and the interest of Noteholders.
Pursuant to the Sale and Servicing Agreement, the Servicer, irrevocably
and unconditionally, (i) submits for itself and its property in any legal action
arising out of the Sale and Servicing Agreement and the other Operative
Documents, to the nonexclusive general jurisdiction of the courts of the United
States of America for the Southern District of New York, and appellate courts
therefrom and (ii) waives any objection it may have that any action therein was
brought in an inconvenient court. Notwithstanding the foregoing, a court may
determine, on its own motion, that an action brought against the Servicer in any
such court was brought in an inconvenient forum.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Sale and Servicing Agreement, the Servicer is
responsible for servicing, collecting, enforcing and administering the Contracts
in accordance with its customary and usual procedures for servicing contracts
comparable to the Contracts. _______ of the Contracts included in the Contract
Pool (representing ___% of the ADCB of the Contract Pool as of the initial
Cut-off Date) will be sub-serviced by the related Vendors, however, the Servicer
will remain primarily liable for all servicing functions with respect thereto.
In addition, the Servicer pursuant to the Sale and Servicing Agreement
will 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, but
only 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, Repurchase 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 Contract Pool.
The Servicer may, consistent with its customary and usual servicing
procedures, agree to modifications or adjustments in Contract terms so long as
such adjustments do not (i) change the amount of any Scheduled Payment, (ii)
extend any Scheduled Payment (unless such extension is made in order to avoid
liquidation and maximize recoveries on the Contract and the term thereof does
not exceed six months or the stated maturity date of the Notes), (iii) cause the
release of any Equipment from the lien of the Indenture (unless Equipment of
comparable value is substituted) or (iv) cause any representation or warranty
made with respect to such Contract to become untrue.
RESIGNATION AND CERTAIN OTHER MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Sale and Servicing Agreement, except upon determination that such duties are no
longer permissible under applicable law. No such resignation will become
effective until the Back-up Servicer has assumed the Servicer's responsibilities
and obligations as successor Servicer under the Sale and Servicing Agreement.
Any person into which, in accordance with the Sale and Servicing
Agreement, the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Sale and Servicing Agreement.
SERVICER DEFAULT
In the event of any Servicer Default, either the Indenture Trustee may,
at the direction of the Required Controlling Holders, by written notice to the
Servicer (and the Indenture Trustee, if given by the Noteholders) (a
"Termination Notice"), may terminate all of the rights and obligations of the
Servicer, as servicer, under the Sale and Servicing Agreement. Upon receipt by
the Servicer of such a Termination Notice, all authority and power of the
Servicer under the Sale and Servicing Agreement with respect to any Contract in
the Contract Pool will cease and the same will pass to and be vested in the
Back-up Servicer, as the successor Servicer pursuant to and under the Sale and
Servicing Agreement.
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 notice to the Indenture Trustee to make any
payment, transfer or deposit pursuant to the Sale and
Servicing Agreement on or before the date occurring three (3)
Business Days after the date on which notice of such failure
requiring the same to be remedied shall have been received by
the Servicer from the Indenture Trustee, the Trust Depositor
or the Issuer (or to the Servicer, the Issuer, the Trust
Depositor and the Indenture Trustee by the Noteholders
representing in aggregate no less than 25% of the Principal
Amount of any Class of Notes affected thereby) or after the
Servicer's discovery of such failure; or
(b) failure on the part of the Servicer to deliver to the
Indenture Trustee and the Trust the "Servicer's Certificate"
as and when required to be delivered by the terms of the Sale
and Servicing Agreement; or
(c) failure on the part of the Servicer to duly observe or perform
in any material respect any other covenants or agreements of
the Servicer set forth in the Sale and Servicing Agreement
(or, if Mitsui Vendor Leasing is the Servicer, the Transfer
and Sale Agreement) which has a material adverse effect on the
Trust or the Noteholders, which continues unremedied for a
period of 30 days after the date on which written notice of
such failure requiring the same to be remedied shall have been
given to the Servicer by the Indenture Trustee, the Trust
Depositor or Issuer (or to the Servicer, the Trust Depositor,
the Issuer and the Indenture Trustee by the Noteholders
representing in aggregate not less than 25% of the Principal
Amount of any Class of Notes affected thereby) or after the
Servicer's discovery of such failure; or
(d) any representation, warranty or certification made by the
Servicer in the Sale and Servicing Agreement or in any
certificate delivered pursuant to the Sale and Servicing
Agreement shall prove to have been incorrect in any material
respect when made, which incorrectness has a material adverse
effect on the Trust or Noteholders and which continues to be
incorrect in any material respect for a period of 30 days
after the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the
Servicer by the Indenture Trustee, the Trust Depositor or the
Issuer (or to the Servicer, the Trust Depositor, the Issuer
and the Indenture Trustee by Noteholders or by the Indenture
Trustee on behalf of Noteholders representing in aggregate not
less than 25% of the Principal Amount of any Class of Notes
adversely affected thereby) and such incorrectness continues
to affect such Noteholders materially and adversely for such
period; or
(e) 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 (c) or (d) for a period of 60 days (in addition to any
period provided in (a), (c) or (d)) shall not constitute a Servicer Default
until the expiration of such additional five Business Days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or other similar occurrences. Upon the occurrence of any such event
the Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of the Sale and
Servicing Agreement and the Servicer shall provide the Issuer, the Trust
Depositor and the Indenture Trustee prompt notice of such failure or delay by
it, together with a description of its efforts to so perform its obligations.
The Servicer shall promptly after having obtained knowledge thereof, but in no
event later than two Business Days thereafter, notify the Indenture Trustee, the
Issuer and the Trust Depositor in writing of any Servicer Default.
BACK-UP SERVICER
Bankers Trust Company will act as back-up servicer pursuant to the Sale
and Servicing Agreement (in such capacity, the "Back-up Servicer"). Under the
Sale and Servicing Agreement, following the termination or resignation of Mitsui
Vendor Leasing as Servicer, the Back-up Servicer has agreed to act as successor
Servicer, unless and until another successor is appointed pursuant to the terms
of the Sale and Servicing Agreement. Prior to such event, the Back-up Servicer
will have no other duties or obligations under the Sale and Servicing Agreement,
including, without limitation, the obligation to supervise the performance of
the Servicer, and will have no liability for any action taken or omitted by the
Servicer. In the event that the Back-up Servicer is unable as a matter of law to
act as successor Servicer as provided in the Sale and Servicing Agreement, the
Trust Depositor has the right to contract for the performance of such services
with others.
Bankers Trust Company is a New York banking corporation which is
______. Bankers Trust Company engages in general commercial banking and trust
business, offering a comprehensive range of corporate, commercial, correspondent
and individual banking services, both domestic and international, as well as a
wide range of trust and custodial services.
EVIDENCE AS TO COMPLIANCE
The Sale and Servicing Agreement provides that on or before [ ] 31 of
each calendar year the Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Trust Depositor) to furnish a report to the effect that such
firm has applied certain procedures agreed upon with the Servicer and enumerated
in the Sale and Servicing Agreement and examined certain documents and records
relating to the servicing of the related Contracts all as described in the Sale
and Servicing Agreement and that, on the basis of such procedures, nothing came
to the attention of such firm that caused them to believe that such servicing
was not conducted in compliance with the Sale and Servicing Agreement except for
such exceptions or errors as such firm shall believe to be immaterial and such
other exceptions as shall be set forth in such statement.
The Sale and Servicing Agreement provides for delivery to the Issuer,
the Trust Depositor, the Indenture Trustee and each Rating Agency on or before [
] 31 of each calendar year of a statement signed by an officer of the Servicer
to the effect that, to the best of such officer's knowledge, the Servicer has
performed its obligations in all material respects under the Sale and Servicing
Agreement throughout the preceding year or, if there has been a default in the
performance of any such obligation, specifying the nature and status of the
default.
Copies of all statements, certificates and reports furnished to the
Indenture Trustee may be obtained by a request in writing delivered to the
Indenture Trustee.
AMENDMENTS
The Sale and Servicing Agreement may be amended from time to time by
agreement of the Seller, the Servicer, the Issuer, the Trust Depositor, and the
Indenture Trustee without the consent of any Noteholder (i) to cure any
ambiguity or mistake, (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 the Noteholders or (iii) to add or amend any
other provision of the Sale and Servicing Agreement with respect to matters or
questions arising thereunder; provided further that such amendment will be
deemed not to affect adversely in any material respect the interests of the
Noteholders, and no such Opinion of Counsel will be required, if each Rating
Agency provides prior written confirmation that such amendment will not result
in a withdrawal or downgrade of the ratings then assigned to the Notes.
The Sale and Servicing Agreement may also be amended from time to time
by the Seller, the Servicer, the Issuer, Trust Depositor, and the Indenture
Trustee with the consent of the Required Controlling Holders for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Sale and Servicing Agreement or of modifying in any manner the
rights of Noteholders. No such amendment, however, may:
(i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on the
Contracts or distributions made on any Note or the rate of
interest payable thereon without the consent of each
Noteholder affected thereby; or
(ii) reduce the aforesaid percentage required to consent to any
such amendment or any waiver hereunder without the consent of
each Noteholder affected thereby; or
(iii) modify, amend or supplement the provisions of the Sale and
Servicing Agreement relating to the allocation of Available
Amounts (see "Description of the Notes--Allocations") without
the consent of each Noteholder.
Notwithstanding the foregoing, no such amendment shall be effective
unless and until each Rating Agency has notified the Issuer and the Indenture
Trustee that such amendment will not result in a withdrawal or downgrade of the
ratings then assigned to the Notes. Promptly following the execution of any such
amendment (other than an amendment described in the preceding paragraph), the
Indenture Trustee will furnish written notice of the substance of such amendment
to each affected Noteholder.
TERMINATION
The Sale and Servicing Agreement will terminate upon final distribution
of all moneys or other property or proceeds of the Trust Assets in accordance
with the terms of the Sale and Servicing Agreement and the Indenture. Upon
termination of the Sale and Servicing Agreement, all right, title and interest
in the Trust Assets (other than amounts in accounts maintained by the Indenture
Trustee for the final payment of principal and interest to Noteholders) will be
conveyed and transferred through the Trust Depositor to the Seller.
THE OWNER TRUSTEE
_____________________________ will be the Owner Trustee under the Sale
and Servicing Agreement. Mitsui Vendor Leasing and its affiliates may from time
to time enter into banking and trustee relationships with the Owner Trustee and
its affiliates. Mitsui Vendor Leasing 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 ____________________________________.
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-owner trustee or separate trustee of all or
any part of the Trust Assets. To the extent permitted by law, all rights,
powers, duties and obligations conferred or imposed upon the Owner Trustee will
be conferred or imposed upon and exercised or performed by the Owner Trustee and
such separate trustee or co-trustee jointly, or, in any jurisdiction in which
the Owner Trustee will be incompetent or unqualified to perform certain acts,
singly upon such separate trustee or co-trustee who shall exercise and perform
such rights, powers, duties and obligations solely at the direction of the Owner
Trustee.
The Owner Trustee may resign at any time, in which event a successor
Owner Trustee will be appointed as provided in the Sale and Servicing Agreement.
The Servicer may also remove the Owner Trustee if such Owner Trustee ceases to
be eligible to continue as such under the Sale and Servicing Agreement. 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 Issuer
and the Indenture Trustee. Pursuant to the Sale and Servicing Agreement, the
Indenture Trustee will obtain the benefits of the Sale and Servicing Agreement
for itself and the Noteholders represented thereby.
EVENTS OF DEFAULT AND RESTRICTING EVENTS; 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 and be continuing, then and in
every such case, the Notes shall be accelerated with accrued but unpaid interest
thereon; provided that such Event of Default may be waived if the Required
Controlling Holders provide the Indenture Trustee, the Trust Depositor, the
Issuer and the Servicer written notice of such waiver.
The Indenture Trustee may, and shall, if so directed by the Required
Controlling Holders in writing, after the occurrence and during the continuance
of an Event of Default: (i) institute proceedings in its own name and as or on
behalf of a trustee for the collection of all amounts then payable on the Notes,
(ii) institute proceedings for the complete or partial foreclosure against the
Trust Assets, (iii) exercise any remedies of a secured party under the UCC, and
(iv) direct the Owner Trustee to sell the Trust Assets or any portion thereof or
rights or interest therein, at one or more public or private sales; provided,
however, that the Indenture Trustee may not sell or otherwise liquidate the
Trust Assets following an Event of Default, other than an Event of Default
described in subparagraphs (a) and (b) under "Description of Notes--Events of
Default", 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 or (C) the Indenture Trustee determines that the Trust
Assets will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes and the Indenture Trustee provides prior
written notice to each Rating Agency and obtains the consent of the Required
Controlling Holders.
Except as otherwise provided above, following and Event of
Default, the Indenture Trustee may, but need not, elect to maintain possession
of the Trust Assets.
No Holder of a Note will have any right to institute any
proceeding, with respect to the Indenture, unless (i) such Holder has previously
given notice to the Indenture Trustee of a continuing Event of Default, (ii) the
Holders of not less than 25% of the Principal Amount of such outstanding Notes
have made a written request to the Indenture Trustee to institute such
proceeding in respect of such Event of Default its own name as Indenture
Trustee, (iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in complying with such request, (iv) the Indenture Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed to institute
such proceedings, and (v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by the Holders
of a majority of the Principal Amount of such outstanding Notes, voting together
as a single class.
Subject to the provisions of the Indenture relating to the
duties of the Indenture Trustee, if an Event of Default occurs and is
continuing, the Indenture Trustee will be under no obligation to exercise any of
the rights or powers under the Indenture at the request or direction of any of
the Holders of the Notes, if the Indenture Trustee reasonably believes it will
not be adequately indemnified against the costs, expenses and liabilities which
it may incur in complying with such request or direction.
THE INDENTURE TRUSTEE
The Indenture Trustee with respect to the Notes is Bankers Trust
Company, a New York banking corporation. Mitsui Vendor Leasing and its
affiliates may from time to time enter into banking and trustee relationships
with the Indenture Trustee and its affiliates. Mitsui Vendor Leasing 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 Sale and Servicing
Agreement, the authentication and registration of transfer of Notes under the
Indenture, and the delivery of certain information received from the Trust
Depositor and the Servicer.
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
At any time and from time to time, the Trust and the Indenture Trustee,
with the written consent of the Required Controlling Holders, 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 that without the consent of each Noteholder under the
Indenture, no such amendment, supplement, waiver or consent shall
(i) reduce the amount or extend the time of payment of any amount
owing or payable under any Note or (except as provided in the
Indenture) increase or reduce the interest payable on any Note
(except that only the consent of the affected holder of a Note
shall be required for any decrease in an amount of or the rate
of interest payable on such Note or any extension for the time
of payment of any amount payable under such Note), or alter or
modify the provisions with respect to the order of priorities
in which distributions thereunder shall be made or with
respect to the amount or time of payment of any such
distribution, or
(ii) reduce, modify or amend any indemnities in favor of any
Noteholder or in favor of or to be paid by the Trust
Depositor, or alter the definition of "Indemnities" to exclude
any Noteholder (except as consented to by each Noteholder
adversely affected thereby), or
(iii) make any Note payable in money other than U.S. dollars, or
(iv) modify the definitions in the Indenture of Required
Controlling Holders, or otherwise modify the percentage of
Noteholders required to effect any modification of the
Indenture.
At any time and from time to time, the Trust and the Indenture Trustee,
without the consent of the Holders of any Notes and with prior notice to each
Rating Agency, may execute a supplement to the Indenture for any of the
following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of the 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 the Indenture, or to subject to the lien created by
the Indenture;
(ii) to evidence the succession, in compliance with the applicable
provisions thereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the
Issuer therein 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
therein or in any supplemental indenture which may be
inconsistent with any other provision therein or in any
supplemental indenture or the Operative Documents;
(vi) to evidence and provide for the acceptance of the appointment
thereunder by a successor Indenture Trustee with respect to
the Notes and to add to or change any of the provisions of the
Indenture as shall be necessary to facilitate the
administration of the trusts thereunder by more than one
Indenture Trustee;
(vii) to modify, eliminate or add to the provisions of the Indenture
to such extent as shall be necessary to effect the
qualification of the Indenture under the TIA or under any
similar federal statute hereafter enacted and to add to the
Indenture such other provisions as may be expressly required
by the TIA; and
(viii) to make any other provisions with respect to matters or
questions arising under the Indenture or in any supplemental
indenture; provided that such action shall not, as evidenced
by an [Opinion of Counsel] delivered to the Indenture Trustee,
adversely affect in any material respect the interests of the
Holders of the Notes; provided further that such action shall
be deemed not to adversely affect in any material respect the
interests of the Noteholders and no such [Opinion of Counsel]
need be delivered if each Rating Agency provides written
confirmation that such action will not result in a reduction
or withdrawal or downgrade of the ratings then assigned to the
Notes.
TERMINATION
The Indenture will terminate upon final distribution of all moneys or
other property or proceeds of the Trust Assets in accordance with the terms of
the Indenture and the Sale and Servicing Agreement.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
TRANSFER OF CONTRACTS
As of the Cutoff Date, the Seller will sell the Contracts to the Trust
Depositor pursuant to the Transfer and Sale Agreement which in turn will be
immediately conveyed to the Issuer pursuant to the Sale and Servicing Agreement.
Under commercial law, the transfer of the Contracts to the Issuer is either a
sale of the Contracts to the Issuer or a grant of a security interest in such
property to the Issuer. The Trust Depositor has taken and will take all actions
that are required under applicable law to perfect the Issuer's interest in the
Contracts in the event the transfer by the Trust Depositor to the Issuer is
deemed to be a loan for commercial law purposes, and, in the event such transfer
is under commercial law or a grant of a security interest, it is the intent of
the Trust Depositor that the Issuer 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 Issuer
that, in the event the sale of such Contracts by the Trust Depositor to the
Issuer 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 date of conveyance, in favor of
the Issuer. For a discussion of the Issuer's rights arising from these
representations and warranties not being satisfied, see "The Sale and Servicing
Agreement Generally--Representations and Warranties."
Financing statements covering the Contracts will be filed under the UCC
by or on behalf of the Trust Depositor, the Issuer 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 to the Issuer, and have
been pledged by the Issuer to the Indenture Trustee, and the Seller will 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 Issuer, 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 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 could be defeated. In
such event, distributions to Noteholders could be adversely affected.
There are also certain limited circumstances under applicable federal
or state law in which prior transferees of 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 was conveyed to the Trust Depositor or the Issuer,
respectively, may, in either case, have priority over the interest of the Issuer
in such Contract. Under the Transfer and Sale Agreement, the Seller will warrant
to the Trust Depositor, and under the Sale and Servicing Agreement the Trust
Depositor will warrant to the Issuer, that the Contracts have been transferred
free and clear of the lien of any third party other than Permitted Liens. Each
of the Seller and the Trust Depositor will also covenant that it will not sell,
pledge, assign, transfer or grant any lien on any Contract included in the
Contract Pool, other than transfers made pursuant to the Sale and Servicing
Agreement or the Indenture. 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.
Similarly, a tax or other government lien on property of the Issuer
arising prior to the time a Contract is pledged to the Indenture Trustee may
also have priority over the interest of the Issuer in such Contract. Under the
Indenture, the Issuer will warrant to the Indenture Trustee that the Contracts
have been pledged free and clear of the lien of any third party other than
Permitted Liens. The Issuer will also covenant that it will not sell, pledge,
assign, transfer or grant any lien on any Contract included in the Contract
Pool, other than pledges to the Indenture Trustee pursuant to the Indenture.
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 and (ii) liens in
favor of the Indenture Trustee created pursuant to 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, (iii) liens in favor of the
Indenture Trustee created pursuant to the Indenture, (iv) other subordinated
liens which are subordinated to the prior payment of the Notes on terms
described in the Sale and Servicing Agreement and (v) liens granted by the
End-Users or Vendors which are subordinated to the interest of the Issuer and
the Indenture Trustee in such Equipment.
TRANSFERS OF INTERESTS IN EQUIPMENT
In connection with the conveyance of the Contracts to the Issuer, the
Seller's right, title and interest in the related Equipment securing such
Contracts will be assigned by the Seller to the Issuer pursuant to the Sale and
Servicing Agreement, and pledged by the Issuer to the Indenture Trustee pursuant
to the Indenture. 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. Due, however, 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
Issuer's or the Indenture Trustee's interests therein. While failure to file
such assignments does not affect the Issuer's interest in the Contracts
(including the security interest in the related Equipment granted pursuant to
such Contract) or perfection of the Indenture Trustee's interest in such
Contracts, it does expose the Trust Depositor and the Issuer (and thus
Noteholders) to the risk that the Servicer could inadvertently release its
security interest in the Equipment of record, and it could complicate or impede
the Trust Depositor's, the Issuers's (and the Indenture Trustee's) enforcement,
as assignee, of the Seller's right, title and interest in the Equipment. While
these risks should not affect the perfection or priority of the interest of the
Trust Depositor, the Issuer and the Indenture Trustee in the Contracts or rights
to payment thereunder, they may adversely affect the right of the Trust
Depositor, the Issuer and the Indenture Trustee to receive proceeds of a
disposition of the Equipment related to Defaulted Contracts. Additionally,
statutory liens for repairs or unpaid taxes and other liens arising by operation
of law may have priority even over prior perfected security interests in the
Equipment assigned to the Trust Depositor, the Issuer and in turn the Indenture
Trustee.
CERTAIN MATTERS RELATING TO BANKRUPTCY
The Seller acquired the Contracts from Vendors. If the acquisition of a
Contract by the Seller is treated as a sale of such Contracts from the Vendors
to the Seller, such Contracts generally would not be part of the related
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, if an unpaid
creditor of such Vendor or a representative of such creditor, 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 Issuer 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
Contracts to the Seller 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,
the Issuer's and the Indenture Trustee's) interest in the Contracts. Certain
Contracts may be "true leases" and thus subject to rejection by the lessor under
the Bankruptcy Code. Any such 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 Contract or a transfer by a Vendor to the
Seller of an interest in the right to payments only under any such 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 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.
In the Transfer and Sale Agreement, Mitsui Vendor Leasing will warrant
to the Trust Depositor that the conveyance of the Contracts by the Seller to the
Trust Depositor is a valid sale and transfer of such Contracts to the Trust
Depositor. In addition, the 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.
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 Depositor (and consequently to the Noteholders) could
occur or, should the court rule in favor of such creditor, representative or
debtor, 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 (and consequently
the Issuer's and the Indenture Trustee's) interest in the Contracts.
The Trust Depositor will warrant in the Sale and Servicing Agreement
that the security interest therein granted by the Issuer 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 Issuer's and
the Indenture Trustee's respective interests in the Contracts sold by it.
Nevertheless, if the Trust Depositor were to become a debtor in a bankruptcy
case and an unpaid creditor of the Trust Depositor or a representative of
creditors of the Trust Depositor, such as a trustee in bankruptcy, or the Trust
Depositor acting as a debtor-in-possession, were to take the position that the
sale of Contracts to the Issuer was ineffective to remove such Contracts 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 Issuer could
occur or, should the court rule in favor of such creditor, representative or
debtor, reductions in the amount of such payments could result. If the transfer
of Contracts to the Issuer 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 Issuer's and hence 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.
Certain restrictions have been imposed on the Trust Depositor and the
Issuer 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 Issuer. 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 of its business.
Additionally, the Trust Depositor may commence a voluntary case or preceding
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 proceeding, 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 Mitsui Vendor Leasing would not lead to
insolvency proceedings of either, or both, of the Trust Depositor or the Trust.
In either such event, or if an attempt were made to litigate any of the
foregoing issues, delays of distributions on the Notes, possible reductions in
the amount of payment of principal of and interest on the Notes and limitations
(including a stay) on the exercise of remedies under the Indenture and the Sale
and Servicing Agreement could occur, although the Noteholders would continue to
have the benefit of the Indenture Trustee's security interest in the Trust
Assets under the Indenture.
The right of the Indenture Trustee, as secured party under the
Indenture for the benefit of the Noteholders, to foreclose upon and sell the
Trust Assets is likely to be significantly impaired by applicable bankruptcy
laws, including the automatic stay pursuant to Section 362 of the Bankruptcy
Code, if a bankruptcy proceeding were to be commenced by or against the Trust,
and possibly the Trust Depositor, before or possibly even after the Indenture
Trustee has foreclosed upon and sold the Trust Assets. Under the bankruptcy
laws, payments on debts are not made and secured creditors are prohibited from
repossessing their security from a debtor in a bankruptcy case or from disposing
of security repossessed from such a debtor, without bankruptcy court approval.
Moreover, the bankruptcy laws generally permit the debtor to continue to retain
and to use collateral even though the debtor is in default under the applicable
debt instruments, provided generally that the secured creditor has the right to
seek "adequate protection." The meaning of the term "adequate protection" may
vary according to circumstances, but it is intended in general to protect the
value of the security from any diminution in the value of the collateral as a
result of the use of the collateral by the debtor during the pendency of the
bankruptcy case. In view of the lack of a precise definition of the term
"adequate protection" and the broad discretionary powers of a bankruptcy court,
it is impossible to predict whether or to what extent the holders of the Notes
would be compensated for any diminution in value of the Trust Assets.
Furthermore, in the event a bankruptcy court determines that the value of the
Trust Assets is not sufficient to repay all amounts due on the Notes, the
Noteholders would hold secured claims only to the extent of the value of the
Trust Assets to which the holders are entitled, and unsecured claims with
respect to such shortfall. The bankruptcy laws do not permit the payment or
accrual 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.
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
assuming the Trust Assets were not then subject to being involved in a
bankruptcy case, the Indenture Trustee would sell the Contracts and would use
the proceeds of such sale to pay the outstanding principal of and accrued
interest on the Notes to the extent and in the order of priority described under
"Description of the Notes-Allocations, Following an Event of Default or
Restricting Event." The Noteholders would suffer a loss if the sum of (i) the
proceeds of the sale allocable to the Noteholders and (ii) the proceeds of any
collections on the Contracts in the Collection Account allocable to the
Noteholders is insufficient to pay the Noteholders in full.
State laws impose requirements and restrictions relating to foreclosure
sales and obtaining deficiency judgments following such sales. In the event that
the Noteholders must rely on repossession and disposition of any Equipment to
recover amounts due on Defaulted Contracts, such amounts may not be realized
because of the application of these requirements and restrictions. Other factors
that may affect the ability of the Noteholders to realize the full amount due on
a Contract include the failure to file financing statements to perfect the
Seller's, the Trust Depositor's, the Trust's or the Indenture Trustee's, as
applicable, interest in the Equipment, 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.
In addition, if a court, in a lawsuit by an unpaid creditor of the
Seller or by a representative of creditors of the 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 the 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 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 Trust Depositor
believes that it and the Seller have entered into these transactions for proper
purposes and in good faith and that the purchase price for the Contracts
represents reasonably equivalent value or fair consideration for the transfers
of such Contracts by the Seller to the Trust Depositor.
The Issuer 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 the 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. However, there can be no assurance,
however, that a court would reach the same conclusion.
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 fight 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 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 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.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a discussion of 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 Brown & Wood LLP,
federal tax counsel to the Trust Depositor ("Tax Counsel"), are based upon
current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations promulgated thereunder, current administrative
rulings, judicial decisions and other applicable authorities in effect as of the
date hereof, all of which are subject to change, possibly with retroactive
effect. There are no cases, regulations, or Internal Revenue Service ("IRS")
rulings on comparable transactions or instruments to those described herein. As
a result, there can be no assurance that the IRS will not challenge the
conclusions reached herein, and no ruling from the IRS has been or will be
sought on any of the issues discussed below. Furthermore, legislative, judicial
or administrative changes may occur, perhaps with retroactive effect, which
could affect the accuracy of the statements and conclusions set forth herein as
well as the tax consequences to Noteholders.
This discussion does not purport to deal with all aspects of federal
income taxation that may be relevant to Noteholders in light of their personal
investment or tax circumstances nor to certain types of holders who may be
subject to special treatment under the federal income tax laws (including,
without limitation, financial institutions, broker-dealers, insurance companies,
foreign persons, tax-exempt organizations, and persons who hold the Notes as
part of a straddle, hedging, or conversion transaction). The discussion is
generally directed to prospective purchasers who purchase Notes at the time of
original issue, who are citizens or residents of the United States, and who hold
the Notes as "capital assets" within the meaning of Section 1221 of the Code. It
is recommended that taxpayers 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. IT IS RECOMMENDED THAT
PROSPECTIVE INVESTORS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE
FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES.
OPINION
In the opinion of Tax Counsel, for federal income tax purposes,
although no transaction closely comparable to that contemplated herein has been
the subject of any Treasury Regulation, revenue ruling, or judicial decision,
based on the application of existing law to the facts as set forth in the
applicable agreements, (i) the Issuer will not be treated as an association (or
publicly traded partnership) taxable as a corporation and (ii) the Notes will be
treated as indebtedness. An opinion of counsel does not foreclose the
possibility of a contrary determination by the IRS or by a court of competent
jurisdiction, or of a contrary position by the IRS or Treasury Department in
regulations or rulings issued in the future.
Although it is the opinion of Tax Counsel that the Issuer 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
Issuer and the Notes will prevail. If the Issuer were taxable as a corporation
for federal income tax purposes, it would be subject to corporate income tax on
its taxable income. The Issuer's taxable income would include all its income on
the related Contracts and other assets, which may be reduced by its interest
expense on the Notes if the Notes are respected as debt of such corporation. Any
such corporate income tax could materially reduce cash available to make
payments on the Notes. If, contrary to the opinion of Tax Counsel, the IRS also
successfully asserted that one or more of the Notes did not represent debt for
federal income tax purposes, the Notes might be treated as equity interests in
the Issuer. If so treated, it is possible that the Issuer might be treated as a
publicly traded partnership taxable as a corporation, (in which case the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Notes recharacterized as equity) unless the Issuer is able
to meet certain qualifying income tests or otherwise qualifies for an exemption
from the publicly traded partnership rules. Even if the Issuer is not taxed as a
corporation, treatment of the Notes as equity interests in a publicly traded
partnership could have adverse tax consequences to certain holders. For example,
income to certain tax-exempt entities (including pension funds) may constitute
"unrelated business taxable income," income to foreign holders generally would
be subject to U.S. tax and U.S. tax return filing and withholding requirements,
individual holders might be subject to certain limitations on their ability to
deduct their share of Issuer expenses, and income from the Issuer's assets would
be taxable to Noteholders without regard to (i) whether cash distributions are
made from the Issuer or (ii) the Noteholders' method of tax accounting.
The discussion that follows assumes that the Notes will be treated as
indebtedness for federal income tax purposes. The following discussion is also
based in part upon Treasury regulations interpreting the original issue discount
("OID") provisions of the Code. The OID regulations, however, are subject to
varying interpretations and do not address all issues that would affect
Noteholders.
TAXATION OF INTEREST INCOME TO NOTEHOLDERS
Based upon the discussion below under the heading "OID," Tax Counsel's
interpretation of (i) the definition of "qualified stated interest" and (ii)
other provisions of the OID Code sections and regulations, it is not expected
that the Notes will be issued with OID (i.e., any excess of the stated
redemption price at maturity over their issue price), other than perhaps with a
de minimis amount (i.e., 1/4 of the Notes stated redemption price at maturity
multiplied by the number of full years to maturity). In such case, the stated
interest on each class of Notes should be treated as qualified stated interest
and will be taxable as ordinary income for federal income tax purposes when
received or accrued in accordance with the Noteholders general method of tax
accounting.
OID
If a Note is issued at a discount from its principal amount or if the
stated interest on such Note is not treated as "qualified stated interest," the
Note would be treated as having OID. Under the OID regulations currently in
effect, in order to have qualified stated interest, the stated interest must be
"unconditionally payable" in cash or property at least once annually. Interest
is unconditionally payable only if reasonable legal remedies exist to compel
timely payment or the debt instrument otherwise provides terms and conditions
that make the likelihood of late payment (other than a late payment that occurs
within a reasonable grace period) or nonpayment a remote contingency. The Issuer
believes that the likelihood of late payment or nonpayment of the stated
interest on the Notes should constitute a remote contingency; the IRS, however,
may disagree. In such case, the stated interest on the Notes would not be
qualified stated interest and the Notes would be considered to have been issued
with OID.
If the Notes are in fact issued with a greater than de minimis amount
of OID or are otherwise treated as having been issued with OID, the following
rules should apply. The excess of the "stated redemption price at maturity" of a
Note (generally equal to its principal amount as of the date of issuance plus
all interest other than "qualified stated interest" payable prior to or at
maturity) over the original issue price (in this case, the initial offering
price at which a substantial amount of the Notes are sold to the public) will
constitute OID. A Noteholder must include OID in income as interest over the
term of the Note under a constant yield method. OID must be included in income
in advance of the receipt of cash representing that income. In general, the
amount of OID included in income is the sum of the "daily portions" of the OID
with respect to the Note for each day during the taxable year the Noteholder
held the Note. The daily portion generally is determined by allocating to each
day in an accrual period a ratable portion of the OID allocable to such accrual
period. The amount of OID allocable to an accrual period is generally equal to
the difference between (i) the product of the Notes' adjusted issue price and
its yield to maturity and (ii) the amount of qualified stated interest payments
allocable to such accrual period. The "adjusted issue price" of an OID Note at
the beginning of any accrual period is the sum of its issue price plus the
amount of OID allocable to prior accrual periods minus the amount of prior
payments that were not qualified stated interest.
Alternatively, because the payments on the Notes may be accelerated by
reason of prepayments on the Contracts, OID, other than de minimis OID, on the
Notes, if any, may have to be accrued under Code section 1272(a)(6), which
allocates OID to each day in an accrual period by taking the ratable portion of
the excess of (i) the sum of the present value of the remaining payments on a
Note as of the close of the accrual period and the payments made during the
accrual period that were included in the stated redemption price at maturity,
over (ii) the adjusted issue price of the Note at the beginning of the accrual
period. No regulations have been issued under Code section 1272(a)(6) and it is
therefor not clear if such section would apply to the Notes if they are treated
as having OID. Legislation has been proposed which if enacted, would require any
OID (or interest) on the Notes to be computed in accordance with the rules of
Section 1272(a)(6) and certain prepayment assumptions.
A holder of a Note issued with de minimis OID must include such OID in
income proportionately as principal payments are made on such Note.
Acquisition Premium
A holder that purchases a Note for an amount less than or equal to the
sum of all amounts payable on the Note after the purchase date other than
payments of qualified stated interest but in excess of its adjusted issue price
(any such excess being "acquisition premium") and that does not make the
election described below under "Election to Treat All Interest as Original Issue
Discount" is permitted to reduce the daily portions of OID, if any, by a
fraction, the numerator of which is the excess of the holder's adjusted basis in
the Note immediately after its purchase over the adjusted issue price of the
Note, and the denominator of which is the excess of the sum of all amounts
payable on the Note after the purchase date, other than payments of qualified
stated interest, over the Note's adjusted issue price.
Market Discount
Whether or not the Notes are issued with OID, a subsequent purchaser
(i.e., a purchaser who acquires a Note not at the time of original issue) of a
Note at a discount will be subject to the "market discount rules" of Sections
1276 through 1278 of the Code. In general, these rules provide that if the
holder of a Note purchases the Note at a market discount (i.e., a discount from
its original issue price plus any accrued OID that exceeds a de minimis amount
specified in the Code) and thereafter recognizes gain upon a disposition (or
receives a principal payment), the lesser of (i) such gain (or the principal
payment) or (ii) the accrued market discount (not previously included in income)
will be taxed as ordinary income. Generally, the accrued market discount will be
the total market discount (not previously included in income) on the Note
multiplied by a fraction, the numerator of which is the number of days the
holder held the Note and the denominator of which is the number of days from the
date the holder acquired the Note until its maturity date. The holder may elect,
however, to determine accrued market discount under the constant yield method.
The adjusted basis of a Note subject to such election will be increased to
reflect market discount included in gross income, thereby reducing any gain or
increasing any loss on a subsequent sale or taxable disposition. Holders should
consult with their own tax advisors as to the effect of making this election.
Limitations imposed by the Code, which are intended to match deductions
with the taxation of income, may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A Noteholder who elects to include market
discount in gross income as it accrues, however, is exempt from this rule.
Notwithstanding the above rules, market discount on a Note will be
considered to be zero if it is less than a de minimis amount, which is .25% of
the remaining principal balance of the Note multiplied by its expected weighted
average remaining life. If market discount is de minimis, the actual amount of
discount must be allocated to the remaining principal distributions on the Note,
and when such distribution is received, capital gain will be recognized equal to
discount allocated to such distribution.
Amortizable Bond Premium
In general, if a subsequent purchaser acquires a Note at a premium
(i.e., an amount in excess of the amount payable upon the maturity thereof),
such Noteholder will be considered to have purchased the Note with "amortizable
bond premium" equal to the amount of such excess. A Noteholder may elect to
deduct the amortizable bond premium as it accrues under a constant yield method
over the remaining term of the Note. Under proposed regulations, if finalized,
accrued amortized bond premium may only be used as an offset against qualified
stated interest income when such income is included in the holder's gross income
under the holder's normal accounting system.
Election to Treat All Interest as Original Issue Discount
A holder may elect to include in gross income all interest that accrues
on a Note using the constant yield method described above under the heading
"OID," with modifications described below. For purposes of this election,
interest includes stated interest, OID, de minimis OID, market discount, de
minimis market discount and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium. In applying the constant yield method to a
Note with respect to which this election has been made, the issue price of the
Note will equal the electing holders adjusted basis in the Note immediately
after its acquisition, the issue date of the Note will be the date of its
acquisition by the electing holder, and no payments on the Note will be treated
as payments of qualified stated interest. This election, if made, may not be
revoked without the consent of the IRS. Holders should consult with their own
tax advisors as to the effect of making this election in light of their
individual circumstances.
DISPOSITION OF NOTES
Generally, capital gain or loss will be recognized on a sale or other
taxable disposition of the Notes in an amount equal to the difference between
the amount realized (other than amounts attributable to, and taxable as, accrued
interest) and the Issuer's tax basis in the Notes. A Noteholders tax basis in a
Note will generally equal his or her cost increased by any OID or market
discount previously included by such Noteholder in income with respect to the
Note and decreased by any bond premium previously amortized and any principal
payments previously received by such Noteholder with respect to the Note.
Subject to the market discount rules of the Code, any such gain or loss will be
capital gain or loss if the Note was held as a capital asset. Capital gain or
loss will be long-term if the Note was held by the holder for more than one year
and otherwise will be short-term. In the case of a taxable individual
Noteholder, capital gain income will be long-term capital gain if the Notes have
been held for more than eighteen months, mid-term capital gain if the Notes have
been held for more than one year but not more than eighteen months, or
short-term capital gain if the Notes have been held for one year or less. Any
capital losses realized generally may be used by a corporate taxpayer only to
offset capital gains, and by an individual taxpayer only to the extent of
capital gains plus $3,000 of other income.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Indenture Trustee will be required to report annually to the IRS,
and to each Noteholder, the amount of interest paid on the Notes (and the amount
withheld for federal income taxes, if any) for each calendar year, except as to
exempt recipients (generally, corporations, tax-exempt organizations, qualified
pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status). Each holder
(other than holders who are not subject to the reporting requirements) will be
required to provide, under penalties of perjury, a certificate (Form W-9)
containing the holder's name, address, correct federal taxpayer identification
number and a statement that the holder is not subject to backup withholding.
Should a non-exempt Noteholder fail to provide the required certification, the
Indenture Trustee will be required to withhold (or cause to be withheld) 31% of
the interest otherwise payable to the holder, and remit the withheld amounts to
the IRS as a credit against the holder's federal income tax liability.
Final regulations dealing with backup withholding and information
reporting on income paid to a foreign person and related matters (the "New
Withholding Regulations") were published in the Federal Register on October 14,
1997. In general, the New Withholding Regulations do not significantly alter the
substantive withholding and information reporting requirements, but do unify
current certification procedures and forms and clarify reliance standards. The
New Withholding Regulations generally will be effective for payments made after
December 31, 1999, subject to certain transition rules. The discussion set forth
above does not take the New Withholding Regulations into account. Prospective
Noteholders are strongly urged to consult their own tax advisor with respect to
the New Withholding Regulations.
TAX CONSEQUENCES TO FOREIGN INVESTORS
Based upon Tax Counsel's opinion that the Notes will be treated as
indebtedness for federal income tax purposes, the following information
describes the general United States federal income tax treatment of investors
that are not United States 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 or partnership (including any entity treated as a
corporation or a partnership for United States federal income tax purposes)
organized in or under the laws of the United States, unless, in the case of a
partnership, Treasury regulations provide otherwise, (iii) an estate the income
of which is includible in gross income for United States 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. Notwithstanding the preceding sentence, to
the extent provided in regulations, certain trusts in existence on August 20,
1996, and treated as United States persons prior to such date that elect to
continue to be so treated also shall be considered United States persons.
(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 Issuer or a
"controlled foreign corporation" with respect to which the
Issuer is a "related person" within the meaning of the Code,
and (ii) provides an appropriate statement (Form W-8 or
similar acceptable certification) 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 results 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 United States 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.
As discussed above, the New Withholding Regulations were published in
the Federal Register on October 14, 1997, and generally will be effective for
payments made after December 31, 1999, subject to certain transition rules. The
discussion set forth above does not take the New Withholding Regulations into
account. Prospective investors that are Foreign Persons are strongly urged to
consult their own tax advisor with respect to the New Withholding Regulations.
CERTAIN STATE TAX CONSEQUENCES
Because of the differences in state tax laws and their applicability to
different investors, it is not possible to summarize the potential state tax
consequences of holding the Notes. IT IS RECOMMENDED THAT PURCHASERS OF NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE STATE TAX CONSEQUENCES OF
PURCHASING ANY NOTES.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
"ERISA"), imposes certain requirements on employee benefit plans subject to
ERISA ("ERISA Plans") and prohibits certain transactions between ERISA Plans and
persons who are "parties in interest" (as defined under ERISA) with respect to
assets of such Plans. Section 4975 of the Code prohibits a similar set of
transactions between certain plans or individual retirement accounts ("Code
Plans," and together with ERISA Plans, "Plans") and persons who are
"disqualified persons" (as defined in the Code) with respect to Code Plans.
Certain employee benefit plans, such as governmental plans and church plans (if
no election has been made under Section 410(d) of the Code), are not subject to
the requirements of ERISA or Section 4975 of the Code, and assets of such plans
may be invested in the Notes, subject to the provisions of other applicable
federal and state law. Any such plan which is qualified under Section 401(a) of
the Code and exempt from taxation under Section 501(a) of the Code is, however,
subject to the prohibited transaction rules set forth in Section 503 of the
Code.
Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that investments be made in accordance with
the documents governing the ERISA Plan. Before investing in the Notes, an ERISA
Plan fiduciary should consider, among other factors, whether to do so is
appropriate in view of the overall investment policy and liquidity needs of the
ERISA Plan.
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, regulatory or administrative
exemption applies to the transaction. Section 4975 of the Code and Sections
502(i) and 502(l) 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 Issuer, the Underwriter, the Seller, the Servicer,
the Trust Depositor, the Owner Trustee, the Indenture 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 or Section 4975 of the Code, unless an administrative exemption described
below or some other exemption is available.
Any person who (a) has discretionary authority or control with respect
to the investment or management of the assets of a Plan or (b) has authority or
responsibility to give, or regularly gives, investment advice with respect to
the assets of a Plan 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, is a fiduciary of such
Plan, and should consider whether an investment in the Notes would involve a
conflict of interest or an act of self-dealing, in view of the identity of the
parties to the transaction and service providers to the Trust identified in this
Prospectus.
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.
PLAN ASSET REGULATION
Pursuant to a Department of Labor regulation codified at 29 C.F.R.
section 2510.3-101 (the "Plan Assets Regulation"), in general when a Plan
acquires an equity interest in an entity such as the Issuer and such interest
does not represent a "publicly offered security" or a security issued by an
investment company registered under the Investment Company Act of 1940, as
amended, the Plan's assets include both the equity interest and an undivided
interest in each of the underlying assets of the entity, unless it is
established either that the entity is an "operating company" or that equity
participation in the entity by "benefit plan investors" is not "significant." In
general, an "equity interest" is defined under the Plan Assets Regulation as any
interest in an entity other than an instrument which is treated as indebtedness
under applicable local law and which has no substantial equity features. Thus,
if the Notes constitute debt with no substantial equity features for purposes of
the Plan Assets Regulation, then a Plan's acquisition of Notes will not cause
the assets of the Issuer to be deemed assets of such Plan for purposes of
section 404 and 406 of ERISA or section 4975 of the Code, and the Plan's
interest will be deemed to include solely an interest in such Notes. Conversely,
if the Notes constitute an equity interest for purposes of the Plan Assets
Regulation, then a Plan's acquisition of Notes may cause the assets of the
Issuer to be deemed to be assets of such Plan for purposes of sections 404 and
406 of ERISA and section 4975 of the Code. In such event, the fiduciary and
prohibited transaction restrictions of ERISA and section 4975 of the Code would
apply to transactions involving the assets of the Issuer, and could give rise to
a prohibited transaction for which no exemption is available.
Although there is little published authority available and there can be
no assurance in this regard, the Issuer believes that the Class A Notes, the
Class B Notes and the Class C Notes should be treated as debt rather than equity
interests under the Plan Assets Regulation. Accordingly, the assets of the
Issuer should not be deemed to be assets of Plans under the Plan Assets
Regulation or otherwise under ERISA as a result of the purchase of Notes by or
with the assets of Plans. However, before purchasing any Notes on behalf of a
Plan, an ERISA Plan fiduciary should make its own determination that the Class
of Notes being purchased will not constitute equity interests of the Issuer for
purposes of the Plan Assets Regulation.
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. (the "Underwriter") and the Underwriter has agreed, subject to
the terms and conditions set forth therein, to purchase all the Notes offered
hereby if any of such Notes are purchased.
The Underwriter has advised the Trust Depositor that the Underwriter
proposes initially to offer the 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 Notes.
The Underwriter may allow and such dealers may reallow a concession not in
excess of ____% of the initial principal amount of the Notes. After the initial
public offering, the public offering price and such concessions may be changed.
The underwriting agreement provides that the Trust Depositor and Mitsui
Vendor Leasing, jointly and severally, will indemnify the Underwriter against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, or contribute to payments the Underwriter may be required to
make in respect thereof.
In the ordinary course of its business, the Underwriter and its
affiliates have engaged and may engage in commercial banking and investment
banking transactions with Mitsui Vendor Leasing and its affiliates, including
the Trust Depositor.
RATING OF THE NOTES
It is a condition to the issuance of the Notes offered hereunder that
the Class A-1 Notes be rated at least "P-1" and "F-1", that the Class A-2 and
Class A-3 Notes be rated at least "Aaa" and "AAA", that the Class B Notes be
rated at least _____ and that the Class C Notes be rated at least _____ by
Moody's Investors Service, Inc. and Fitch IBCA, Inc., respectively
(collectively, the "Rating Agencies").
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 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
Depositor and the Seller by Brown & Wood LLP, New York, New York. Certain legal
matters for the Underwriter will be passed upon by Cadwalader, Wickersham &
Taft, New York, New York.
INDEX OF TERMS
Accrual Period, ...................................10, 41
ADCB,.......................................... 5, 12, 42
Additional Contract,............................... 8, 34
Additional Contract Cutoff Date,....................... 5
Adjusted Contract,..................................... 4
Administration Agreement,............................. 52
Administration Fee,................................... 52
Administrator,........................................ 52
Aggregate Principal Paydown Amount, ...............12, 42
Applicable Percentage,............................ 12, 42
Article 2A,....................................... 20, 67
Available Amounts,.................................... 44
Back-up Servicer,............................... 2, 4, 59
Bankruptcy Code,...................................... 19
Business Day,.......................................... 4
Calculation Date,...................................... 4
Cede,.................................................. 2
CEDEL,................................................. 2
CEDEL Participants,................................... 51
Class A Noteholders,.............................. 10, 41
Class A Notes,......................................... 5
Class A Principal Payment Amount,..................... 42
Class A-1 Notes,....................................... 5
Class A-2 Notes,....................................... 5
Class A-3 Notes,....................................... 5
Class B Noteholders,.............................. 10, 41
Class B Notes, .........................................5
Class B Principal Payment Amount, .....................42
Class C Noteholders, ..............................10, 41
Class C Notes, .........................................5
Class C Principal Payment Amount, .....................42
Closing Date, ..........................................4
Code, .................................................68
Code Plans, ...........................................73
Collection Account, ................................9, 46
Collection Period, .....................................4
Commission, ............................................3
Conditional Payment Rate, .............................34
Contract Files,........................................53
Contract Pool,..........................................6
Contracts, .........................................cover
Cooperative, ..........................................51
CPR,...................................................34
CSA,....................................................6
CSAs,..................................................31
Cutoff Date,............................................4
Defaulted Contract,.................................8, 45
Definitive Notes, .....................................52
Depositaries, .........................................49
Depositary, ...........................................41
Determination Date, ...................................43
Discount Rate, ........................................13
Discounted Contract Balance, ......................13, 42
Distribution, .........................................48
DTC, ...................................................2
Eligible Contract, ....................................54
Eligible Investments, .................................46
End-User, .............................................38
Equipment, ............................................32
ERISA, ................................................73
ERISA Plans, ..........................................73
Euroclear, .............................................2
Euroclear Operator, ...................................51
Euroclear Participants, ...............................51
Event of Default, .....................................46
Exchange Act, ..........................................3
Excluded Amounts, .....................................31
FDIC, .................................................46
Foreign Person, .......................................71
Holders, ..............................................52
Indenture, ......................................cover, 5
Indenture Trustee, ..............................cover, 4
Indirect Participants, ................................49
Ineligible Contract, ..................................55
Initial Class A Note Principal Balance, ................5
Initial Class A-1 Note Principal Balance, ..............5
Initial Class A-2 Note Principal Balance, ..............5
Initial Class A-3 Note Principal Balance, ..............5
Initial Class B Note Principal Balance, ................5
Initial Class C Note Principal Balance, ................5
Insolvency Event, .....................................47
Insurance Proceeds, ...................................53
IRS, ..................................................68
Issuer, .........................................cover, 3
Lease, .................................................6
Leases, ...............................................31
Mitsui Vendor Leasing, ......................cover, 3, 38
Monthly Report, .......................................48
MVLFCII, ...........................................cover
New Withholding Regulations, ..........................71
Note Owners, ...........................................5
Noteholders, ......................................10, 41
Notes, .................................................5
OID, ..................................................69
Operative Documents, ..................................40
Owner Trustee, ..................................cover, 4
Participants, .........................................49
Payment Date, .......................................2, 4
Permitted Liens, ......................................64
Plan Assets Regulation, ...............................73
Plans, ................................................73
Prepaid Contract, ..................................8, 34
Prepayment, ...........................................17
Prepayment Amount, ....................................54
Principal Amount, .....................................43
PTCE...................................................73
Qualified Institution, ................................46
Rating Agencies................................... 15, 74
Record Date, ...........................................5
Recoveries, ...........................................45
Registration Statement, ................................3
Repurchase Amount, ....................................55
Required Controlling Holders, .........................47
Restricting Event, ....................................47
Sale and Servicing Agreement, ......................2, 23
Scheduled Payments, ...............................13, 43
Securities Act, ........................................3
Seller, .........................................2, 3, 38
Servicer, .......................................2, 3, 38
Servicer Advance, .................................14, 57
Servicer Default, .....................................58
Servicing Fee, ....................................14, 48
Servicing Fee Percentage, .........................14, 48
Statistical Discount Rate, .............................7
Substitute Contract, ...............................7, 34
Substitute Contract Cutoff Date, .......................4
Tax Counsel, ..........................................68
Termination Notice, ...................................57
Terms and Conditions, .................................51
TIA, ..................................................62
Transfer and Sale Agreement, .......................2, 23
Transferred Assets, ...................................53
True Leases, ..........................................19
Trust, ..........................................cover, 3
Trust Agreement, .......................................3
Trust Assets, ......................................5, 53
Trust Depositor, ............................cover, 3, 40
Trustees, .............................................48
Underwriter, ...................................cover, 74
UNL Pool, .............................................33
Vendor, ................................................9
Vendor Assignment, .....................................9
Vendor Program Agreement, ..............................9
Vendors, ..............................................32
Warranty Contract, ....................................56
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------ ---------------------------------------------------------
<S> <C>
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
DEPOSITOR OR THE UNDERWRITER. THIS ISSUER PROSPECTUS DOES NOT MITSUI VENDOR LEASING
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY ASSET TRUST 1998-1
SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY, NOR DOES IT ISSUER
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 TO SUCH PERSON. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY MITSUI VENDOR LEASING II
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED FUNDING CORP.
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. TRUST DEPOSITOR
MITSUI VENDOR LEASING
_________________ (U.S.A.) INC.
SELLER AND SERVICER
TABLE OF CONTENTS
PAGE ------------------------
REPORTS TO NOTEHOLDERS.........................2 PROSPECTUS
AVAILABLE INFORMATION..........................3
SUMMARY OF TERMS...............................3 ------------------------
RISK FACTORS..................................17
USE OF PROCEEDS...............................22
THE TRUST.....................................22
THE CONTRACT POOL.............................23
THE CONTRACTS GENERALLY.......................31
PREPAYMENT AND YIELD CONSIDERATIONS...........34
MITSUI VENDOR LEASING (U.S.A.) INC............38
THE TRUST DEPOSITOR...........................40
DESCRIPTION OF THE NOTES......................40
THE TRANSFER AND SALE AGREEMENT FIRST UNION CAPITAL MARKETS
AND SALE AND SERVICING
AGREEMENT GENERALLY.......................53
THE INDENTURE.................................61
CERTAIN LEGAL ASPECTS OF THE CONTRACTS........64
FEDERAL INCOME TAX CONSEQUENCES...............68
CERTAIN STATE TAX CONSEQUENCES................72
ERISA CONSIDERATIONS..........................73
PLAN OF DISTRIBUTION..........................74
RATING OF THE NOTES...........................74
LEGAL MATTERS.................................75 ___________, 1998
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.
- ------------------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Notes being registered
hereby are estimated as follows:
SEC registration fee...................................... $ *
Legal fees and expenses................................... *
Accounting fees and expenses.............................. *
Blue sky fees and expenses................................ *
Rating agency fees........................................ *
Owner Trustee fee's and expenses.......................... *
Indenture Trustee's fees and expenses..................... *
Printing.................................................. *
Miscellaneous............................................. *
---
Total..................................................... $
====
- -------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Mitsui Vendor Leasing Funding Corp. II, the registrant, has undertaken in
its articles of incorporation and bylaws to indemnify, to the maximum extent
permitted by the Delaware General Corporation Law as from time to time amended,
any currently acting or former director, officer, employee and agent of the
registrant against any and all liabilities incurred in connection with their
services in such capacities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a. Exhibits:
1.1 Form of Underwriting Agreement*
3.1 Articles of Incorporation of Mitsui Vendor Leasing Funding Corp. II
3.2 Bylaws of Mitsui Vendor Leasing Funding Corp. II
4.1 Form of Trust Agreement
4.2 Form of Sale and Servicing Agreement
4.3 Form of Indenture (including forms of Class A Notes, Class B Notes and
Class C Notes)
4.4 Form of Administration Agreement
4.5 Form of Transfer and Sale Agreement
5.1 Opinion of Brown & Wood LLP with respect to legality
8.1 Opinion of Brown & Wood LLP with respect to tax matters
23.1 Consent of Brown & Wood LLP (included as part of Exhibit 5.1)
23.2 Consent of Brown & Wood LLP (included as part of Exhibit 8.1)
24.1 Power of Attorney (included on page II-5)**
25.1 Statement of Eligibility and Qualification of Indenture Trustee*
----------------
* To be filed by amendment.
** Previously filed.
b. Financial Statement Schedules: Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes as follows:
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of such 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) For purposes of determining any liability under the Act, 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 Act will be deemed to be part of this registration
statement as of the time it was declared effective.
(c) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to
be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of San Diego and State of California, on the 11th day of August, 1998.
MITSUI VENDOR LEASING FUNDING CORP. II
By: /s/ John L. Plunkett
--------------------
John L. Plunkett
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Paul A. Renner* President (Principal Executive August 11, 1998
- -----------------------
Paul A. Renner Officer); Director
Jun-ichi Nagatoishi* Executive Vice President; Director August 11, 1998
- -----------------------
Jun-ichi Nagatoishi
James F. Burke* Senior Vice President, Chief August 11, 1998
- -----------------------
James F. Burke Financial Officer (Principal
Financial and Accounting
Officer); Director
/s/John L. Plunkett
- -------------------
*John L. Plunkett, pursuant to a Power of Attorney (executed by each of the
officers and directors indicated above and filed as Exhbit 24.1 to the
Registration Statement), by signing his name does hereby sign and execute this
Amendment No. 1 to the Registration Statement on behalf of each such officer and
director.
CERTIFICATE OF INCORPORATION
OF
MITSUI VENDOR LEASING FUNDING CORP. II
THE UNDERSIGNED, to form a corporation for the purposes stated in this
certificate, pursuant to the provisions of the General Corporation Law of the
State of Delaware, certifies as follows:
FIRST: The name of the Corporation is
Mitsui Vendor Leasing Funding Corp. II
SECOND: The registered office of the Corporation is located at 1209
Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of
its registered agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of common stock that the Corporation
is authorized to issue is three thousand. The common stock of the Corporation
shall have no par value.
FIFTH: The name and address of the Incorporator is:
Name Address
---- -------
Siegfried P. Knopf Brown & Wood LLP
One World Trade Center
New York, NY 10048-0557
SIXTH: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of
subsection (b) of Section 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under that section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by
that section. This indemnification shall not be exclusive of any other rights
to which those indemnified may be entitled under any by law, agreement, vote
of stockholders or disinterested directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
office. This indemnification shall continue as to a person who has ceased to
be a director, officer, employee, or agent and shall inure to the benefit of
his heirs, executors, and administrators.
The undersigned, being the Incorporator, for the purpose of forming a
corporation pursuant to the General Corporation Law of the State of Delaware,
does make this certificate, declaring and certifying that this is his act and
deed and the facts stated herein are true, and accordingly has hereunto set
his hand this 3 day of June, 1998.
/s/ Siegfried P. Knopf, Incorporator
BYLAWS
OF
MITSUI VENDOR LEASING FUNDING CORP. II
TABLE OF CONTENTS
Page
----
ARTICLE I OFFICES........................................................1
ARTICLE II MEETINGS OF STOCKHOLDERS......................................1
Section 1.Annual Meeting........................................1
Section 2.Special Meetings......................................1
Section 3.Notice of Meetings....................................1
Section 4.Waiver of Notice......................................2
Section 5.Organization..........................................2
Section 6.Stockholders Entitled to Vote.........................2
Section 7.Quorum and Adjournment................................3
Section 8.Order of Business.....................................3
Section 9.Vote of Stockholders..................................3
Section 10 Consent of Stockholders in Lieu of Meeting...........4
ARTICLE III BOARD OF DIRECTORS...........................................4
Section 1.Election and Term.....................................4
Section 2.Qualification.........................................4
Section 3.Number................................................4
Section 4.General Powers........................................5
Section 5.Place of Meetings.....................................5
Section 6.Organization Meeting..................................5
Section 7.Regular Meetings......................................5
Section 8.Special Meetings; Notice and Waiver of Notice.........5
Section 9.Organization of Meetings..............................6
Section 10 Quorum and Manner of Acting..........................6
Section 11 Voting...............................................6
Section 12 Action Without a Meeting.............................7
Section 13 Resignations.........................................7
Section 14 Removal of Directors.................................7
Section 15 Filling of Vacancies.................................7
Section 16 Interested Directors and Officers....................7
ARTICLE IV THE OFFICERS..................................................8
Section 1.Officers - Qualifications.............................8
Section 2.Term of Office; Vacancies.............................8
Section 3.Removal of Elected Officers...........................9
Section 4.Resignations..........................................9
Section 5.Officers Holding More Than One Office.................9
Section 6.The Chairman of the Board.............................9
Section 7.The President.........................................9
Section 8.The Vice President....................................10
Section 9.The Secretary.........................................10
Section 10 The Treasurer........................................10
Section 11 Additional Duties and Authority......................11
ARTICLE V STOCK AND TRANSFERS OF STOCK...................................11
Section 1.Stock Certificates....................................11
Section 2.Transfers of Stock....................................11
Section 3.Lost Certificate......................................11
Section 4.Determination of Holders of Record for Certain
Purposes..............................................12
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS.............12
Section 1.Indemnification.......................................12
Section 2.Expenses..............................................13
Section 3.Determination of Indemnification......................13
Section 4.Nonexclusive Right....................................13
Section 5.Subordination of Indemnification......................14
ARTICLE VII MISCELLANEOUS................................................14
Section 1.Fiscal Year...........................................14
Section 2.Signatures on Negotiable Instruments..................14
Section 3.References to Article and Section Numbers and to
the Bylaws and the Certificate of Incorporation.......14
ARTICLE VIII AMENDMENTS..................................................14
Section 1.Amendments............................................14
Section 2.Amendment of Certain Bylaws...........................15
BYLAWS
OF
MITSUI VENDOR LEASING FUNDING CORP. II
ARTICLE I
OFFICES
Mitsui Vendor Leasing Funding Corp. II (the "Corporation") may establish
or discontinue, from time to time, the offices and places of business within
or without the State of Delaware that the Board of Directors deems proper for
the conduct of the Corporation's business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING.
--------------
The annual meeting of the holders of shares of stock entitled to notice
of the meeting and to vote notice at the meeting pursuant to the provisions of
the Certificate of Incorporation (the "Annual Meeting of Stockholders") for
the purpose of electing directors and transacting any other business that may
come before it shall be held each year at the time, on the day, and at the
place, within or without the State of Delaware, that shall be designated by
the Board of Directors.
SECTION 2. SPECIAL MEETINGS.
----------------
In addition to the special meetings that are provided for by law or by
the Certificate of Incorporation, special meetings of the holders of the
Corporation's stock may be called at any time by the Board of Directors and
may be held at the time, on the day, and at the place, within or without the
State of Delaware, that shall be designated by the Board of Directors.
SECTION 3. NOTICE OF MEETINGS.
------------------
Except as otherwise provided by law, written notice of each meeting of
stockholders shall be given either by delivering a notice personally or
mailing a notice to each stockholder of record entitled to vote at the
meeting. If mailed, the notice shall be directed to the stockholder in a
postage-prepaid envelope at his address as it appears on the stock books of
the Corporation unless, prior to the time of mailing, he shall have filed with
the Secretary a written request that notices intended for him be mailed to
some other address, in which case the notice shall be mailed to the address
designated in the request. Notice of each meeting of stockholders shall be in
the form approved by the Board of Directors and shall state the purposes for
which the meeting is called, the date and time when and the place where it is
to be held, and shall be delivered personally or mailed not more than sixty
days and not less than ten days before the day of the meeting. Except as
otherwise provided by law, the business that may be transacted at any the
meeting of stockholders shall consist of and be limited to the purposes stated
in the notice. The Secretary or an Assistant Secretary of the Corporation
shall, after giving the notices, make an affidavit stating that notice has
been given. The affidavit shall be filed with the minutes of the meeting.
SECTION 4. WAIVER OF NOTICE.
----------------
Whenever notice is required to be given under any provision of law or of
the Certificate of Incorporation or the bylaws, a waiver of notice in writing
or by electronic facsimile transmission or other communication device capable
of transmitting or creating a written record, signed by the person entitled to
notice, whether before or after the time stated in the notice, shall be
equivalent to notice. Attendance of a person at a meeting of stockholders
shall constitute a waiver of notice of the meeting, except when the person
attends the meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business at the meeting because the
meeting is not properly called or convened. Neither the business to be
transacted at, nor the purpose of, any meeting of stockholders need be
specified in any waiver of notice unless so required by the Certificate of
Incorporation.
SECTION 5. ORGANIZATION.
------------
The Chairman of the Board shall act as chairman at all meetings of
stockholders at which he is present. The chairman shall call the meetings of
stockholders to order and preside thereat. If the Chairman of the Board shall
be absent from any meeting of stockholders, the duties otherwise provided in
this Section 5 of Article II to be performed by him at the meeting shall be
performed at the meeting by the officer described in Section 6 of Article IV.
The Secretary of the Corporation shall act as secretary at all meetings of the
stockholders, but in his absence the chairman of the meeting may appoint any
person present to act as secretary of the meeting.
SECTION 6. STOCKHOLDERS ENTITLED TO VOTE.
-----------------------------
The Board of Directors may fix a date not more than sixty days nor less
than ten days prior to the date of any meeting of stockholders, or prior to
the last day on which the consent or dissent of stockholders may be
effectively expressed for any purpose without a meeting, as a record date for
the determination of the stockholders entitled to notice of and to vote at the
meeting and any adjournment of the meeting, or to give the consent or express
the dissent. Only those stockholders of record on that date shall be entitled
to notice of, and to vote at, the meeting and any adjournment thereof, or to
give the consent or express the dissent, as the case may be, notwithstanding
any transfer of any stock on the books of the Corporation after setting the
record date. The Secretary shall prepare and make or cause to be prepared and
made, at least ten days before every meeting of stockholders, a complete list
of the stockholders entitled to vote at the meeting, arranged in alphabetical
order and showing the address of each stockholder and the number of shares
registered in the name of each the stockholder. The list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place specified in the notice of the meeting within the
city where the meeting is to be held, or, if not so specified, at the place
where the meeting is to be held. The list shall be produced and kept at the
time and place of the meeting during the whole time thereof, and shall be
subject to the inspection of any stockholder who may be present.
SECTION 7. QUORUM AND ADJOURNMENT.
----------------------
Except as otherwise provided by law or by the Certificate of
Incorporation, the holders of a majority of the shares of stock entitled to
vote at the meeting present in person or by proxy shall constitute a quorum at
all meetings of the stockholders. In the absence of a quorum, the holders of a
majority of the shares of stock present in person or by proxy may adjourn any
meeting, from time to time, until a quorum shall be present. At any adjourned
meeting at which a quorum may be present, any business may be transacted that
might have been transacted at the meeting as originally called. No notice of
any adjourned meeting need be given other than by announcement at the meeting
that is being adjourned. However, if the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, then a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 8. ORDER OF BUSINESS.
-----------------
The order of business at all meetings of stockholders shall be as
determined by the chairman of the meeting or as is determined by the vote of
the holders of a majority of the shares of stock present in person or by proxy
and entitled to vote at the meeting. At special meetings of stockholders no
business other than that specified in the notice of the meetings or germane
thereto shall be transacted.
SECTION 9. VOTE OF STOCKHOLDERS.
--------------------
Except as otherwise permitted by law or by the Certificate of
Incorporation or the bylaws, all action by stockholders shall be taken at a
stockholders meeting. Every stockholder of record, as determined pursuant to
Section 6 of this Article II, and who is entitled to vote, shall be entitled
at every meeting of the stockholders to one vote for every share of stock
standing in his name on the books of the Corporation. Every stockholder
entitled to vote or entitled to express consent or dissent to corporate action
in writing without a meeting may authorize another person or persons to act
for him by proxy duly appointed by an instrument in writing, subscribed by the
stockholder and executed not more than three years prior to the meeting,
unless the instrument provides for a longer period. Attendance at any meeting
by a stockholder shall not have the effect of revoking a proxy given before
that meeting unless the stockholder shall in writing so notify the secretary
of the meeting prior to the voting of the proxy. Unless otherwise provided by
law, no vote on any question upon which a vote of the stockholders may be
taken need be by written ballot unless the chairman of the meeting shall
determine that it shall be by written ballot or the holders of a majority of
the shares of stock present in person or by proxy and entitled to participate
in the vote shall so demand. In a vote by written ballot each written ballot
shall state the number of shares voted and the name of the stockholder or
proxy voting. Except as otherwise provided by law, by the Certificate of
Incorporation, or by Section 14 of Article III, all elections of directors and
all questions shall be decided by the vote of the holders of a majority of the
shares of stock present in person or by proxy at the meeting and entitled to
vote in the election or on the question.
SECTION 10. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING.
------------------------------------------
Except as otherwise provided by law or by the Certificate of
Incorporation, any action required to be taken, or which may be taken, at any
meeting of stockholders may be taken without a meeting, without prior notice,
and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of shares of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take the action at a meeting at which all shares of stock entitled to vote
thereon were present and voted. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing. The written consent
shall bear the date of signature of each stockholder who signs the consent. No
written consent shall be effective to take the corporate action referred to in
the consent unless within sixty days of the earliest dated consent delivered
to the Corporation, written consents signed by a sufficient number of
stockholders to take action are delivered to the Corporation by delivery to
its registered office in Delaware, its principal place of business, or to the
Secretary or other agent of the Corporation having custody of the minute book
of the Corporation. Delivery made to the Corporation's registered office shall
be by hand or by certified or registered mail, return receipt requested.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. ELECTION AND TERM.
-----------------
The directors shall be elected at the Annual Meeting of the Stockholders
and shall be elected to serve until the next Annual Meeting of Stockholders
and until their successors are elected and have qualified or until their
earlier resignation or removal.
SECTION 2. QUALIFICATION.
-------------
A director need not be the record or beneficial owner of shares of
capital stock of the Corporation. Acceptance of the office of director may be
expressed orally or writing.
SECTION 3. NUMBER.
------
The number of directors constituting the whole board shall be three, at
least two of whom shall be Independent Directors. The number of directors may
be increased or decreased from time to time by amendment of this bylaw by the
Board of Directors or the stockholders within the limits permitted by law. No
decrease in the number of directors shall change the term of any director then
in office.
The term "Independent Director" shall have the meaning given to it in the
Certificate of Incorporation of the Corporation.
SECTION 4. GENERAL POWERS.
--------------
The business, properties, and affairs of the Corporation shall be managed
by the Board of Directors. Without limiting the generality of the foregoing,
the Board of Directors shall have power to elect and appoint officers of the
Corporation, to appoint and direct agents, to grant general or limited
authority to officers, employees, and agents of the Corporation, and to make,
execute, and deliver contracts and other instruments and documents in the name
and on behalf of the Corporation and over its seal, without specific authority
in each case. In addition, the Board of Directors may exercise all the powers
of the Corporation and do all lawful acts and things that are not reserved to
the stockholders by law or by the Certificate of Incorporation or by these
bylaws.
SECTION 5. PLACE OF MEETINGS.
-----------------
Meetings of the Board of Directors may be held at any place, within or
without the State of Delaware, as is from time to time designated by the Board
of Directors.
SECTION 6. ORGANIZATION MEETING.
--------------------
A newly elected Board of Directors shall meet and organize, and also may
transact any other business that might be transacted at a regular meeting
thereof as soon as practicable after each Annual Meeting of Stockholders, at
the place at which the meeting of stockholders took place, without notice of
the meeting, provided a majority of the whole Board of Directors is present.
If the a majority is not present, the organization meeting may be held at any
other time or place that may be specified in a notice given in the manner
provided in Section 8 of this Article III for special meetings of the Board of
Directors, or in a waiver of notice thereof.
SECTION 7. REGULAR MEETINGS.
----------------
Regular meetings of the Board of Directors shall be held at the times
determined by resolution of the Board of Directors. No notice shall be
required for any regular meeting. Except as otherwise provided by law, any
business may be transacted at any regular meeting of the Board of Directors.
SECTION 8. SPECIAL MEETINGS; NOTICE AND WAIVER OF NOTICE.
---------------------------------------------
Special meetings of the Board of Directors shall be called by the
Secretary at the request of the Chairman of the Board or the President or at
the request in writing of any two directors stating the purpose or purposes of
the meeting. Notice of any special meeting shall be in form approved by the
Chairman of the Board or the President, as the case may be. Notices of special
meetings shall be mailed to each director at his residence or usual place of
business (his "notice address") not later than two days before the day on
which the meeting is to be held, or shall be sent to him at his notice address
by electronic facsimile transmission or other communication device capable of
transmitting or creating a written record or be delivered personally or by
telephone not later than the day before the day of meeting. Notice of any
meeting of the Board of Directors need not be given to any director if he
signs a written waiver of notice either before or after the time stated
therein, or if he attends the meeting, except when he attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business at the meeting because the meeting is not properly
called or convened. The business to be transacted at, or the purpose of, any
special meeting of the Board of Directors shall be specified in any notice or
written waiver of notice.
SECTION 9. ORGANIZATION OF MEETINGS.
------------------------
The Chairman of the Board shall preside at all meetings of the Board of
Directors at which he is present. If the Chairman of the Board shall be absent
from any meeting of the Board of Directors, the duties otherwise provided in
this Section 9 of Article III to be performed by him at the meeting shall be
performed at the meeting by the officer prescribed by Section 6 of Article IV.
If none of those officers is present at the meeting, one of the directors
present shall be chosen by the members of the Board of Directors present to
preside at the meeting. The Secretary of the Corporation shall act as the
secretary of all meetings of the Board of Directors, and in his absence a
temporary secretary shall be appointed by the chairman of the meeting.
SECTION 10. QUORUM AND MANNER OF ACTING.
---------------------------
At every meeting of the Board of Directors one-third, but in no event
fewer than two, of the total number of directors constituting the whole Board
of Directors shall constitute a quorum. Except as otherwise provided by law or
by the Certificate of Incorporation, by Section 15(a) of this Article III, or
by Section 3 of Article IV, the vote of a majority of the directors present at
any the meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum, a majority of the directors present may
adjourn any meeting, from time to time, until a quorum is present. No notice
of any adjourned meeting need be given other than by announcement at the
meeting that is being adjourned. Members of the Board of Directors or any
committee of the Board may participate in a meeting of the Board of Directors
or of the committee by means of telephone conference or similar communications
equipment if all persons participating in the meeting can hear each other.
Participation by a member of the Board of Directors in a meeting pursuant to
this Section 10 of Article III shall constitute his presence in person at the
meeting.
SECTION 11. VOTING.
------
On any question on which the Board of Directors shall vote, the names of
those voting and their votes shall be entered in the minutes of the meeting if
any member of the Board of Directors so requests at the time.
SECTION 12. ACTION WITHOUT A MEETING.
------------------------
Except as otherwise provided by law or by the Certificate of
Incorporation, any action required or permitted to be taken at any meeting by
the Board of Directors or by any committee of the Board may be taken without a
meeting, if prior to the action all members of the Board of Directors or of
the committee, as the case may be, consent to it in writing, and the writing
or writings are filed with the minutes of proceedings of the Board of
Directors or the committee.
SECTION 13. RESIGNATIONS.
------------
Any director may resign at any time upon written notice of resignation to
the Corporation. Any resignation shall be effective immediately unless a date
certain is specified for it to take effect, in which event it shall be
effective on that date. Acceptance of any resignation shall not be necessary
to make it effective, irrespective of whether the resignation is tendered
subject to acceptance.
SECTION 14. REMOVAL OF DIRECTORS.
--------------------
Any director may be removed, either for or without cause, at any time by
action of the holders of a majority of the outstanding shares of stock
entitled to vote on removal, either at a meeting of the holders of the shares
or, whenever permitted by law, without a meeting by their written consents.
SECTION 15. FILLING OF VACANCIES.
--------------------
Except as otherwise provided by law and the Certificate of Incorporation,
in case of any increase in the number of directors, or of any vacancy in the
Board of Directors, the additional directors may be elected, or, as the case
may be, the vacancies may be filled, either (a) by the Board of Directors at
any meeting by affirmative vote of a majority of the remaining directors
though the remaining directors be less than the quorum provided in Section 10
of this Article III, or (b) by the holders of capital stock of the Corporation
entitled to vote on the election of directors, either at an Annual Meeting of
Stockholders or at a special meeting of the holders called for that purpose.
The directors so chosen shall hold office until the next Annual Meeting of
Stockholders and until their successors are elected and have qualified or
until their earlier resignation or removal.
SECTION 16. INTERESTED DIRECTORS AND OFFICERS.
---------------------------------
a. No contract or transaction between the Corporation and one
or more of its directors or officers, or between the Corporation and
any other corporation, partnership, association, or other
organization in which one or more of the Corporation's directors or
officers are directors or officers or have a financial interest,
shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting
of the Board of Directors or committee of the Board that authorizes
the contract or transactions, or solely because his or their votes
are counted on the issue, if:
(1) The material facts as to their relationship or
interest and as to the contract or transaction are
disclosed or known to the Board of Directors or the
committee and the Board of Directors or committee in good
faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less
than a quorum; or
(2) The material facts as to their relationship or
interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to
vote on the issue and the contract or transaction is
specifically approved in good faith by vote of the
stockholders; or
(3) The contract or transaction is fair as to the
Corporation as of the time it is authorized, approved, or
ratified by the Board of Directors, a committee of the
Board, or the stockholders.
b. Interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a
committee thereby which authorizes the contract or transaction.
ARTICLE IV
THE OFFICERS
SECTION 1. OFFICERS - QUALIFICATIONS.
-------------------------
The elected officers of the Corporation shall be a President, a
Secretary, a Treasurer (or Chief Financial Officer), and, at the option of the
Board of Directors, a Chairman of the Board. The elected officers shall be
elected by the Board of Directors. The Chairman of the Board and the President
shall be selected from the directors. The Board of Directors may elect one or
more Vice Presidents and elect or appoint any other officers it deems
appropriate. Assistant Secretaries, Assistant Treasurers, and other officers
and agents may be appointed by the Board of Directors or may be appointed
pursuant to Section 6 of this Article IV.
SECTION 2. TERM OF OFFICE; VACANCIES.
-------------------------
So far as is practicable, all elected officers shall be elected at the
organization meeting of the Board of Directors in each year and, except as
otherwise provided in Sections 3 and 4, and subject to the provisions of
Section 6 of this Article IV, shall hold office until the organization meeting
of the Board of Directors in the next subsequent year and until their
respective successors are elected and qualify or until their earlier
resignation or removal. If any vacancy occurs in any office, the Board of
Directors may elect or appoint a successor to fill the vacancy for the
remainder of the term.
SECTION 3. REMOVAL OF ELECTED OFFICERS.
---------------------------
Any elected officer may be removed at any time, either for or without
cause, by affirmative vote of a majority of the whole Board of Directors, at
any regular meeting or at any special meeting called for the purpose.
SECTION 4. RESIGNATIONS.
------------
Any officer may resign at any time upon written notice of resignation to
the Corporation. Any resignation shall be effective immediately unless a date
certain is specified for it to take effect, in which event it shall be
effective on that date. Acceptance of any resignation shall not be necessary
to make it effective, irrespective of whether the resignation is tendered
subject to acceptance.
SECTION 5. OFFICERS HOLDING MORE THAN ONE OFFICE.
-------------------------------------
Any officer may hold two or more offices the duties of which can be
consistently performed by the same person, except that the offices of
President and Secretary may not be held by the same person at the same time.
SECTION 6. THE CHAIRMAN OF THE BOARD.
-------------------------
As provided in Section 5 of Article II, the Chairman of the Board shall
act as chairman at all meetings of the stockholders at which he is present,
and, as provided in Section 9 of Article III, he shall preside at all meetings
of the Board of Directors at which he is present. In the absence of the
Chairman of the Board, his duties shall be performed and his authority may be
exercised by the President. In the absence of the Chairman of the Board and
the President, the duties shall be performed by person designated by the most
senior officer of the Corporation making a designation, with the right
reserved to the Board of Directors to make the designation or supersede any
designation so made.
SECTION 7. THE PRESIDENT.
-------------
The President shall be the chief executive officer of the Corporation. He
shall direct, coordinate, and control the Corporation's business and
activities and its operating expenses and capital expenditures and shall have
general authority to exercise all the powers necessary for the chief executive
officer of the Corporation, all in accordance with basic policies established
by and subject to the control of the Board of Directors. He shall be
responsible for the employment or appointment of any employees, agents, and
officers (except officers to be elected by the Board of Directors pursuant to
Section 1 of this Article IV) required for the conduct of the business of the
Corporation. He shall have authority to suspend or to remove any employee,
agent, or appointed officer of the Corporation. In the case of the suspension
for cause of any elected officer, he shall recommend to the Board of Directors
what further action should be taken. He shall have general authority to
execute bonds, deeds, and contracts in the name and on behalf of the
Corporation.
The President also shall be the chief administrative officer of the
Corporation. He shall implement the general directives, plans and policies and
shall establish operating and administrative plans, and policies and direct
and coordinate the Corporation's organizational components, within the scope
of the authority delegated to him by the Board of Directors. As provided in
Section 6 of this Article IV, in the absence of the Chairman of the Board, the
President shall perform all the duties and exercise the authority of the
Chairman of the Board.
SECTION 8. THE VICE PRESIDENT.
------------------
The several Vice Presidents, if any, shall perform the duties and may
exercise the authority as may from time to time be conferred upon them by the
Board of Directors, the Chairman of the Board, or the President.
SECTION 9. THE SECRETARY.
-------------
The Secretary shall attend to the giving of notice of all meetings of
stockholders and of the Board of Directors. As provided in Section 5 of
Article II and Section 9 of Article III, the Secretary shall keep minutes of
all proceedings at meetings of the stockholders and of the Board of Directors
at which he is present. When some other person has served as secretary to a
meeting, the Secretary shall maintain custody of the minutes of those
proceedings. He shall keep and account for all books, documents, papers, and
records of the Corporation, except those for which some other officer or agent
is properly accountable. He shall generally perform all the duties usually
appertaining to the office of secretary of a corporation. In the absence of
the Secretary, an Assistant Secretary, if any, or person designated by the
Chairman of the Board shall perform his duties.
SECTION 10. THE TREASURER.
-------------
The Treasurer, who may be designated the Chief Financial Officer, shall
have the care and custody of all the funds of the Corporation and shall
deposit the same in the banks or other depositories the Board of Directors (or
persons designated by the Board of Directors for the purpose) directs or
approves from time to time. He shall keep a full and accurate account of all
moneys received and paid on account of the Corporation and shall render a
statement of his accounts whenever the Board of Directors shall require.
Except as otherwise provided by the Board of Directors or in the Corporation's
plan of organization, he shall perform all other necessary duties in
connection with the administration of the financial affairs of the Corporation
and shall generally perform all the duties usually appertaining to the office
of the treasurer of a corporation. Whenever required by the Board of
Directors, he shall give bonds for the faithful discharge of his duties in the
sums and with sureties approved the Board of Directors. In the absence of the
Treasurer, an Assistant Treasurer, if any, or any person designated by the
Chairman of the Board shall perform his duties.
SECTION 11. ADDITIONAL DUTIES AND AUTHORITY.
-------------------------------
In addition to the foregoing specifically enumerated duties and
authority, the several officers of the Corporation shall perform any other
duties and may exercise any further authority the Board of Directors
determines or that may be assigned to them by any superior officer from time
to time.
ARTICLE V
STOCK AND TRANSFERS OF STOCK
SECTION 1. STOCK CERTIFICATES.
------------------
The capital stock of the Corporation shall be represented by certificates
(each, a "certificate") signed by or in the name of the Corporation by the
President or any Vice President, and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer. In case any officer who
has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be an officer before the certificate is issued by the
Corporation, it may nevertheless be issued by the Corporation with the same
effect as if the officer had not ceased to be such at the date of its issue.
The certificates representing the capital stock of the Corporation shall be in
the form approved by the Board of Directors.
SECTION 2. TRANSFERS OF STOCK.
------------------
Transfers of stock on the books of the Corporation may be authorized only
by the person named in the certificate, or by an attorney for that person
properly constituted in writing. The transfer shall be effected only upon
surrender and cancellation of a certificate or certificates for at least the
number of shares to be transferred, duly endorsed or accompanied by proper
evidence of succession, assignment, or authority to transfer, with the proof
of authenticity of the signatures satisfactory to the Corporation or its
agents, and with all required stock transfer tax stamps affixed thereto and
canceled, or accompanied by sufficient funds to pay the taxes.
SECTION 3. LOST CERTIFICATE.
----------------
If any certificate of stock is lost, stolen, or destroyed, the Board of
Directors, in its discretion, or any officers duly authorized by the Board of
Directors, may authorize the issuance of a substitute certificate, in place of
the certificate so lost, stolen, or destroyed. The applicant for a substitute
certificate shall furnish evidence satisfactory to the Corporation of the
loss, theft, or destruction of the certificate and of its ownership, and shall
also furnish whatever security or indemnity the Corporation requires.
SECTION 4. DETERMINATION OF HOLDERS OF RECORD FOR CERTAIN PURPOSES.
-------------------------------------------------------
In order to determine the stockholders or other holders of securities
entitled to receive payment of any dividend or other distribution or allotment
or any rights, or entitled to exercise any rights from any change, conversion,
or exchange of capital stock or other securities or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record
date. The record date shall not be more than sixty days prior to the date of
payment of the rights or the date when any the rights from any change,
conversion, or exchange of stock or securities may be exercised. Only holders
of record on the date so fixed shall be entitled to receive payment of the
dividend or other distribution or to receive the allotment of rights, or to
exercise the rights, notwithstanding any transfer of any stock or other
securities on the books of the Corporation after the record date has been
fixed.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND OTHERS
SECTION 1. INDEMNIFICATION.
---------------
a. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit or proceedings whether civil, criminal,
administrative, or investigative (other than an action by or in the right
of the Corporation), by reason of the fact that he is or was a director,
officer, employee, or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses (including, without limitation, attorneys'
fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit, or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the
Corporation or the other person and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the Corporation or the other
person or, with respect to any criminal action or proceeding, that the
person had reasonable cause to believe that his conduct was unlawful.
b. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the Corporation to procure
a judgment in its favor by reason of the fact that he is or was a
director, officer, employee, or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including, without
limitation, attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he
acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Corporation or the other
person; except that no indemnification shall be made in respect of any
claim, issue, or matter as to which the person shall have been adjudged
to be liable for negligence or misconduct in the performance of his duty
to the Corporation unless and only to the extent that the Court of
Chancery or the court in which the action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, the person is fairly
and reasonably entitled to indemnity for the expenses which the Court of
Chancery or the other court shall deem proper.
SECTION 2. EXPENSES.
--------
To the extent that a director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in Section 1 of this Article VI, or in
defense of any claim, issue, or matter therein, he shall be indemnified
against expenses (including, without limitation, attorneys' fees) actually and
reasonably incurred by him in connection therewith, if any, as the Board of
Directors deems appropriate.
SECTION 3. DETERMINATION OF INDEMNIFICATION.
--------------------------------
Any indemnification under Section 1 or 2 of this Article VI (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Section 1 or 2 of this Article
VI. The determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to the
action, suit, or proceedings, (ii) if either a disinterested quorum is not
obtainable or a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (iii) by the stockholders.
SECTION 4. NONEXCLUSIVE RIGHT.
------------------
The indemnification provided by this Article VI shall not be exclusive of
any other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders, or disinterested directors or otherwise, both
as to action in his official capacity and as to action in another capacity
while holding the office. The indemnification provided by this Article VI
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the successors, assigns,
heirs, executors, and administrators of that person.
SECTION 5. SUBORDINATION OF INDEMNIFICATION.
--------------------------------
Notwithstanding any provision of this Article VI to the contrary, any
indemnification obligation of the Corporation under this Article VI shall be
fully subordinated to any and all other obligations of the Corporation and
shall not constitute a "claim" against the Corporation (as defined in Section
101(4) of the Federal Bankruptcy Code) in the event that, and for so long as,
the Corporation's cash flow is insufficient to pay any and all other
obligations.
ARTICLE VII
MISCELLANEOUS
SECTION 1. FISCAL YEAR.
-----------
The fiscal year of the Corporation shall be as fixed by the Board of
Directors.
SECTION 2. SIGNATURES ON NEGOTIABLE INSTRUMENTS.
------------------------------------
All bills, notes, checks, or other instruments for the payment of money
shall be signed or countersigned by the officers or agents and in the manner
as, from time to time, may be prescribed by resolution (whether general or
special) of the Board of Directors, or may be prescribed by any officers, or
any officer and agent jointly, who are duly authorized by the Board of
Directors.
SECTION 3. REFERENCES TO ARTICLE AND SECTION NUMBERS AND TO THE
BYLAWS AND THE CERTIFICATE OF INCORPORATION.
------------------------------------------------------
Whenever in these bylaws reference is made to an Article or Section
number, the reference is to the number of an Article or Section of these
bylaws. Whenever in these bylaws reference is made to the bylaws, the
reference is to these bylaws of the Corporation, as amended, and whenever
reference is made to the Certificate of Incorporation, the reference is to the
Certificate of Incorporation of the Corporation, as amended, including all
documents deemed by the General Corporation Law of the State of Delaware to
constitute a part thereof.
ARTICLE VIII
AMENDMENTS
SECTION 1. AMENDMENTS.
----------
The bylaws may be altered, amended, or repealed at any Annual Meeting of
Stockholders, or at any special meeting of holders of shares of stock entitled
to vote thereon and by the Board of Directors at any valid meeting by
affirmative vote of a majority of the whole Board of Directors or by the
written consent of all members of the whole Board of Directors. In no event
shall any alteration, amendment, or repeal of any bylaw impair, or impair the
intent of, or be inconsistent with, the Certificate of Incorporation of the
Corporation. Notice of any proposed alteration, amendment, or repeal of the
bylaws shall be included in the notice of meeting in which the proposal is to
be acted upon.
SECTION 2. AMENDMENT OF CERTAIN BYLAWS.
---------------------------
Notwithstanding any other provision of these bylaws, the affirmative vote
of 100% of the members of the Board of Directors of the Corporation shall be
required in order to alter, amend, or repeal Sections 1, 3, 4, 6, or 10 of
Article III, or Sections 1 or 2 of this Article VIII of these bylaws, or to
adopt any bylaw that would have the substantive effect of altering, amending
or repealing Sections 1, 3, 4, 6, or 10 of Article III, or Sections 1 or 2 of
this Article VIII of these bylaws.
[Exhibit 4.1]
================================================================================
[FORM OF TRUST AGREEMENT]
between
MITSUI VENDOR LEASING FUNDING CORP. II
as Trust Depositor,
and
________________________________________,
as Owner Trustee
Dated as of August 1, 1998
================================================================================
Table of Contents
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms...........................................1
SECTION 1.02. Other Definitional Provisions...............................2
SECTION 1.03. Usage Of Terms..............................................2
SECTION 1.04. Section References..........................................2
SECTION 1.05. Accounting Terms............................................2
ARTICLE II
ORGANIZATION
SECTION 2.01. Name........................................................3
SECTION 2.02. Office......................................................3
SECTION 2.03. Purposes And Powers.........................................3
SECTION 2.04. Appointment Of Owner Trustee................................4
SECTION 2.05. Capital Contribution Of Owner Trust Estate..................4
SECTION 2.06. Declaration Of Trust........................................4
SECTION 2.07. Liability Of Trust Depositor................................4
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 III
[RESERVED]
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice To Trust Depositor With Respect
To Certain Matters........................................6
SECTION 4.02. Actions With Respect To Certain Matters.....................7
SECTION 4.03. Action By the Trust Depositor With Respect
To Bankruptcy.............................................7
SECTION 4.04. Restrictions On the Trust Depositor's and
the Administrator's Power.................................8
ARTICLE V
CERTAIN DUTIES
SECTION 5.01. [Reserved]..................................................8
SECTION 5.02. [Reserved]..................................................8
SECTION 5.03. [Reserved]..................................................8
SECTION 5.04. [Reserved]..................................................8
SECTION 5.05. The Internal Revenue Service And Others.....................8
SECTION 5.06. Signature On Returns; Tax Matters Partner...................8
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. General Authority...........................................9
SECTION 6.02. General Duties..............................................9
SECTION 6.03. Action Upon Instruction.....................................9
SECTION 6.04. No Duties Except As Specified In
This Agreement Or In Instructions........................11
SECTION 6.05. No Action Except Under Specified
Documents Or Instructions................................11
SECTION 6.06. Restrictions...............................................11
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. Acceptance Of Trusts And Duties............................11
SECTION 7.02. Furnishing Of Documents....................................12
SECTION 7.03. Representations And Warranties.............................13
SECTION 7.04. Reliance; Advice Of Counsel................................13
SECTION 7.05. Not Acting In Individual Capacity..........................14
SECTION 7.06. Owner Trustee Not Liable For Notes Or Contracts............14
SECTION 7.07. Owner Trustee May Own Notes................................14
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. Owner Trustee's Fees And Expenses..........................14
SECTION 8.02. Indemnification............................................15
SECTION 8.03. Payments To The Owner Trustee..............................15
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. Termination Of Trust Agreement.............................15
SECTION 9.02. Dissolution Upon Bankruptcy Of Trust Depositor
Or Withdrawal Or Removal Of Trust Depositor..............16
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. Eligibility Requirements For Owner Trustee.................16
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
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Supplements And Amendments.................................19
SECTION 11.02. No Legal Title To Trust Estate In the Trust Depositor......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 11.08. [Reserved].................................................22
SECTION 11.09. No Petition................................................22
SECTION 11.10. [Reserved].................................................22
SECTION 11.11. Headings...................................................22
SECTION 11.12. Governing Law..............................................22
SECTION 11.13. [Reserved].................................................22
SECTION 11.14. [Reserved].................................................22
EXHIBITS
Exhibit A - Form of Certificate of Trust.............................A-1
This Trust Agreement dated as of August 1, 1998 between Mitsui Vendor
Leasing Funding Corp. II, a Delaware corporation, as Trust Depositor (the "Trust
Depositor"), and ________________________________, a _________________________,
as owner trustee (the "Owner Trustee").
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms. Except as otherwise provided in this
------------------
Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Agreement: This Trust Agreement, as the same may be amended and
---------
supplemented from time to time pursuant to the terms hereof and the other Basic
Documents.
Business Trust Statute: 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 of Trust: 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.
Expenses: As defined in Section 8.02.
--------
Indemnified Parties: As defined in Section 8.02.
-------------------
Owner Trustee: ____________________, a ____________________, not in
-------------
its individual capacity but solely as owner trustee under this Agreement, and
any successor Owner Trustee hereunder.
Owner Trustee Corporate Trust Office: The office of the Owner Trustee
------------------------------------
at which its corporate trust business shall be administered, which initially
shall be _________________________________, or such other office at such other
address as the Owner Trustee may designate from time to time by notice to the
Owner, the Seller, the Servicer, the Indenture Trustee and the Trust Depositor.
Sale and Servicing Agreement: The Sale and Servicing Agreement, dated
----------------------------
as of the date hereof, among the Trust, the Trust Depositor, the Seller, the
Servicer, the Indenture Trustee and the Back-up Servicer.
Secretary of State: The Secretary of State of the State of Delaware.
------------------
Treasury Regulations: The 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: The trust established by this Agreement.
-----
Trust Depositor: Mitsui Vendor Leasing Funding Corp. II in its
----------------
capacity as Trust Depositor hereunder, and its successors.
Trust Estate: All right, title and interest of the Trust in and to the
------------
Trust Assets.
SECTION 1.02. Other Definitional Provisions. Capitalized terms used
-------------------------------
that are not otherwise defined herein shall have the meanings ascribed thereto
in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
SECTION 1.03. Usage Of Terms. With respect to all terms in this Agreement,
--------------
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation".
SECTION 1.04. Section References. All section references, unless otherwise
------------------
indicated, shall be to Sections in this Agreement.
SECTION 1.05. Accounting Terms. All accounting terms used but not
-----------------
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
ARTICLE II
ORGANIZATION
SECTION 2.01. Name. The Trust created hereby shall be known as "Mitsui
----
Vendor Leasing Asset Trust 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 or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Trust Depositor, the Indenture Trustee and the Administrator.
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 use in accordance with
this Agreement and the other Basic Documents, and in furtherance of such purpose
to engage in the following ministerial activities:
(i) to issue the Notes pursuant to the Indenture and to sell the
Notes;
(ii) with the proceeds of the sale of the Notes, to purchase the
Contracts and other Trust Assets, and to pay the organizational, start-up
and transactional expenses of the Trust and to pay the balance to the Trust
Depositor pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and distribute
pursuant to the Sale and Servicing Agreement any portion of the Trust
Estate released from the Lien of, and remitted to the Trust pursuant to,
the Indenture;
(iv) to enter into and perform its obligations under the Basic
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 Basic Documents, to engage in such
other activities as may be required in connection with conservation of the
Trust Estate and the making of distributions in accordance with the Sale
and Servicing Agreement and other Basic Documents.
The Trust shall not engage in any activities other than in connection
with the foregoing. Nothing contained herein shall be deemed to authorize the
Owner Trustee to engage in any business operations or any activities other than
those set forth in this Section 2.03. Specifically, the Owner Trustee shall have
no authority to engage in any business operations, or acquire any assets other
than those specifically included in the Trust Estate under Section 1.01, or
otherwise vary the assets held by the Trust. Similarly, the Owner Trustee shall
have no discretionary duties other than performing those ministerial acts set
forth above necessary to accomplish the purpose of this Trust as set forth in
this Section 2.03.
SECTION 2.04. Appointment Of Owner Trustee. The Trust Depositor hereby
-------------------------------
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee hereby accepts such appointment.
SECTION 2.05. Capital Contribution Of Owner Trust Estate. The Trust
-----------------------------------------------
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Trust Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Trust Estate
(prior to giving effect to the conveyances described in the Sale and Servicing
Agreement). 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, subject to the obligations of the
Trust under the Basic Documents. It is the intention of the parties hereto that
the Trust constitute a business trust under the Business Trust Statute and that
this Agreement constitute the governing instrument of such business trust. It is
the intention of the parties hereto that the Trust be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulation Section
301.7701-3(b)(1)(ii) as in effect for periods after January 1, 1997. The parties
agree not to take any action inconsistent with such intended federal income tax
treatment. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute for
the sole purpose and to the extent necessary to accomplish the purposes of this
Trust as set forth in Section 2.03.
SECTION 2.07. Liability Of Trust Depositor.
----------------------------
(a) Pursuant to Section 3803(a) of the Business Trust Statute, the
Trust Depositor shall be liable directly to and will indemnify any injured party
or any other creditor of the Trust for all losses, claims, damages, liabilities
and expenses of the Trust to the extent that the Trust Depositor would be liable
if the Trust were a partnership under the Delaware Revised Uniform Limited
Partnership Act in which Trust Depositor were a general partner (including any
personal property replacement tax that is imposed on the Trust as a
partnership); provided that the Trust Depositor shall not be liable for any
losses incurred by 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.
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. The Trust shall not have any
employees in any state other than Delaware; provided that nothing herein shall
restrict or prohibit the Owner Trustee from having employees within or without
the State of Delaware. 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.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any material breach of any of the material terms and provisions
of, nor constitute (with or without notice or lapse of time) a material
default under, the articles of incorporation or bylaws of the Trust
Depositor, or any indenture, agreement or other instrument to which the
Trust Depositor is a party or by which it is bound; nor result in any
branch of any of the terms and provisions of or constitute (with or without
notice or lapse of time, or both) a default under any indenture, agreement,
mortgage, deed of trust or other instrument to which the Trust Depositor is
a party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other
than the Basic Documents, or violate any law, 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 any of its
properties, except in each case to the extent it would not have a material
adverse effect on the validity or enforceability of, or its performance
under, the Basic Documents.
(v) The Trust Depositor holds all necessary licenses, certificates and
permits from all Government Authorities necessary for conducting its
business as it is presently conducted, and 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 delivery, performance,
validity or enforceability of the Basic Documents, to which it is a party,
except for such consents, licenses, approvals or authorizations, or
registrations or declarations, as shall have been obtained or filed, as the
case may be, prior to the Closing Date.
(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 or any of the other Basic Documents, (B)
seeking to prevent the issuance of the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic
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 or
any of the other Basic Documents 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.
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 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, 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 as the sole
beneficiary of the Trust.
ARTICLE III
[RESERVED]
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice To Trust Depositor 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 any of the following
actions unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Trust Depositor in writing of the proposed
action, the Indenture Trustee shall have consented to such action in the event
any Notes are outstanding and the Trust Depositor shall not have notified the
Owner Trustee in writing prior to the 30th day after such notice is given that
the Trust Depositor has withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Contracts) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Contracts);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) [Reserved];
(e) [Reserved]; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee, or the consent to the assignment
by the Note Registrar, Paying Agent or Indenture Trustee of its obligations
under the Indenture.
SECTION 4.02. Actions 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 Trust Depositor, 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 8.2 of the Sale and Servicing
Agreement, (d) except as expressly provided in the Basic 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 Trust
Depositor.
SECTION 4.03. Action By the Trust Depositor 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 Trust
Depositor and the delivery to the Owner Trustee by the Trust Depositor of a
certificate certifying that the Trust Depositor reasonably believes that the
Trust is insolvent.
SECTION 4.04. Restrictions On the Trust Depositor's and the
------------------------------------------------------------
Administrator's Power. Neither the Administrator nor the Trust Depositor 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 Basic Documents or would be contrary
to the purpose of this Trust as set forth in Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
ARTICLE V
CERTAIN DUTIES
SECTION 5.01. [Reserved]
SECTION 5.02. [Reserved]
SECTION 5.03. [Reserved]
SECTION 5.04. [Reserved]
SECTION 5.05. The Internal Revenue Service And Others. The Owner Trustee
----------------------------------------
shall (a) maintain (or cause to be maintained) the books of the Trust on a
calendar year basis and the accrual method of accounting, (b) deliver to the
Trust Depositor, as may be required by the Code and applicable Treasury
Regulations, such information as may be required to enable the Trust Depositor
to prepare its federal and state income tax returns, (c) file such tax returns
relating to the Trust and make such elections as from time to time may be
required or appropriate under any applicable state or federal statute or any
rule or regulation thereunder so as to maintain the federal income tax treatment
for the Trust as set forth in Section 2.11, (d) cause such tax returns to be
signed in the manner required by law and (e) collect or cause to be collected
any withholding tax. 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
Trust Depositor shall be designated the "Tax Matters Partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. General Authority. Subject to the provisions and
-------------------
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party 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 Basic Documents. The Owner Trustee is further authorized from time to time
to take such action as the Administrator recommends with respect to the Basic
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 Basic Documents
to which the Trust is a party and to administer the Trust, subject to the Basic
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 Mitsui Vendor Leasing (U.S.A.)
Inc. in connection with any claims paying procedure as part of an insolvency or
receivership proceeding involving Mitsui Vendor Leasing U.S.A. (Inc.).
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be 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 IV hereof, in accordance with the terms of the
Basic Documents, the Trust Depositor 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 Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is contrary
to the terms hereof or of any other Basic Document or is otherwise contrary to
law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any other Basic Document, the Owner Trustee shall promptly give notice (in such
form as shall be appropriate under the circumstances) to the Trust Depositor
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 Trust Depositor 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 Basic Documents, as it shall deem to be in the best interests of the
Noteholders, 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 Basic Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Owner
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the other Basic
Documents, as it shall deem to be in the best interests of the Noteholders, 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 Owner 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 Basic Document against the Owner Trustee.
The Owner Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to prepare or file any Commission filing for the Trust or to record
this Agreement or any other Basic Document. The Owner Trustee nevertheless
agrees that it will, at its own cost and expense, promptly take all action as
may be necessary to discharge any liens on any part of the Trust Estate that
result from actions by, or claims against, the Owner Trustee that are not
related to the ownership or the administration of the Trust Estate.
SECTION 6.05. No Action Except Under Specified Documents Or Instructions.
-----------------------------------------------------------
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the other Basic 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 VII
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 Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any other Basic Document under any circumstances, except (i) for its own
willful misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.03 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee which did not result from
gross negligence on the part of such responsible officer;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator or the Owner;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Basic Document if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution hereof by
the 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 Basic Documents, 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
Basic 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 Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the Trust
under this Agreement or the other Basic Documents that are required to be
performed by the Administrator under the Administration Agreement, the Indenture
Trustee under the Indenture or the Servicer or the Trust Depositor under the
Sale and Servicing Agreement and/or the Transfer and Sale 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 Basic Document, at the request, order or direction of the
Trust Depositor, unless the Trust Depositor 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 Basic Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act.
SECTION 7.02. Furnishing Of Documents. The Owner Trustee shall furnish to
-----------------------
the Trust Depositor 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 Basic Documents.
SECTION 7.03. Representations And Warranties. The Owner Trustee hereby
--------------------------------
represents and warrants to the Trust Depositor that:
(a) It is a _______________ duly organized and validly existing in
good standing under the laws of the State of ___________. 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 Basic 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
Basic 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 VII, in accepting the trusts hereby created, ______________________
acts solely as Owner Trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any other Basic Document shall
look only to the Trust Estate for payment or satisfaction thereof.
SECTION 7.06. Owner Trustee Not Liable For Notes Or Contracts. The
------------------------------------------------------
recitals contained herein 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, or any other Basic Document or the Notes, or of
any Contract or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Contract, or the perfection and priority of any security
interest created by any Contract in any Equipment or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
Estate or its ability to generate the payments to be distributed to the
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
Basic Document or in any related document or the accuracy of any such warranty
or representation; or any action of the Administrator, the Indenture Trustee or
the Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.07. Owner Trustee May Own Notes. The Owner Trustee in its
-------------------------------
individual or any other capacity may become the owner or pledgee of Notes and
may deal with the Trust Depositor, the Administrator, the Indenture Trustee and
the Servicer in banking transactions with the same rights as it would have if it
were not Owner Trustee.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. Owner Trustee's Fees And Expenses. The Owner Trustee shall
----------------------------------
receive as compensation for its services hereunder such fees as have been
separately agreed upon and which shall be paid consistent with Section 9.15 of
the Sale and Servicing Agreement. Additionally, the Owner Trustee shall be
entitled to be reimbursed by the Trust or the Trust Depositor 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 Basic Documents, the Trust
Estate, the administration of the Trust Estate or the action or inaction of the
Owner Trustee hereunder; provided that the Trust Depositor shall not be liable
for or required to indemnify an Indemnified Party from and against Expenses
arising or resulting from any of the matters described in the third sentence of
Section 7.01; provided further that the liability of the Trust Depositor under
this Section shall be limited to the assets of the Trust Depositor. The
indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In the
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Trust Depositor, which approval shall not be
unreasonably withheld.
SECTION 8.03. Payments To The Owner Trustee. Any amounts paid to the Owner
-----------------------------
Trustee pursuant to this Article shall be deemed not to be a part of the Trust
Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. Termination Of Trust Agreement.
------------------------------
(a) This Agreement (other than Article Eight) and the Trust shall
terminate and be of no further force or effect upon the earlier of (i) final
distribution by the Owner Trustee of all moneys or other property or proceeds of
the Trust Estate in accordance with the terms of the Indenture, the Sale and
Servicing Agreement and Article V hereof, (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 the Trust Depositor as described in Section
9.02, shall not (i) operate to terminate this Agreement or the Trust, (ii)
entitle the Trust Depositor'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 shall be given by the Owner
Trustee by letter to the Trust Depositor mailed within five Business Days of
receipt of notice of such termination from the Servicer given pursuant to
Section 5.1(b) of the Sale and Servicing Agreement, stating the date of such
termination.
(d) [Reserved]
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
SECTION 9.02. Dissolution Upon Bankruptcy Of Trust Depositor Or Withdrawal
------------------------------------------------------------
Or Removal Of Trust Depositor. In the event that an Insolvency Event shall occur
- -----------------------------
with respect to the Trust Depositor or the Trust Depositor shall withdraw,
liquidate or be removed from the Trust, this Agreement shall be terminated in
accordance with Section 9.01 90 days after the date of such event, unless within
such 90 day period, the Owner Trustee shall have received written instructions
from the Required Holders not to dissolve or terminate the Trust. Promptly after
the occurrence of any Insolvency Event with respect to the Trust Depositor, the
Trust Depositor shall give the Indenture Trustee and Owner Trustee written
notice thereof, and the Indenture Trustee shall give prompt written notice to
the Noteholders thereof. Upon a termination pursuant to this Section, the Owner
Trustee shall direct the Indenture Trustee promptly to sell the Trust Assets in
a commercially reasonable manner and on commercially reasonable terms. The
proceeds of such a sale of the Trust Assets shall be treated as Collections
under the Sale and Servicing Agreement.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND
ADDITIONAL OWNER TRUSTEES
SECTION 10.01. Eligibility Requirements For Owner Trustee. The Owner
-----------------------------------------------
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; and (a) having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's; or
(b) which the Rating Agencies have otherwise indicated in writing is an entity
acceptable to act as Owner Trustee hereunder. If such corporation shall publish
reports of condition at least annually pursuant to law or to the requirements of
the aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Owner Trustee
shall resign immediately in the manner and with the effect specified in Section
10.02.
SECTION 10.02. Resignation Or Removal Of Owner Trustee. The Owner Trustee
---------------------------------------
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Administrator. Upon receiving such notice
of resignation, the Administrator shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee. If at any time
the Owner Trustee shall cease to be eligible in accordance with the provisions
of Section 10.01 and shall fail to resign after written request therefor by the
Administrator, or if at any time the Owner Trustee shall be legally unable to
act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner
Trustee or of its property shall be appointed or any public officer shall take
charge or control of the Owner Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Administrator,
may remove the Owner Trustee. If the Administrator shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the successor Owner Trustee,
and shall pay all fees owed to the outgoing Owner Trustee. Any resignation or
removal of the Owner Trustee and appointment of a successor Owner Trustee
pursuant to any of the provisions of this Section shall not become effective
until acceptance of appointment by the successor Owner Trustee pursuant to
Section 10.03 and payment of all fees and expenses owed to the outgoing Owner
Trustee. The Administrator shall provide notice of such resignation or removal
of the Owner Trustee to each Rating Agency.
SECTION 10.03. Successor Owner Trustee. Any successor Owner Trustee
---------------------------
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective, and such successor
Owner Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
under this Agreement, with like effect as if originally named as Owner Trustee.
The predecessor Owner Trustee shall upon payment of its fees and expenses
deliver to the successor Owner Trustee all documents and statements and monies
held by it under this Agreement; and the Administrator and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations. No
successor Owner Trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor Owner Trustee shall be
eligible pursuant to Section 10.01. Upon acceptance of appointment by a
successor Owner Trustee pursuant to this Section, the Administrator shall mail
notice thereof to the Trust Depositor, the Indenture Trustee, the Noteholders
and each Rating Agency. If the Administrator shall fail to mail such notice
within ten days after acceptance of such appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Administrator.
SECTION 10.04. Merger Or Consolidation Of Owner Trustee. Any corporation
-----------------------------------------
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding; provided
that such corporation shall be eligible pursuant to Section 10.01; 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.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Supplements And Amendments.
--------------------------
(a) The Agreement may be amended by the Trust Depositor and the Owner
Trustee, without the consent of any of the Noteholders (or the Indenture Trustee
on behalf of any Noteholder), 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 that any such action shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder.
(b) This Agreement may also be amended from time to time by the Trust
Depositor, and the Owner Trustee, with the consent of the Required Holders, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Noteholders; provided 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 (ii) reduce the aforesaid
percentage of the outstanding principal amount of the Notes required to consent
to any such amendment, without the consent of the Holders of all outstanding
Notes.
(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) It shall not be necessary for the consent of the Noteholders or
the Indenture Trustee pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate
of Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(f) Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the other Basic Documents, and
that all conditions precedent to the execution and delivery of such amendment as
set forth in Basic 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 the Trust Depositor.
-------------------------------
The Trust Depositor shall not have legal title to any part of the Trust Estate.
No transfer, by operation of law or otherwise, of any right, title or interest
of the Trust Depositor of any beneficial 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 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 at the address specified in
the Sale and Servicing Agreement for such recipient.
Each party hereto may, by notice given in accordance herewith to each
of the other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 11.05. 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.
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, all as herein provided.
SECTION 11.08. [Reserved]
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
Notes, this Agreement or any of the other Basic Documents.
(b) The Owner Trustee, by entering into this Agreement, 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 Notes, this Agreement or any of the other Basic
Documents.
SECTION 11.10. [Reserved]
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. [Reserved]
SECTION 11.14. [Reserved]
--------
[remainder of this page intentionally left blank]
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.
MITSUI VENDOR LEASING FUNDING CORP II.
By: ________________________________________
Name: __________________________________
Title:__________________________________
_____________________________________________
not in its individual capacity but solely as
Owner Trustee
By: ________________________________________
Name: __________________________________
Title:__________________________________
EXHIBIT A
CERTIFICATE OF TRUST OF MITSUI VENDOR
LEASING ASSET TRUST 1998-1
This Certificate of Trust of Mitsui Vendor Leasing Asset Trust 1998-1
(the "TRUST"), dated August __, 1998, is being duly executed and filed by
________________, a ________________, 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 Mitsui Vendor
----
Leasing Asset Trust 1998-1.
2. Delaware Trustee. The name and business address of the Owner
------------------
Trustee of the Trust in the State of Delaware is ______________________________
_________________ (Attn: ____________________________).
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.
_____________________________________________
not in its individual capacity but solely as
Owner Trustee
By: ________________________________________
Printed Name: __________________________
Title:
[Exhibit 4.2]
================================================================================
[FORM OF SALE AND SERVICING AGREEMENT]
among
MITSUI VENDOR LEASING ASSET TRUST 1998-1
Trust
MITSUI VENDOR LEASING FUNDING CORP. II
Trust Depositor
MITSUI VENDOR LEASING (U.S.A.) INC.
Seller and Servicer
_________________
Indenture Trustee and Back-up Servicer
___________________________
Dated as of August 1, 1998
___________________________
================================================================================
Table of Contents
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions..................................................1
SECTION 1.2. Usage of Terms..............................................18
SECTION 1.3. Calculations................................................19
SECTION 1.4. Section References..........................................19
SECTION 1.5. No Recourse.................................................19
ARTICLE II
CONVEYANCE OF CONTRACTS
SECTION 2.1. Conveyance of Contracts and other Trust Assets..............20
SECTION 2.2. Custody of Contract Files...................................21
SECTION 2.3. Further Assurances..........................................22
SECTION 2.4. Representations and Warranties of Trust Depositor...........22
SECTION 2.5. Non Petition Covenant.......................................25
SECTION 2.6. Repurchase/Substitution of Contracts Upon Breach
of Representations and Warranties........................25
ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.1. Duties of the Servicer......................................27
SECTION 3.2. Collection of Contract Payments; Modifications of
Contracts; Certain Prepayments..............................28
SECTION 3.3. Realization Upon Contracts..................................30
SECTION 3.4. Insurance, Maintenance and Taxes............................31
SECTION 3.5. Maintenance of Security Interests in Equipment..............34
SECTION 3.6. Covenants, Representations, and Warranties of
Servicer....................................................34
SECTION 3.7. Sub-Servicers...............................................36
SECTION 3.8. Total Servicing Fee; Payment of Expenses by
Servicer...................................................36
SECTION 3.9. Servicer's Certificate......................................36
SECTION 3.10. Annual Statement as to Compliance; Notice of
Servicer Termination Event.................................37
SECTION 3.11. Annual Independent Accountant's Report.37
SECTION 3.12. Access to Certain Documentation and Information
Regarding Contracts.........................................38
SECTION 3.13. Certain Duties of the Servicer..............................38
SECTION 3.14. Duties of the Servicer under the Indenture..................38
ARTICLE IV
COLLECTIONS AND DEPOSITS; TRUST ACOCUNTS;
ALLOCATIONS AND DISTRIBUTIONS
SECTION 4.1. Initial Deposit.............................................40
SECTION 4.2. Collections.................................................40
SECTION 4.3. Application of Collections..................................40
SECTION 4.4. Net Deposits................................................41
SECTION 4.5. Servicer Advances...........................................41
SECTION 4.6. Collection Account..........................................41
SECTION 4.7. [Reserved]..................................................42
SECTION 4.8. Trust Account Procedures....................................43
SECTION 4.9. Noteholder Distributions....................................43
SECTION 4.10. Allocations And Distributions...............................43
ARTICLE V
TERMINATION
SECTION 5.1. Optional Purchase of All Contracts;
Liquidation of Trust Assets..............................49
ARTICLE VI
THE TRUST DEPOSITOR
SECTION 6.1. Liability of Trust Depositor................................50
SECTION 6.2. Merger or Consolidation of, or Assumption of
the Obligations of, Trust Depositor;
Amendment of Certificate of Incorporation................50
SECTION 6.3. Limitation on Liability of Trust Depositor and
Others...................................................51
SECTION 6.4. Trust Depositor May Own Notes...............................51
SECTION 6.5. Covenants of the Trust Depositor............................51
ARTICLE VII
THE SERVICER
SECTION 7.1. Liability of Servicer; Indemnities..........................52
SECTION 7.2. Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer.........................52
SECTION 7.3. Limitation on Liability of Servicer and Others..............53
SECTION 7.4. Servicer Not to Resign......................................53
SECTION 7.5. Corporate Existence.........................................54
ARTICLE VIII
SERVICER TERMINATION EVENTS
SECTION 8.1. Servicer Termination Event..................................55
SECTION 8.2. Consequences of a Servicer Termination Event................56
SECTION 8.3. Back-up Servicer to Act; Appointment of
Successor................................................57
SECTION 8.4. Notification to Noteholders.................................57
SECTION 8.5. Waiver of Past Defaults.....................................57
ARTICLE IX
SUBSTITUTION AND ADDITION OF CONTRACTS
SECTION 9.1. Permitted Substitutions for Defaulted
Contracts; Conditions for All
Substitutions and Additions..............................59
SECTION 9.2. Procedures..................................................60
SECTION 9.3. Objection and Repurchase....................................61
SECTION 9.4. The Seller's and the Servicer's Subsequent
Obligations..............................................62
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 9.5. Amendment...................................................62
SECTION 9.6. Protection of Title to Trust Assets.........................63
SECTION 9.7. Governing Law...............................................66
SECTION 9.8. Severability of Provisions..................................66
SECTION 9.9. Assignment..................................................66
SECTION 9.10. Third-Party Beneficiaries...................................66
SECTION 9.11. Counterparts................................................66
SECTION 9.12. Intention of Parties........................................66
SECTION 9.13. Notices.....................................................66
SECTION 9.14. Income Tax Characterization.................................67
EXHIBITS
Exhibit A -- Schedule of Contracts and Equipment
Exhibit B -- Form of Servicer's Certificate
This Sale and Servicing Agreement dated as of August 1, 1998 among
Mitsui Vendor Leasing Asset Trust 1998-1, a Delaware business trust (the
"Trust"), Mitsui Vendor Leasing Funding Corp. II, a Delaware corporation, as
trust depositor (the "Trust Depositor"), Mitsui Vendor Leasing (U.S.A.) Inc., a
Delaware corporation , as seller (in such capacity, the "Seller") and servicer
(in such capacity, the "Servicer"), , a organized and existing under the laws of
the , as indenture trustee (the "Indenture Trustee") and back-up servicer (the
"Back-up Servicer").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. All terms defined in the Indenture, and the
-----------
Transfer and Sale Agreement, the Trust Agreement and the Administration
Agreement (in each case as defined below) shall have the same meaning in this
Agreement and are hereby incorporated by reference. Whenever capitalized and
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accountant's Report: The report of a firm of nationally recognized
--------------------
independent accountants described in Section 3.11.
Accrual Period: is the period from and including the most recent
---------------
Payment Date to but excluding the following Payment 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 Payment Date following the
Closing Date.
ADCB: 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.
Additional Contract: A Contract with respect to which a related
--------------------
Addition Event has occurred and is identified in the related Addition Notice and
transferred to the Trust pursuant to Section 9.02(b).
Addition Event: With respect to any transfer of an Additional Contract
--------------
to the Trust under Section 9.02, a Prepayment of such Contract in full by the
related Obligor.
Addition Notice: With respect to any transfer of Additional Contract
---------------
to the Trust pursuant to Section 9.02(b), a notice, which shall be given at
least [___] days prior to the related transfer to the Trust, identifying the
Additional Contract to be transferred , the Discounted Contract Balance of such
Additional Contract and the Contract as to which a Prepayment in full is made
relating to such Additional Contract, with such notice to be signed both by the
Trust Depositor, and the Seller.
Adjusted Contract: As defined in Section 3.2(f).
-----------------
Administrative Fee: With respect to any Collection Period, all
-------------------
administrative fees, expenses and charges collected in respect of the Contracts
during such Collection Period, including late fees, late payment interest,
delinquency fees, repossession fees, insufficient funds charges, inspection
charges, UCC fees, documentation fees and any Extension Fees.
Administration Agreement: The Administration Agreement, dated as of
-------------------------
August 1, 1998, among the Trust, the Trust Depositor, the Indenture Trustee and
the Administrator.
Administrator: Mitsui Vendor Leasing (U.S.A.) Inc., a Delaware
-------------
corporation.
Affiliate: With respect to any Person, any other Person directly or
---------
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Aggregate Principal Amount: 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.
Aggregate Principal Paydown Amount: For any Payment Date, an amount
------------------------------------
(not less than zero) equal to (a) the ADCB of all of the Contracts as of the
beginning of business on the first day of the immediately preceding Collection
Period, minus (b) the ADCB of all of the Contracts as of the close of business
on the last day of the immediately preceding Collection Period. Such decline in
the ADCB of all of the Contracts for such immediately preceding Collection
Period may be through payment, prepayment, default and write-off, determination
of ineligibility, substitution or addition of the Contracts or as may otherwise
occur.
Agreement or this Agreement: This Sale and Servicing agreement, all
---------------------------
amendments and supplements hereto and all exhibits and schedules to any of the
foregoing.
Applicable Percentage: (i) for the Class A Notes 100% until the Class
---------------------
A-1 Notes are paid in full, and thereafter ______%, (ii) for the Class B Notes
0% until the Class A-1 Notes are paid in full, and thereafter ______%,
(iii) for the Class C Notes 0% until the Class A-1 Notes are paid in full, and
thereafter (iv) [_____]%.
Available Amounts: As of any Payment Date, the sum of (i) all amounts
-----------------
on deposit in the Collection Account as of the preceding Determination Date on
account of Pledged Revenues; provided that, with respect to the Pledged Revenues
identified in clauses (i) and [___], only such Pledge Revenues received prior to
the end of the Collection Period preceding such Payment Date shall be part of
the Available Amount for such Payment Date.
Back-up Servicer: As defined in the preamble.
----------------
Basic Documents: This Agreement, the Transfer and Sale Agreement, the
---------------
Indenture, the Notes, the Trust Agreement and the Administration Agreement.
Book Value: With respect to any Equipment, the value of such Equipment
----------
as shown on the accounting books and records of the Seller as of the Cut-off
Date. The Book Value for each item of Equipment shall be set forth on Exhibit A
hereto (as such Exhibit A may be revised from time to time).
Business Day: Any day of the year other than a Saturday, a Sunday, or
------------
any other day on which banking institutions in San Diego, California or New
York, New York are authorized or obligated by law or regulation to be closed or
a day that Mitsui is not open for business.
Casualty Loss: With respect to any item of Equipment, the loss, theft,
-------------
damage beyond repair or governmental condemnation or seizure of such item of
Equipment.
Class: Any of the group of Notes identified herein as, as applicable,
-----
the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class B
Notes, or the Class C Notes.
Class A Notes: The Class A-1 Notes, the Class A-2 Notes and the Class
-------------
A-3 Notes.
Class A Percentage: is the ratio (expressed as a percentage) that the
------------------
sum of the Initial Class A-1 Principal Amount, Initial Class A-2 Principal
Amount and Initial Class A-3 Principal Amount bears to the sum of the Initial
Class A-1 Principal Amount, Initial Class A-2 Principal Amount, Initial Class
A-3 Principal Amount, Initial Class B Principal Amount and the Initial Class C
Principal Amount.
Class A Principal Payment Amount: With respect to any Payment Date and
--------------------------------
the Class A Notes, the lesser of (a) the aggregate Principal Amount of the Class
A Notes and (b) (i) the Applicable Percentage for the Class A Notes for such
Payment Date, multiplied by (ii) the Aggregate Principal Paydown Amount for such
Payment Date.
Class A-1 Interest Rate: [ ] per annum (calculated on the basis of
------------------------
the actual number of days in each Accrual Period and year of 360 days).
Class A-1 Maturity Date: The ______________________ Payment Date.
-----------------------
Class A-1 Noteholder: The Person in whose name a Class A-1 Note is
---------------------
registered in the Note Register.
Class A-1 Notes: The $____________ aggregate initial principal amount
--------------------
of Class A-1 Receivable-Backed Notes, Series 1998-1 issued pursuant to the
Indenture.
Class A-2 Interest Rate: [ ]% per annum (calculated on the basis of a
-----------------------
year of 360 days and twelve 30-day months).
Class A-2 Maturity Date: The ______________ Payment Date.
-----------------------
Class A-2 Noteholder: The Person in whose name a Class A-2 Note is
---------------------
registered in the Note Register.
Class A-2 Notes: The $____________ aggregate initial principal amount
---------------
of Class A-2 Receivable-Backed Notes, Series 1998-1 issued pursuant to the
Indenture.
Class A-3 Interest Rate: [ ]% per annum (calculated on the basis of a
-----------------------
year of 360 days and twelve 30-day months).
Class A-3 Maturity Date: The _________________ Payment Date.
-----------------------
Class A-3 Noteholder: The Person in whose name a Class A-3 Note is
---------------------
registered in the Note Register.
Class A-3 Notes: The $_______________ aggregate initial principal
---------------
amount of Class A-3 Receivable-Backed Notes, Series 1998-1 issued pursuant to
the Indenture.
Class B Interest Rate: [ ]% per annum (calculated on the basis of a
----------------------
year of 360 days and twelve 30-day months).
Class B Maturity Date: The ____________ Payment Date.
---------------------
Class B Noteholder: The Person in whose name a Class B Note is
--------------------
registered in the Note Register.
Class B Notes: The $___________ aggregate initial principal amount of
-------------
Class B Receivable-Backed Notes, Series 1998-1 issued pursuant to the Indenture.
Class B Percentage: The ratio (expressed as a percentage) that the
------------------
initial Class B Principal Amount bears to (a) until the Principal Amount of all
Class A Notes has been paid in full, the sum of the Initial Class A-1 Principal
Amount, Initial Class A-2 Principal Amount, Initial Class A-3 Principal Amount,
Initial Class B Principal Amount and Initial Class C Principal Amount; and (b)
thereafter, the sum of the Initial Class B Principal Amount and Initial Class C
Principal Amount.
Class B Principal Payment Amount: With respect to any Payment Date and
--------------------------------
the Class B Notes the lesser of (a) the Principal Amount of the Class B Notes
and (b)(i) the Applicable Percentage for the Class B Notes for such Payment
Date, multiplied by (ii) the Aggregate Principal Paydown Amount for such Payment
Date.
Class C Interest Rate: [ ]% per annum (calculated on the basis of a
----------------------
year of 360 days and twelve 30-day months).
Class C Maturity Date: The _______________ Payment Date.
---------------------
Class C Noteholder: The Person in whose name a Class C Note is
--------------------
registered in the Note Register.
Class C Notes: The $_____________ aggregate initial principal amount
-------------
of Class C Receivable-Backed Notes, Series 1998-1 issued pursuant to the
Indenture.
Class C Percentage: The ratio (expressed as a percentage) that the
------------------
Initial Class C Principal Amount bears to (a) until the Principal Amount of all
Class A Notes has been paid in full, the sum of the Initial Class A-1 Principal
Amount, Initial Class A-2 Principal Amount, Initial Class A-3 Principal Amount,
Initial Class B Principal Amount and Initial Class C Principal Amount; (b) after
the Principal Amount of all Class A Notes has been paid in full and until the
Principal Amount of the Class B Notes has been paid in full, the sum of the
Initial Class B Principal Amount and Initial Class C Principal Amount, and (c)
thereafter, the Initial Class C Principal Amount.
Class C Principal Payment Amount: With respect to any Payment Date and
--------------------------------
the Class C Notes the lesser of (a) the Principal Amount of the Class C Notes
and (b)(i) the Applicable Percentage for the Class C Notes for such Payment
Date, multiplied by (ii) the Aggregate Principal Paydown Amount for such Payment
Date.
Code: The Internal Revenue Code of 1986, as amended.
----
Collection Account: The account designated as such in, and established
------------------
and maintained pursuant to, Section [8.02] of the Indenture.
Collection Period: Each calendar month, commencing with August 1998.
-----------------
Collection Records: All manually prepared or computer generated
-------------------
records relating to collection efforts or payment histories with respect to the
Contracts.
Collections: All payments received on or with respect to the Contracts
-----------
or the related Equipment, including, without limitation, Scheduled Payments,
Prepayments and Recoveries, all as related to amounts attributable to the
Contracts or the related Equipment (including any such amounts derived from
Vendor recourse provisions) in the Vendor Program Agreements, but excluding any
Excluded Amounts.
Contract: Any lease, conditional sale contract, or security agreement
--------
with respect to any Equipment under which the Seller or a third party acts as
seller, secured party or lessor, to an Obligor and listed on the Schedule of
Contracts.
Contract Files: 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 any
custodian holds, evidencing ownership of such Equipment (if applicable) and all
other documents originally delivered to the Seller or held by any custodian with
respect to any such Contract.
Credit and Collection Policy: The written credit and collection
------------------------------
policies of the Seller and Servicer in effect on the date hereof, as amended
from time to time.
Cut-off Date: With respect to (i) each Contract other than a
-------------
Substitute Contract or Additional Contract, the opening of business on August 1,
1998 and (ii) with respect any Substitute Contract or Additional Contract, the
close of business on the last day of the Collection Period preceding the related
Transfer Date.
Defaulted Contract: A Contract with respect to which there has
-------------------
occurred one or more of the following: (i) all or some portion of any Scheduled
Payment under the Contract is more than 120 days delinquent (or, with respect to
a Contract for which there exists available payment recourse to a Vendor to
satisfy the amount in default, and which recourse was not yet available
(pursuant to the contractual terms thereof) or had not yet been paid by the
Vendor prior to the end of such 120 day period, then at such time thereafter as
the Vendor shall have failed to pay such defaulted amount in accordance with the
provisions of the Vendor Program Agreement or Vendor Assignment), or (ii) the
Servicer has determined in its sole discretion, in accordance with its usual and
customary practices (and taking into account any available Vendor recourse),
that such Contract is not collectible.
Determination Date: With respect to any Payment Date, the [ ] Business
------------------
Day preceding such Payment Date.
Discount Rate: At any date of determination, [____] %.
-------------
Discounted Contract Balance: Means with respect to any Contract, (i)
---------------------------
as of the related Cut-off Date, the present value of all of the remaining
Scheduled Payments becoming due under such Contract after the applicable Cut-off
Date but not later than the __________, ____ Payment Date, discounted at the
Discount Rate, and (ii) as of any other date of determination, the sum of (x)
the present value of all of the remaining Scheduled Payments becoming due under
such Contract after such date of determination but not later than the
__________, _____ Payment Date, discounted at the Discount Rate and (y) the
aggregate amount of all Scheduled Payments due and payable under such Contract
after the applicable Cut-off Date and prior to such date of determination that
have not then been received by the Servicer; provided that the Discounted
--------
Contract Balance for any Defaulted Contract shall be zero.
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.
Eligible Contract: A Contract satisfying the Representations and
------------------
Warranties.
Eligible Investments: With respect to any Payment Date means
----------------------
negotiable instruments or securities or other investments maturing on or before
such Payment 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
Payment Date immediately following such date of determination, and (c) which
evidence:
(i) direct obligations of, and obligations fully guaranteed as to full
and timely payment by, the United States of America (or by any agency thereof to
the extent such obligations are backed by the full faith and credit of the
United States of America);
(ii) demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by federal or state banking or depository institution authorities;
provided, however, that at the time of the Trust's investment or contractual
- -------- -------
commitment to invest therein, the commercial paper, if any, and short-term
unsecured debt obligations (other than such obligation whose rating is based on
the credit of a Person other than such institution or trust company) of such
depository institution or trust company shall have a credit rating from each
Rating Agency in the Highest Required Investment Category granted by such Rating
Agency;
(iii) commercial paper, or other short term obligations, having, at
the time of the Trust's investment or contractual commitment to invest therein,
a rating in the Highest Required Investment Category granted by each Rating
Agency;
(iv) demand deposits, time deposits or certificates of deposit that
are fully insured by the FDIC;
(v) notes that are payable on demand or bankers' acceptances issued by
any depository institution or trust company referred to in (ii) above;
(vi) investments in money market funds having, at the time of the
Trust's investment or contractual commitment to invest therein, a rating of the
Highest Required Investment Category from each Rating Agency or having otherwise
been approved in writing by each Rating Agency;
(vii) time deposits (having maturities of not more than 90 days) by an
entity the commercial paper of which has, at the time of the Trust's investment
or contractual commitment to invest therein, a rating of the Highest Required
Investment Category granted by each Rating Agency;
(viii) Eligible Repurchase Obligations; and
(ix) any negotiable instruments or securities or other investments in
which the investment by the Trust therein has been approved in writing by the
Rating Agency.
The Indenture Trustee may purchase or sell to itself or an Affiliate,
as principal or agent, the Eligible Investments described above.
Eligible Repurchase Obligations: 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 Servicer: Mitsui Vendor Leasing (U.S.A.) Inc., a Delaware
------------------
corporation or another Person which at the time of its appointment as Servicer
(i) is servicing a portfolio of equipment Contract contracts, installment sale
contracts, promissory notes, loan and security agreements and/or other similar
types of receivables comparable to the Contracts, (ii) is legally qualified and
has the capacity to service the Contracts, (iii) has demonstrated the ability
professionally and competently to service a portfolio of equipment Contract
contracts, installment sale contracts, promissory notes, loan and security
agreements and other similar types of receivables comparable to the Contracts
with reasonable skill and care, (iv) has available software which is adequate to
perform its duties and responsibilities under this Agreement, and (v) satisfies
the Rating Agency Condition.
Equipment: The tangible assets financed or Contracted by an Obligor
---------
pursuant to a Contract and/or, unless the context otherwise requires, a security
interest in such assets, such tangible assets to consist primarily of medical,
machine tool and other commercial and industrial equipment.
Excluded Amounts: (a) Any Collections on deposit in the Collection
-----------------
Account or otherwise received by the Servicer, which Collections are
attributable to any Taxes, fees or other charges imposed by any Governmental
Authority, (b) any Collections representing reimbursements of insurance premiums
or payments for services that were not financed by the Seller, (c) any
Collections with respect any Substitute Contract or Additional Contract received
after the end of the Collection Period preceding the related Transfer Date and
(d) any Administrative Fees.
Extension Fees: Any fee received by the Servicer in consideration for
--------------
the granting of an extension on the payment of any Scheduled Payment due under a
Contract.
FDIC: shall mean the Federal Deposit Insurance Corporation, or any
----
successor thereto.
Fitch: Fitch IBCA, Inc.
-----
Governmental Authority: With respect to any Person, any nation or
-----------------------
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person.
Highest Required Investment Category: (i) with respect to ratings
---------------------------------------
assigned by S&P, A-1+ for short-term instruments and AAA for long-term
instruments, and (ii) with respect to ratings assigned by Moody's, A2 or P-1 for
one month instruments, A1 or P-1 for three month instruments, Aa3 or P-1 for six
month instruments and Aaa or P-1 for instruments with a term in excess of six
months.
Indenture: The Indenture dated as of August 1, 1998 between the Trust
---------
and the Indenture Trustee.
Indenture Trustee: As defined in the preamble.
-----------------
Independent Accountants: As defined in Section 3.11(a).
-----------------------
Initial Class A-1 Principal Amount: $________________.
----------------------------------
Initial Class A-2 Principal Amount: $________________.
----------------------------------
Initial Class A-3 Principal Amount: $________________.
----------------------------------
Initial Class B Principal Amount: $__________________.
--------------------------------
Initial Class C Principal Amount: $__________________.
--------------------------------
Initial Pool Discounted Contract Balance: $__________________.
----------------------------------------
Insolvency Event: With respect to a specified Person, (a) the filing
----------------
of a decree or order for relief by a court having jurisdiction in the premises
in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under
such law, taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of this property, or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.
Insolvency Laws: 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: With respect to any Contract, an insurance policy
-----------------
covering physical damage to or loss of the related Equipment.
Insurance Proceeds: Depending on the context, any amounts payable or
------------------
any payments made, to the Servicer under any Insurance Policy.
Insurance, Maintenance and Tax Accounts: The accounts which are
------------------------------------------
established and maintained pursuant to Section 3.4(a).
Lien: Any security interest, lien, charge, pledge, preference, equity
----
or encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
Liquidation Expenses: With respect to any Contract in connection with
--------------------
the liquidation of such 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 counsel, in each case in
accordance with the Servicer's customary procedures in connection with the
repossession, storage, repair, refurbishing and disposition of any related
Equipment (including taxes and insurance charges, to the extent in excess of
amounts available therefor and relating to such Contract in the Insurance,
Maintenance and Tax Accounts) and other out-of-pocket costs related to the
liquidation of such Equipment, including the attempted collection of any amount
owing pursuant to such Contract if it is a Defaulted Contract.
Liquidation Net Proceeds: All amounts received by the Servicer (i) in
------------------------
connection with the liquidation of any Contract and disposition of the related
Equipment or (ii) as insurance proceeds with respect to any damaged or destroyed
Equipment to be applied as described in Section 3.4(c)(ii), in each case net of
(a) related Liquidation Expenses and (b) amounts that are required to be
refunded to the Obligor on such Contract; provided that the Liquidation Net
--------
Proceeds with respect to any Contract and disposition of the related Equipment
shall in no event be less than zero.
Maturity Date: [__________]
-------------
Monthly Records: All records and data maintained by the Servicer with
---------------
respect to the Contracts in accordance with its customary standards, policies
and procedures.
Moody's: Moody's Investors, Inc.
-------
Note Majority: Holders of Notes representing a majority of the
--------------
Discounted Contract Balance of each Class of the Notes then Outstanding.
Obligor: The lessee, borrower, purchaser or any other Person or
-------
Persons who are obligated to make payments under a Contract.
Opinion of Counsel: A written opinion of counsel acceptable in form
------------------
and substance and from counsel acceptable to the Trust and, if such opinion or a
copy thereof is required to be delivered to the Indenture Trustee, to the
Indenture Trustee.
Original Term: The term of a Contract as of the Cut-off Date (which
--------------
shall include any renewals or extensions of the original term thereof prior to
the Cut-off Date), as such term may be extended in accordance with Section
3.2(c) or as a result of a bankruptcy proceeding with respect to the related
Obligor, but excluding, in the case of any Contract, any other extensions or
renewals thereof.
Payment Date: The [___] day of each calendar month (or, if such
-------------
[______]day is not a Business Day, the next succeeding Business Day), commencing
[______].
Permitted Liens: (a) shall mean, with respect to Contracts:
---------------
(i) Liens for state, municipal or other local taxes
if such taxes shall not at the time be due and payable and
(ii) Liens in favor of the Trust Depositor, the Trust and the
Indenture Trustee created pursuant to the Transfer and Sale
Agreement, this Agreement and the Indenture; and
(b) with respect to the related Equipment:
(i) materialmen's, warehousemen's and mechanics'
liens 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, (iii) Liens in favor of the
Trust Depositor, the Trust and the Indenture Trustee created
pursuant to the Transfer and Sale Agreement, this Agreement
and the Indenture, (iv) Liens created by the related Obligor
that are subordinated to or otherwise lower in priority than
the Liens in favor of the Trust Depositor, the Trust and the
Indenture Trustee and (v) Liens granted by the End-Users or
Vendors which are subordinated to the interest of the Issuer
and the Indenture Trustee in such Equipment; and
(c) any other subordinated Liens which are subordinated to the
prior payment of the Notes upon the terms and conditions described
herein.
Person: Any legal Person, including any individual, corporation,
------
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, or any other entity.
Pledged Revenues: (i) All Scheduled Payments on the Contracts received
----------------
on or after the applicable Cut-off Date (including all Scheduled Payments due
prior to, but not received as of, the applicable Cut-off Date, but excluding any
Scheduled Payments due on or after, but received prior to, the applicable
Cut-off Date); (ii) any Prepayments received on the Contracts on or after the
applicable Cut-off Date; (iii) the Repurchase Amount of any Contracts
repurchased by the Seller (to the extent the Seller has not delivered a
Substitute Contract) in accordance with Section 2.6 (other than any portion
thereof attributable to the Book Value of the Equipment); (iv) the amount paid
by the Trust Depositor to repurchase the Contracts pursuant to Section 5.1; (v)
Liquidation Net Proceeds, received in respect of any Contracts and the
disposition of the related Equipment on or after the related Cut-off Date; (vi)
any earnings on the investment of amounts credited to the Trust Accounts; and
(vii) any Recoveries received on the Contracts on or after the applicable
Cut-off Date. Notwithstanding the foregoing, amounts identified in the last
sentence of Section 3.4(a) not to be included as Pledged Revenues, shall not be
part of Pledged Revenues in accordance with such sentence.
Predecessor Contract: With respect to any Substitute Contract, (i) if
--------------------
such Substitute Contract is substituted for a Warranty Contract, such Warranty
Contract, (ii) if such Substitute Contract is substituted for an Adjusted
Contract, such Adjusted Contract and (iii) if such Substitute Contract is
substituted for a Defaulted Contract, such Defaulted Contract.
Prepaid Contract: 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 or a Contract that has been liquidated by
the Servicer in accordance with the terms of this Agreement.
Prepayment Amount: An amount equal to not less than (a) the Discounted
-----------------
Contract Balance on the close of business on the last day of the Collection
Period ending immediately prior to the date of Prepayment plus any accrued and
unpaid interest payments thereon (at the Discount Rate) and (b) any outstanding
Servicer Advances thereon (not included in (a) above).
Prepayments: Means any and all partial and full prepayments on a
-----------
Contract including, with respect to such 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 payments upon an optional
termination of the Trust pursuant to Section 7.08.
Principal Amount: With respect to a Class of Notes, the aggregate
-----------------
Initial Principal Amount thereof reduced by the aggregate amount of any
distributions applied in reduction of such principal amount.
Qualified Eligible Investments: Eligible Investments acquired by the
-------------------------------
Indenture Trustee in its name and in its capacity as Indenture Trustee, which
are held by the Indenture Trustee in the Collection Account 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 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 the 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) 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: (a) the corporate trust department of the
----------------------
Indenture Trustee or Owner Trustee, or (b) a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), (i) (A)
which has either (1) a long-term unsecured debt rating acceptable to the Rating
Agencies, or (2) a short-term unsecured debt rating or certificate of deposit
rating acceptable to the Rating Agencies, (B) the parent corporation of which
has either (1) a long-term unsecured debt rating acceptable to the Rating
Agencies, or (2) a short-term unsecured debt rating or certificate of deposit
rating acceptable to the Rating Agencies, or (C) is otherwise acceptable to the
Rating Agencies, and (ii) whose deposits are insured by the FDIC.
Rating Agency: Each national statistical rating agency or organization
-------------
that has issued one or more ratings in respect of the Notes.
Rating Agency Condition: With respect to any action, each Rating
-------------------------
Agency's notification to the Trust and the Indenture Trustee that such action
will not result in a reduction or withdrawal of the rating, if any, of any Class
of Notes to which it is a Rating Agency.
Record Date: With respect to any Payment Date and the Notes, the day
-----------
immediately preceding each Payment Date (or, with respect to any Definitive
Note, the last day of the calendar month preceding the month in which such
Payment Date occurs).
Recoveries: Any and all recoveries on account of a Defaulted Contract,
----------
including, without limitation, any and all cash proceeds or rents realized from
the sale, lease, re-lease or re-financing of repossessed Equipment or other
property, Insurance Proceeds and amounts received pursuant to a Vendor Program
Agreement or Vendor Assignment (including amounts received from any "net loss
pool" that may have been created under such Vendor Program Agreement or Vendor
Assignment).
Representations and Warranties: As defined in Section 2.6.
------------------------------
Repurchase Amount: With respect to a Contract and related Equipment
------------------
required to be repurchased by the Seller in accordance with Section 2.6, the
Discounted Contract Balance (without giving effect to the proviso in the
definition thereof) for such Contract as of the close of business on the last
day of the Collection Period preceding the related Transfer Date.
Repurchased Contract: Any Contract which the Seller [or the Servicer]
--------------------
has repurchased as required by Section 2.6.
Required Holders: means (i) prior to the payment in full of the Class
----------------
A Notes outstanding, Class A-1 Noteholders, Class A-2 Noteholders and/or Class
A-3 Noteholders holding Class A-1 Notes, Class A-2 Notes and/or Class A-3 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.
Responsible Officer: As to any Person, any officer of such Person with
-------------------
direct responsibility for the administration of this Agreement and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
Restricting Event: Any of the following events:
-----------------
(a) As of any Payment Date, the weighted average ADCB of all Contracts
in respect of which, during the three preceding Collection Periods, a scheduled
payment is more than [60] days past due exceeds [3.0%] of the weighted average
ADCB of all Contracts in the Contracts Pool during such three Collection
Periods; or
(b) As of any Payment Date, the product of (i) two multiplied by (ii)
the difference between (x) the ADCB of all that became Defaulted Contracts
during the six preceding Collection Periods and (y) Recoveries received during
the six preceding Collection Periods on Account of all Defaulted contracts,
exceeds [3.0%] of the weighted average ADCB of Contracts in the Contracts Pool
during such six Collection Periods; or
(c) A Servicer Termination Event has occurred and is continuing.
Schedule of Contracts: Collectively, the schedules of Contracts (which
---------------------
shall be made available to the parties hereto on a computer disk or other data
storage medium) attached hereto as (or described in) Exhibit A, as such
schedules may be revised from time to time in accordance with Sections 2.6,
9.2(a) and 9.2(b).
Scheduled Payments: With respect to any Contract, the rent or
-------------------
financing payment (whether principal or principal and interest) scheduled to be
made by the related End-User under the terms of such Contract after the related
Cut-off Date (provided that Scheduled Payments do not include and Excluded
Amounts).
Seller: As defined in the preamble.
------
Servicer: Mitsui Vendor Leasing (U.S.A.) Inc., its successor in
--------
interest pursuant to Section 8.2 or, after any termination of the Servicer upon
a Servicer Termination Event, any successor Servicer.
Servicer Advance: As defined in Section 4.5.
----------------
Servicer Termination Event: An event described in Section 8.1.
--------------------------
Servicer's Certificate: With respect to each Determination Date, a
-----------------------
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 3.9, substantially in the form attached hereto as Exhibit B.
Servicing Fee: With respect to any Collection Period, the fee payable
-------------
to the Servicer for services rendered during such Collection Period, which shall
be equal to one-twelfth of the Servicing Fee Rate multiplied by the ADCB
determined as of the last day of the second preceding Collection Period;
provided, that in the case of the Servicing Fee with respect to the Collection
- --------
Period commencing on the initial Cut-off Date, an amount equal to the product of
(i) the Servicing Fee Rate, (ii) the Initial ADCB, and (iii) a fraction, the
numerator of which is [____] and the denominator of which is 360.
Servicing Fee Rate: [___]% per annum.
------------------
S&P: Standard & Poor's Ratings Services, a division of The McGraw-Hill
---
Companies, Inc.
Stated Maturity Date: [__________]
--------------------
Sub-Servicer: The Person named as servicer or sub-servicer in any
------------
agreement between the Servicer and such Person by which such Person is
contractually obligated to perform on the Servicer's behalf all or a part of the
servicing obligations described herein.
Substitute Contract: An Eligible Contract substituted (x) by the
--------------------
Seller for a Defaulted Contract or a Warranty Contract or (y) by the Servicer
for an Adjusted Contract.
Tax Opinion: [To come]
-----------
Taxes: Any present or future taxes, levies, imposts, duties, charges,
-----
assessments or fees of any nature (including interest, penalties, and additions
thereto) that are imposed by any government or other taxing authority.
Total Principal Payment Amount: With respect to any Payment 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 Payment Date.
Total Servicing Fee: The sum of the Servicing Fee and the
-----------------------
Administrative Fees.
Transfer and Sale Agreement: The Transfer and Sale Agreement, dated as
---------------------------
of August 1, 1998, among Mitsui Vendor Leasing Funding Corp. II, as Purchaser,
and Mitsui Vendor Leasing (U.S.A.) Inc., as Seller and Servicer.
Transfer Date: With respect to (i) any Substitute Contract, (A) if
--------------
such Substitute Contract relates to a Warranty Contract, the second Business Day
preceding the third Determination Date following the Seller's discovery or
receipt of notice from the Indenture Trustee or the Servicer of a Repurchase
Event with respect to such Warranty Contract, (B) if such Substitute Contract
relates to a Defaulted Contract, the second Business Day preceding the
Determination Date following the Sellers election to substitute a Substitute
Contract for such Defaulted Contract in accordance with Article IX and (ii) any
Additional Contract, the second Business Day preceding the Determination Date
following the Collection Period in which the related Prepayment in respect of
the related Prepaid Contract is received by the Servicer:
Trust: As defined in the preamble.
-----
Trust Accounts: The Collection Account, the Insurance, Maintenance and
--------------
Tax Accounts and such other accounts as may be established in the name of the
Trust or the Indenture Trustee pursuant to the Indenture or this Agreement.
Trust Agreement: The Trust Agreement, dated as of August 1, 1998,
----------------
among the Trust Depositor and the Owner Trustee.
Trust Assets: means the property and proceeds of every description
-------------
conveyed pursuant to Section 2.1 of this Agreement (including all Eligible
Investments in the Trust Accounts and all proceeds therefrom).
Trust Depositor: As defined in the preamble.
---------------
UCC: The Uniform Commercial Code as in effect in the relevant
---
jurisdiction.
Vendor: Each vendor of Equipment.
------
Vendor Assignment: Each assignment from a Vendor that conveys such
------------------
Vendor's interest in a Contract to the Seller.
Vendor Program Agreement: Each vendor finance program agreement with a
------------------------
Vendor pursuant to which Contracts originated by or through such Vendor are
assigned or otherwise conveyed to the Seller.
Warranty Contract: A Contract as to which a Repurchase Event has
------------------
occurred.
SECTION 1.2. Usage of Terms. With respect to all terms used in this
----------------
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
SECTION 1.3. Calculations. All calculations of the Discounted Contract
------------
Balance of any Contract and of the amount of the Servicing Fee shall be made on
the basis of a 360-day year consisting of twelve 30-day months. All references
to the Discounted Contract Balance of a Contract as of any date shall refer to
the close of business on such date.
SECTION 1.4. Section References. All references to Articles, Sections,
-------------------
paragraphs, subsections, exhibits and schedules shall be to such portions of
this Agreement unless otherwise specified.
SECTION 1.5. No Recourse. No recourse may be taken, directly or
-----------
indirectly, under this Agreement or any certificate or other writing delivered
in connection herewith or therewith, against any stockholder, officer or
director, as such, of the Trust Depositor, the Seller, the Servicer or the
Indenture Trustee or of any predecessor or successor of the Trust Depositor, the
Seller the Servicer or the Indenture Trustee.
ARTICLE II
CONVEYANCE OF CONTRACTS
SECTION 2.1. Conveyance of Contracts and other Trust Assets.
----------------------------------------------
(a) Subject to the terms and conditions of this Agreement, the Trust
Depositor, pursuant to the mutually agreed upon terms contained herein, hereby
transfers, assigns, and otherwise conveys to the Trust, without recourse (but
without limitation of its obligations in this Agreement), as of the Closing
Date, all of the right, title and interest, including any security interest,
whether now owned or hereafter acquired, of the Trust Depositor in and to the
following:
(i) the Transferred Assets;
(ii) all funds on deposit from time to time in the Trust
Accounts and all investments therein and proceeds thereof;
(iii) the Transfer and Sale Agreement; and
(iv) any and all proceeds of the foregoing;
The foregoing does not constitute, nor is it intended to result in, the creation
or assumption by the Trust, the Indenture Trustee or any Noteholder of any
obligation of the Trust Depositor, the Servicer or any other Person in
connection with the Contracts or the related Equipment or any agreement or
instrument relating thereto, including any obligation to the Obligors.
(b) [Reserved]
(c) The execution and delivery of this Agreement shall constitute an
acknowledgment by each of the Trust Depositor and the Trust that they intend
that each assignment and transfer herein contemplated constitute an assignment
outright, and not for security, of the property described in Section 2.1(a),
conveying good title thereto free and clear of any Liens, from the Trust
Depositor to the Trust, and that all such property shall not be a part of the
estate of the Trust Depositor in the event of the bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, or the occurrence of another similar
event, of, or with respect to the Trust Depositor. In the event that such
conveyance is determined to be made as security for a loan made by the Trust or
the Noteholders to the Trust Depositor, the Trust Depositor hereby grants to the
Trust a security interest in all of the Trust Depositor's right, title and
interest in and to the property described in Section 2.1(a) to secure the loan
determined to have been made to the Trust Depositor and the payment and
performance of the other obligations of the Trust Depositor under this
Agreement, and agrees that in such event this Agreement shall constitute a
security agreement under applicable law.
SECTION 2.2. Custody of Contract Files.
-------------------------
(a) The Trust hereby appoints the Servicer, and the Servicer hereby accepts
such appointment, to act as the agent of the Trust as custodian of the Contract
Files (with respect to each Contract), which will be, as of the Closing Date
(or, in the case of a Substitute Contract, as of the related Transfer Date), in
the possession of the Servicer or its agents.
(b) The Servicer agrees to maintain the Contract Files at the locations
where they are currently maintained, or at such other locations as shall from
time to time be identified to the Indenture Trustee by written notice. The
Servicer may temporarily move individual Contract Files or any portion thereof
without notice as necessary to conduct collection and other servicing activities
in accordance with its customary practices and procedures.
(c) As custodian, the Servicer shall have and perform the following powers
and duties:
(i) hold the Contract Files on behalf of the Trust Depositor, the
Trust, the Noteholders and the Indenture Trustee, maintain accurate records
pertaining to each Contract to enable it to comply with the terms and
conditions of this Agreement and the other Basic Documents, maintain a
current inventory thereof and certify to the Indenture Trustee annually
that it continues to maintain possession of such Contract Files;
(ii) implement written policies and procedures with respect to Persons
authorized to have access to the Contract Files and the receipting for
Contract Files taken from their storage area by an employee of the Servicer
for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with maintaining custody of
the Contract Files on behalf of the Trust Depositor, the Trust, the
Noteholders and the Indenture Trustee.
(d) In performing its duties under this Section, the Servicer agrees to
service the Contracts in accordance with customary and usual procedures of
institutions which service equipment Contracts, installment sale contracts,
promissory notes, loan and security agreements and other similar types of
receivables comparable to the Contracts and, to the extent more exacting, the
degree of skill and attention that the Servicer exercises from time to time with
respect to all comparable such contracts that it services for itself or others.
The Servicer shall promptly report to 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 agrees further not to assert any beneficial ownership interests in
the Contracts or the Contract Files. The Servicer agrees to indemnify the Trust
Depositor, the Trust, the Noteholders and the Indenture Trustee for any and all
liabilities, obligations, losses, damages, payments, costs or expenses of any
kind whatsoever which may be imposed on, incurred or asserted against the Trust
Depositor, the Trust, the Noteholders or the Indenture Trustee as the result of
any act or omission by the Servicer relating to the maintenance and custody of
the Contract Files; provided that the Servicer will not be liable for any
--------
portion of any such amount resulting from the negligence or willful misconduct
of the Trust Depositor, the Trust, any Noteholder or the Indenture Trustee.
SECTION 2.3. Further Assurances. Following the Closing Date, the Trust
-------------------
Depositor shall, at the reasonable request of the Indenture Trustee or the
Servicer, and at the Trust Depositor's expense, execute and deliver any further
instruments of transfer or other documents, and shall take all such other
actions that may be necessary, appropriate or desirable, to fully convey the
Contracts and the other Trust Assets to the Trust or otherwise to evidence,
effectuate or implement the transactions contemplated hereby. In addition, the
Trust Depositor, as agent for the Trust, shall defend the Contracts and the
other Trust Assets against any and all claims and demands of all Persons at any
time claiming the same or any interest therein adverse to that of the Trust.
SECTION 2.4. Representations and Warranties of Trust Depositor. By its
-------------------------------------------------
execution of this Agreement, the Trust Depositor makes the following
representations and warranties. Unless otherwise specified, such representations
and warranties speak as of the Closing Date.
(a) Organization and Good Standing. The Trust Depositor has
------------------------------
been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with power and authority
to own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to acquire,
own and transfer the Contracts and the other property transferred to the
Trust.
(b) Due Qualification. 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 where the
failure to do so would materially and adversely affect the performance of
its obligations under this Agreement and the other Basic Documents to which
it is a party.
(c) Power and Authority. The Trust Depositor has the power
-------------------
and authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out the terms hereof and
thereof; the Trust Depositor has full power and authority to transfer and
assign the Trust Assets to be transferred and assigned to and deposited
with the Trust by it and has duly authorized such transfer and assignment
to the Trust by all necessary corporate action; and the execution, delivery
and performance of this Agreement and the other Basic Documents to which it
is a party have been duly authorized by the Trust Depositor by all
necessary corporate action.
(d) No Consents. The Trust Depositor holds all necessary
-----------
licenses, certificates and permits from all Governmental Authorities
necessary for conducting its business as it is presently conducted, and 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
delivery, performance, validity or enforceability of the Basic Documents to
which it is a party, except for such consents, licenses, approvals or
authorizations, or registrations or declarations, as shall have been
obtained or filed, as the case may be, prior to the Closing Date.
(e) Valid Transfer; Binding Obligations. This Agreement
--------------------------------------
effects, as of the Closing Date, a valid transfer and assignment of the
Contracts and the other Trust Assets, enforceable against the Trust
Depositor and creditors of and purchasers from the Trust Depositor; and
this Agreement and the other Basic Documents to which it is party, when
duly executed and delivered, shall constitute legal, valid and binding
obligations of the Trust Depositor enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The execution and delivery of this
-------------
Agreement and the other Basic Documents to which the Trust Depositor is a
party, the consummation of the transactions contemplated by this Agreement
and the Basic Documents and the fulfillment of the terms of this Agreement
and the Basic Documents shall not conflict with, result in any breach of
any of the terms and provisions of or constitute (with or without notice or
lapse of time, or both) a default under the articles of incorporation or
by-laws of the Trust Depositor, or any indenture, agreement, mortgage, deed
of trust or other instrument to which the Trust Depositor is a party or by
which it is bound, or result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, other than this
Agreement, or violate any law, order, rule or regulation applicable to the
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 any of its properties, except in
each case to the extent it would not have a material adverse effect on the
validity or enforceability of, or the Trust Depositor's performance under,
this Agreement or the other Basic Documents to which it is party or the
validity or enforceability of the Contracts or on the Trust's or the
Noteholders' interest in any Contracts or other Trust Assets.
(g) No Proceedings. There are no proceedings or
----------------
investigations pending or, to the Trust Depositor's knowledge, threatened
against the Trust Depositor, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality
having jurisdiction over the Trust Depositor or its properties (A)
asserting the invalidity of this Agreement or any of the Basic Documents,
(B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any of the other Basic 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 or any of the other Basic
Documents, or (D) seeking to adversely affect (i) the federal income tax or
other federal, state or local tax attributes of the Notes or (ii) the
federal, state or local tax treatment of any of the transactions
contemplated by this Agreement and the other Basic Documents.
(h) Place of Business. The principal executive offices of
-----------------
the Trust Depositor, and the offices where the Trust Depositor keeps its
records concerning the Contracts and Basic Documents, are located at 6363
Greenwich Drive, Suite 100, San Diego, California 92122.
(i) Registration Statement. No stop order suspending the
-----------------------
effectiveness of the Registration Statement relating to the Notes has been
issued, and no proceeding for that purpose has been instituted or is
threatened, by the Commission.
(j) Filings. Since the effective date of the Registration
-------
Statement relating to the Notes, there has occurred no event required to be
set forth in an amendment or supplement to the Registration Statement or
Prospectus that has not been so set forth, and there has been no document
required to be filed under the Securities Exchange Act of 1934 and the
rules and regulations of the Commission thereunder that upon such filing
would be deemed to be incorporated by reference in the Prospectus that has
not been so filed.
(k) Good Title. Immediately prior to the transfer and
-----------
assignment of the Contracts and other Trust Assets to the Trust pursuant to
Section 2.1(a), the Trust Depositor had good title thereto and was the sole
owner thereof (subject, in the case of amounts in the Insurance,
Maintenance and Tax Accounts, to the rights of the Obligors therein), free
of any Lien. Upon the transfer and assignment of the Contracts and other
Trust Assets to the Trust pursuant to Section 2.1(a), the Trust will have
good title thereto and will be the sole owner thereof (subject, in the case
of amounts in the Insurance, Maintenance and Tax Accounts, to the rights of
the Obligors therein), free of any Lien.
(l) No Impairment. No Person has a participation in or other
-------------
right to receive Scheduled Payments under any Contract, and the Trust
Depositor has taken no action to convey any right to any Person that would
result in such Person having a right to Scheduled Payments received with
respect to any Contract.
(m) Lawful Assignment. No Contract was originated in, or is
-----------------
subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the transfer and assignment of such Contract
from the Trust Depositor to the Trust under this Agreement. Each Contract
may be sold, assigned and transferred by the Trust Depositor to the Trust
without the consent of, or prior approval from, or any notification to, the
applicable Obligor, other than (i) certain Contracts (which, in proportion
to the aggregate of all of the Contracts, are not material) that require
notification of the assignment to the Obligor, which notification will be
given by the Servicer not later than 10 days following the Closing Date,
and (ii) certain Contracts (which, in proportion to the aggregate of all of
the Contracts, are not material) that require the consent of the Obligor,
which consent will be obtained by the Servicer not later than 10 days
following the Closing Date.
(n) All Filings Made. All filings and other actions required
----------------
to be made, taken or performed by any Person in any jurisdiction to give
the Trust a first priority perfected lien or ownership interest in the
Contracts has been made, taken or performed.
(o) Schedule of Contracts Accurate. The information with
-------------------------------
respect to the Contracts contained in the Schedule of Contracts is true and
correct in all material respects.
SECTION 2.5. Non Petition Covenant. None of the Trust Depositor, the
----------------------
Seller, the Servicer shall petition or otherwise invoke the process of any court
or government authority for the purpose of commencing or sustaining a case
against the Trust or the Trust Depositor under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
indenture trustee, custodian, sequestrator or other similar official of the
Trust or the Trust Depositor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust or the Trust
Depositor.
SECTION 2.6. Repurchase/Substitution of Contracts Upon Breach of
------------------------------------------------------------
Representations and Warranties. Concurrently with the execution and delivery of
- ------------------------------
this Agreement, the Seller and the Trust Depositor have entered into the
Transfer and Sale Agreement, the rights of the Trust Depositor under which have
been assigned by the Trust Depositor to the Trust pursuant to Section 2.1(a). As
provided in Schedule B to the Transfer and Sale Agreement, the Seller has made
certain representations and warranties to the Trust Depositor with respect to
the Contracts and related Equipment (the "Representations and Warranties").
After the Seller's discovery or receipt of notice from the Indenture Trustee or
the Servicer of a Repurchase Event with respect to any Contract (including any
Defaulted Contract), the Seller shall, (i) as of the second Business Day
preceding the third Determination Date following such discovery or receipt of
notice (unless such Repurchase Event shall have been cured in all material
respects by such Business Day), repurchase (or substitute a Substitute Contract
for) such Contract and related Equipment (or security interest therein) from the
Trust)and (ii) on or prior to such second Business Day preceding the third
Determination Date following such discovery or receipt of notice (unless such
Repurchase Event shall have been cured in all material respects by such Business
Day), the Seller shall either pay the Repurchase Amount to the Servicer on
behalf of the Trust and the Trust Depositor in accordance with this Section or
deliver a Substitute Contract in accordance with Article IX
The obligations of the Trust Depositor with respect to any such
Repurchase Event shall be limited to taking any and all actions necessary to
enable the Trust or the Indenture Trustee to enforce directly the obligations of
the Seller to repurchase the applicable Contract and related Equipment under the
Transfer and Sale Agreement. It is understood and agreed that, except as set
forth in the following paragraph, the obligation of the Seller to so repurchase
or substitute a Substitute Contract and related Equipment for any Contract and
related Equipment, as to which a breach has occurred and is continuing shall, if
such obligation is fulfilled, constitute the sole remedy against the Seller for
such breach available to the Trust Depositor, the Trust, the Noteholders or the
Indenture Trustee on behalf of the Noteholders.
In addition to the foregoing and notwithstanding whether the Contract
and related Equipment shall have been repurchased by the Seller, the Seller
shall indemnify the Trust Depositor, the Trust, the Noteholders and the
Indenture Trustee against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach.
ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.1. Duties of the Servicer. The Servicer is hereby authorized
-----------------------
to act as agent for the Trust and the Trust Depositor and in such capacity shall
manage, service, administer and make collections on the Contracts, and perform
the other actions required by the Servicer under this Agreement. The Servicer
agrees that its servicing of the Contracts shall be carried out in accordance
with customary and usual procedures of institutions which service equipment
Contract contracts, installment sale contracts, promissory notes, loan and
security agreements and other similar types of receivables comparable to the
Contracts and, to the extent more exacting, the degree of skill and attention
that the Servicer exercises from time to time with respect to all comparable
such contracts that it services for itself or others. In performing such duties,
so long as Mitsui Vendor Leasing (U.S.A.) Inc. is the Servicer, it shall comply
in all material respects with its customary standards, policies and procedures
in effect from time to time. The Servicer may at any time change its customary
standards, policies and procedures; provided that any such change shall not
--------
materially impair the collectibility of any Contract nor the Servicer's ability
to perform its obligations under this Agreement and the other Basic Documents.
The Servicer's duties shall include, without limitation, billing, collection and
posting of all payments, responding to inquiries of Obligors on the Contracts,
investigating delinquencies, sending invoices to Obligors, accounting for
Collections and furnishing monthly and annual statements to the Trust and the
Indenture Trustee with respect to distributions, monitoring the status of
Insurance Policies with respect to the Equipment and performing the other duties
specified herein. The Servicer shall also administer and enforce all material
rights and responsibilities of the lessor or secured party under the Contracts
and provided for in the Insurance Policies, to the extent that such Insurance
Policies relate to the Contracts, the Equipment or the Obligors. To the extent
consistent with the standards, policies and procedures otherwise required
hereby, the Servicer shall follow its customary standards, policies and
procedures and shall have full power and authority to do any and all things in
connection with such managing, servicing, administration and collection that it
may deem necessary or desirable, including the authority to forego collection
efforts under circumstances deemed appropriate by the Servicer in accordance
with its customary standards, policies and procedures. Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered by
the Trust to execute and deliver, on behalf of the Trust Depositor and the Trust
or either of them, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments,
with respect to the Contracts and with respect to the Equipment in accordance
with its customary standards, policies and procedures. The Servicer is hereby
authorized to commence, in its own name, a legal proceeding to enforce a
Contract pursuant to Section 3.3 or to commence or participate in any other
legal proceeding (including, without limitation, a bankruptcy proceeding)
relating to or involving a Contract, an Obligor or the related Equipment. If the
Servicer commences or participates in such a legal proceeding in its own name,
the Trust shall thereupon be deemed to have automatically assigned such Contract
to the Servicer solely for purposes of commencing or participating in any such
proceeding as a party or claimant, and the Servicer is authorized and empowered
by the Trust to execute and deliver in the Servicer's name any notices, demands,
claims, complaints, responses, affidavits or other documents or instruments in
connection with any such proceeding. The Trust shall furnish the Servicer with
any powers of attorney and other documents which the Servicer may reasonably
request and which the Servicer deems necessary or appropriate and take any other
steps which the Servicer may deem necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement.
SECTION 3.2. Collection of Contract Payments; Modifications of Contracts;
------------------------------------------------------------
Certain Prepayments.
- -------------------
(a) Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Contracts as and when the same
shall become due, and shall follow such collection procedures as it follows with
respect to all comparable contracts that it services for itself or others and
otherwise act with respect to the Contracts, the related Equipment, the
Insurance Policies and the other Trust Assets in such manner as will, in the
reasonable judgment of the Servicer, maximize the amount to be received by the
Trust and the Trust Depositor with respect thereto. The Servicer is authorized
in its discretion to waive any Administrative Fees that may be collected in the
ordinary course of servicing any Contract.
(b) The Servicer may at any time agree to a modification or amendment of a
Contract in accordance with its Credit and Collection Policy (it being
acknowledged that any modification or amendment of a Contract resulting from a
bankruptcy proceeding with respect to the Obligor will not be deemed to have
been agreed to by the Servicer hereunder):
(i) in order to (A) change the Obligor's regular due date to a date
within the Collection Period in which such due date occurs or (B)
re-amortize (over the remainder of the original term) the Scheduled
Payments on a Contract following a partial Prepayment (provided that the
sum of such partial Prepayment and the Discounted Contract Balance of the
Contract after the re-amortization is at least equal to the Prepayment
Amount for such Contract prior to the partial Prepayment), or
(ii) for any other purpose, provided that no such modification or
--------
amendment shall:
(A) change the amount or the due date of any Scheduled Payment
(except as provided in clauses (i)(A) and (B) above, Section 3.2(c) or
Section 3.2(d)),
(B) release the related Equipment from the Contract, unless (1)
equipment of equal or greater value is substituted, (2) the remaining
related Equipment has a value at least equal to the Prepayment Amount
of the Contract, or (3) the release is pursuant to a partial
Prepayment (which, in the case of a partial Prepayment on a Contract,
meets the requirements of in clauses (i)(A) and (B) above or Section
3.2(d)) and the ratio of the value of the related Equipment to the
Discounted Contract Balance of the Contract after such partial
Prepayment is at least equal to such ratio prior to such partial
Prepayment;
(C) cause any of the representations or warranties contained in
the Representations and Warranties to cease to be true; or
(D) except as provided in clause (ii)(A) above, result in the
Discounted Contract Balance of the Contract being less than it would
have been absent such modification or amendment.
(c) The Servicer may grant payment extensions on a Contract in accordance
with its Credit and Collection Policy (it being acknowledged that any extensions
on a Contract resulting from a bankruptcy proceeding with respect to the Obligor
will not be deemed to have been granted by the Servicer hereunder) if the
Servicer believes in good faith that such extension is necessary to avoid a
termination and liquidation of such Contract and will maximize the amount to be
received by the Trust with respect to such Contract; provided that:
--------
(i) the aggregate period of all extensions granted on a Contract shall
not exceed six months; and
(ii) in no event may any Contract be extended beyond the Collection
Period preceding the final Stated Maturity Date.
Nothing in this Section 3.2(c) shall be deemed to prevent the Servicer from
extending or renewing, or otherwise accepting the continued performance by the
Obligor under, a Contract after expiration of its stated term.
(d) The Servicer may, in its discretion, allow a Prepayment of a Contract
(which by its terms is not prepayable) in whole or in part, but only if the
amount of such Prepayment (or, in the case of a partial Prepayment, the sum of
such Prepayment and the remaining Discounted Contract Balance of the Contract
after application of such Prepayment), together with such additional amounts as
are (x) available to the Servicer from the related Vendor for the purpose of
prepaying such Contract and (y) deposited in the Collection Account in respect
of such Contract contemporaneously with the deposit therein of such Prepayment,
is at least equal to the Prepayment Amount for such Contract.
(e) [Reserved]
(f) If the Servicer agrees to a modification, amendment or extension of a
Contract not permitted by subsections 3.2(b), (c) or (d) (such Contract, an
"Adjusted Contract"), the Servicer shall, on the second Business Day preceding
the Determination Date following the Collection Period in which such agreement
is made by the Servicer, either (i) repurchase such Adjusted Contract in
accordance with Section 2.6 (as if the provisions of said Section applied to the
Servicer instead of the Seller) or (ii) deliver a Substitute Contract therefor
in accordance with Article IX.
SECTION 3.3. Realization Upon Contracts.
--------------------------
(a) Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall, except as provided in the following paragraph,
take such action as is reasonably necessary (including making commercially
reasonable efforts to repossess (or otherwise comparably convert the ownership
of) and dispose of the related Equipment) to collect from the Obligor or
otherwise all amounts payable under any Contract as to which the Obligor is in
default in the making of one or more Scheduled Payments thereunder, if the
Servicer has determined such default is not likely to be cured. The Servicer
will not be required to repossess (or otherwise comparably convert the ownership
of) any Equipment the repossession of which, in accordance with the Servicer's
Credit and Collection Policy, and based on the Servicer's good faith estimate of
the value of the Equipment and its availability, would not be reasonable. The
Servicer is authorized to follow such customary practices and procedures as it
shall deem necessary or advisable, consistent with the standard of care required
by Section 3.1, which practices and procedures may include the sale of the
related Equipment at public or private sale, the submission of claims under an
Insurance Policy and other actions by the Servicer in order to realize upon such
a Contract. The foregoing is subject to the provision that, in any case in which
the Equipment shall have suffered damage, the Servicer shall not expend funds in
connection with any repair or towards the repossession of such Equipment unless
it shall determine in its reasonable judgment that such repair and/or
repossession shall increase the proceeds of liquidation of the related Contract
by an amount greater than the amount of such expenses. All amounts received upon
liquidation of a Contract (except as otherwise provided below), including any
proceeds derived from the disposition of the related Equipment, shall be
remitted by the Servicer to the Collection Account as soon as practicable, but
in no event later than the second Business Day after receipt thereof. The
Servicer shall be entitled to recover all reasonable out-of-pocket expenses
incurred by it in the course of liquidating a Contract, which amounts may be
retained by the Servicer from such proceeds prior to other applications thereof
(and shall not be required to be deposited as provided in Section 3.2(e)) to the
extent of such expenses. The Servicer shall be entitled to retain in the
Collection Account, from liquidation proceeds, a reserve for out-of-pocket
liquidation expenses in an amount equal to such expenses, in addition to those
previously incurred, as it reasonably estimates will be incurred. Upon
completion of such liquidation, the remainder of any such reserve, after
reimbursement to the Servicer of all out-of-pocket liquidation expenses, shall
constitute Liquidation Net Proceeds and be transferred as provided in Section
4.2(a). The Servicer shall, in accordance with Section 3.4(f), pay on behalf of
the Trust and the Trust Depositor any sales, use, personal property and other
taxes assessed on repossessed Equipment, as well as any sales or similar taxes
on the disposition thereof, and shall be entitled to reimbursement of any such
tax from liquidation proceeds with respect to the related Contract as provided
in Section 3.4(b).
(b) The Servicer will use its best efforts to sell or release any Equipment
upon the termination of the Contract to which such Equipment is subject (whether
as a result of early termination following an Obligor default or upon scheduled
expiration of the Contract), in a timely manner and in a manner so as to
maximize, to the extent possible under the prevailing market conditions, the net
proceeds of such Equipment. The Servicer may, in its discretion, choose to
dispose of Equipment through a new Contract or in some other manner which
provides for payment for the Equipment over time. In any such event (other than
permitting continued payments by the Obligor beyond the scheduled expiration
date of the Contract), the Servicer will be required to pay from its own funds,
and deposit in the Collection Account, an amount which, in its reasonable
judgment, is equal to the fair market value of such Equipment (less any related
out-of-pocket liquidation expenses), and the Servicer will be entitled to all
payments received thereafter in respect of such Equipment. Any such amounts so
deposited by the Servicer shall be treated as additional Liquidation Net
Proceeds.
SECTION 3.4. Insurance, Maintenance and Taxes.
--------------------------------
(a) The Servicer shall establish one or more insurance, maintenance and tax
accounts (collectively, the "Insurance, Maintenance and Tax Accounts") in the
name of the Servicer and for the benefit of the respective Obligors and, to the
extent provided herein, the Trust and the Trust Depositor. The Servicer shall
deposit into the Insurance, Maintenance and Tax Accounts any payments made by or
on behalf of Obligors which constitute (i) insurance charges paid by an Obligor
to the lessor or secured party under a Contract, (ii) any insurance payments or
recoveries paid by an insurance company or comparable third party and related to
the damage to, or destruction of, the related Equipment (unless paid directly by
such insurance company or comparable third party directly to the Obligor), (iii)
any payments made by or on behalf of Obligors which constitute amounts paid by
an Obligor to the lessor or secured party under a Contract in respect of the
maintenance of the related Equipment and (iv) taxes paid by the Obligor with
respect to the related Contract or Equipment. None of the foregoing payments
shall constitute Pledged Revenues except under the circumstances described in
clause (c)(ii) below.
(b) The Servicer may pay from its own funds, or may withdraw amounts from
the Insurance, Maintenance and Tax Accounts, when and if appropriate, to pay,
when due (i) all insurance charges in the amounts due under clause (a)(i) above,
(ii) any amounts payable under any applicable maintenance contract or otherwise
with respect to the maintenance of the related Equipment in the amounts due
under clause (a)(iii) above, and (iii) all taxes in the amounts due under clause
(a)(iv) above. If the Servicer has paid any such insurance charges, maintenance
costs or taxes from its own funds (including any such amounts that may have been
paid prior to the Closing Date), the Servicer shall be entitled to reimbursement
therefor from any appropriate amounts available therefor in the Insurance,
Maintenance and Tax Accounts, from payments thereafter received from the
applicable Obligor in respect thereof or from liquidation proceeds in the event
such Contract is liquidated. The Servicer is authorized in its discretion to
waive its right to receive reimbursement of any such amount.
(c) Amounts on deposit in the Insurance, Maintenance and Tax Accounts which
represent amounts received by the Servicer pursuant to clause (a)(ii) above
shall be applied by the Servicer as follows: (i) if equipment is purchased to
replace the Equipment that was damaged or destroyed, and such replacement
equipment is (in the reasonable opinion of the Servicer) of comparable use and
equivalent value to the Equipment that was damaged or destroyed, or if the
Equipment is to be repaired, the Servicer shall release such amount so received
from the insurance company or comparable third party in payment or reimbursement
for such replacement equipment or such repair; and (ii) if such replacement
option is not exercised or the Equipment is not to be repaired, then the
Servicer shall treat such amount as Liquidation Net Proceeds (after netting any
amounts therefrom as is provided pursuant to the definition of "Liquidation Net
Proceeds" herein) and transfer such amount from the Insurance, Maintenance and
Tax Accounts to the Collection Account.
(d) The Servicer may sue to enforce or collect upon the Insurance Policies,
in its own name, if possible, or as agent of the Trust and the Trust Depositor.
If the Servicer elects to commence a legal proceeding to enforce an Insurance
Policy, the act of commencement shall be deemed to be an automatic assignment of
the rights of the Trust and the Trust Depositor under such Insurance Policy to
the Servicer for purposes of collection only. If, however, in any enforcement
suit or legal proceeding it is held that the Servicer may not enforce an
Insurance Policy on the grounds that it is not a real party in interest or a
holder entitled to enforce the Insurance Policy, the Trust, on behalf of the
Trust Depositor, shall take such steps as the Servicer deems necessary to
enforce such Insurance Policy, including bringing suit in its name or the name
of the Indenture Trustee for the benefit of the Noteholders.
(e) Consistent with its customary standards, policies and procedures, with
respect to each Contract, the Servicer shall maintain insurance against casualty
loss with respect to any Equipment financed by or leased pursuant to the
Contract, to the extent the Contract requires the lessor or secured party under
the Contract to maintain such insurance, and shall otherwise require the Obligor
under the Contract to maintain such insurance, to the extent the Contract
requires that such insurance be maintained by the Obligor. The Servicer shall
not otherwise be liable to the Trust, the Indenture Trustee, the Seller or any
Noteholder for any Casualty Loss with respect to any Equipment related to a
Contract, except to the extent otherwise explicitly provided in this Agreement.
(f) The Servicer shall determine and pay when due all sales, use, personal
property and other taxes payable in respect of the Equipment related to each
Contract. To the extent the Servicer has previously received from the related
Obligor payments with respect to such taxes and has deposited such payments in
the Insurance, Maintenance and Tax Accounts in accordance with clause (a)(iv)
above, the Servicer shall, in accordance with clause (b)(iii) above, either (i)
pay such taxes from amounts withdrawn from the Insurance, Maintenance and Tax
Accounts, or (ii) pay such taxes from its own funds and thereafter reimburse
itself from amounts withdrawn from the Insurance, Maintenance and Tax Accounts.
In the event the Servicer has not previously received payments from the Obligor
for this purpose, or to the extent any such payments received were insufficient
to pay the taxes due, the Servicer shall nonetheless pay such taxes from its own
funds and shall bill the Obligor for any amounts so paid. The Servicer shall be
entitled to reimbursement for any taxes so paid from its own funds, as provided
in clause (b)(iii) above. Failure on the part of the Servicer to perform its
duties in a timely fashion under this clause shall constitute a breach of this
Agreement by the Servicer for which indemnity will be available in accordance
with Section 7.1.
(g) The Servicer shall give prompt written notice to the Indenture Trustee
of the Servicer's failure to pay when due any insurance charge or tax payment
required to be paid pursuant to this Section 3.4 and the reason for such
failure. Upon receipt of any such notice, or if the Indenture Trustee has
otherwise received notice of any such failure to pay an insurance charge or tax
payment, the Indenture Trustee shall take such actions as are reasonably
necessary (including the withdrawal of monies, if any, available therefor in the
Insurance, Maintenance and Tax Accounts and attributable to payments previously
made by the related Obligor and payment of such insurance charge or tax payment)
to cause any such amounts to be paid. The Indenture Trustee shall be permitted
to withdraw monies from the Insurance, Maintenance and Tax Accounts for purposes
of performing its obligations under this paragraph, but shall not, in any event,
be required to use its own funds for such purposes.
SECTION 3.5. Maintenance of Security Interests in Equipment. To the
--------------------------------------------------
extent the Servicer's Credit and Collection Policy in this regard would so
require (it being acknowledged that, in certain instances, such Credit and
Collection Policy would not so require), the Servicer shall take such steps as
are necessary to maintain perfection of any security interest created by each
Contract in the related Equipment on behalf of the Trust and the Trust
Depositor, including, but not limited to, obtaining the execution by the
Obligors and the recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing statements and continuation
statements as are necessary to maintain such security interest granted by the
Obligors under the respective Contracts. The Trust hereby authorizes the
Servicer, and the Servicer agrees (to the extent the Servicer's Credit and
Collection Policy in this regard would so require), to take any and all steps
necessary to re-perfect such security interest on behalf of the Trust and the
Trust Depositor as necessary because of the relocation of Equipment or for any
other reason.
SECTION 3.6. Covenants, Representations, and Warranties of Servicer. By
------------------------------------------------------
its execution and delivery of this Agreement, the Servicer makes the following
representations, warranties and covenants.
(a) The Servicer covenants as follows:
(i) Liens in Force. The Equipment securing each Contract shall not be
--------------
released in whole or in part from any interest the lessor or secured party
may have in such Equipment under the terms of the Contract, except upon
payment in full of the Contract or as otherwise contemplated herein;
(ii) No Impairment. The Servicer shall do nothing to impair the rights
-------------
of the Trust, the Trust Depositor or the Noteholders in the Contracts, the
Insurance Policies or the other Trust Assets; and
(iii) No Amendments. The Servicer shall not extend or otherwise amend
-------------
the terms of any Contract with respect to the Scheduled Payments thereon,
except (A) in accordance with Section 3.2, or (B) at such time as the Notes
are no longer Outstanding, with the consent of the Trust.
(b) The Servicer represents, warrants and covenants as of the date of
execution and delivery of this Agreement:
(i) Organization and Good Standing. The Servicer has been duly
--------------------------------
organized and is validly existing and in good standing under the laws of
its jurisdiction of organization, with power, authority and legal right to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to enter into
and perform its obligations under this Agreement and the other Basic
Documents to which it is a party;
(ii) Due Qualification. The Servicer is duly qualified to do business
-----------------
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions where the failure to do so
would materially and adversely affect the performance of its obligations
under this Agreement and the other Basic Documents to which it is a party;
(iii) Power and Authority. The Servicer has the power and authority to
-------------------
execute and deliver this Agreement and to carry out the terms hereof; and
the execution, delivery and performance of this Agreement and the other
Basic Documents to which it is a party have been duly authorized by the
Servicer by all necessary corporate action;
(iv) Binding Obligation. This Agreement and the other Basic Documents
------------------
to which it is a party shall each constitute the legal, valid and binding
obligation of the Servicer enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(v) No Violation. The execution and delivery of this Agreement, the
------------
consummation of the transactions contemplated by this Agreement and the
other Basic Documents to which it is a party, and the fulfillment of the
terms hereof, shall not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of
time, or both) a default under, the articles of incorporation or bylaws of
the Servicer, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Servicer is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than this Agreement or any other Basic
Document, or violate any law, order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or any of its properties, except in each
case to the extent it would not have a material adverse effect on the
validity or enforceability of, or the Servicer's performance under, this
Agreement or the other Basic Documents to which it is party or the validity
or enforceability of the Contracts or on the Trust's or the Noteholders'
interest in any Contracts or other Trust Assets;
(vi) No Proceeding. There are no proceedings or investigations pending
-------------
or, to the Servicer's knowledge, threatened against the Servicer, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Servicer or its
properties (A) asserting the invalidity of this Agreement or any of the
other Basic Documents, (B) seeking to prevent the issuance of the Notes or
the consummation of any of the transactions contemplated by this Agreement
or any of the other Basic Documents, or (C) seeking any determination or
ruling that might materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of,
this Agreement or any of the other Basic Documents or (D) seeking to
adversely affect (i) the federal income tax or other federal, state or
local tax attributes of the Notes or (ii) the federal, state or local tax
treatment of any of the transactions contemplated by this Agreement and the
other Basic Documents; and
(vii) No Consents. The Servicer holds all necessary licenses,
------------
certificates and permits from all Governmental Authorities necessary for
conducting its business as it is presently conducted, and 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 delivery,
performance, validity or enforceability of the Basic Documents to which it
is a party, except for such consents, licenses, approvals or
authorizations, or registrations or declarations, as shall have been
obtained or filed, as the case may be, prior to the Closing Date.
SECTION 3.7. Sub-Servicers. The Servicer may, without the Trust's or
-------------
the Indenture Trustee's consent, maintain or enter into one or more agreements
with Sub-Servicers for the servicing and administration of the Contracts by such
Sub-Servicers. Notwithstanding the terms or existence of any such agreement
between the Servicer and a Sub-Servicer, the Servicer shall not be relieved of
any of its obligations under this Agreement by reason of such agreement and
shall be obligated to the same extent and under the same terms and conditions as
if the Servicer alone was servicing and administering the Contracts, and neither
the Trust nor the Indenture Trustee shall have any obligation to deal with
anyone other than the Servicer with respect to the servicing of the Contracts.
SECTION 3.8. Total Servicing Fee; Payment of Expenses by Servicer. On
-----------------------------------------------------
each Payment Date, the Servicer shall be entitled to receive out of the
Collection Account the Servicing Fee for the related Collection Period and any
unreimbursed Servicer Advances in respect of a prior Payment Date, pursuant to
Section [8.03] of the Indenture. The Servicer shall be entitled to retain, as
additional servicing compensation under this Agreement, any Administrative Fees.
The Servicer shall be required to pay all expenses incurred by it in connection
with its activities under this Agreement (including taxes imposed on the
Servicer and all expenses incurred in connection with reports to Noteholders).
SECTION 3.9. Servicer's Certificate. No later than 10:00 a.m. San Diego,
----------------------
California time on each Determination Date, the Servicer shall deliver to the
Trust, the Indenture Trustee and each Rating Agency a Servicer's Certificate
executed by a Responsible Officer of the Servicer containing, among other
things, (i) all information necessary to enable the Indenture Trustee to make
the withdrawals and distributions required by [Section 8.03 of the Indenture],
(ii) all information necessary to enable the Indenture Trustee to send the
statements to Noteholders required by [Section 7.05 of the Indenture], (iii) all
information necessary to enable the Indenture Trustee to reconcile all deposits
to, and withdrawals from, the Collection Account for the related Collection
Period and Payment Date, including the accounting required by Section 4.4 and
(iv) a list of (A) all Repurchased Contracts, Substitute Contracts and
Additional Contracts since the preceding Determination Date and (B) all Warranty
Contracts, Adjusted Contracts, Defaulted Contracts and Prepaid Contracts since
the preceding Determination Date, in each case identified by account number (as
set forth in the Schedule of Contracts) and together with such other information
regarding each Contract as may be reasonably requested by the Indenture Trustee.
A copy of such certificate may be obtained by any Noteholder (or by any Note
Owner, upon certification that such Person is a Note Owner and payment of any
expenses associated with the distribution thereof) by a request in writing to
the Indenture Trustee addressed to the Corporate Trust Office.
SECTION 3.10. Annual Statement as to Compliance; Notice of Servicer
------------------------------------------------------------
Termination Event.
- -----------------
(a) The Servicer shall deliver to the Trust, the Indenture Trustee and
each Rating Agency, on or before ________________ (or 90 days after the end of
the Servicer's fiscal year, if other than [December 31]) of each year, beginning
on __________________, a certificate signed by any Responsible Officer of the
Servicer, dated as of [December 31] (or other applicable date) of the preceding
year, stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or such other period as shall have elapsed from the
Closing Date to the date of the first such certificate) and of its performance
under this Agreement has been made under such officer's supervision, and (ii) to
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such period, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trust, the Indenture Trustee and each
Rating Agency, promptly after having obtained knowledge thereof, but in no event
later than two Business Days thereafter, written notice in a certificate signed
by any Responsible Officer of the Servicer of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Termination Event
under Section 8.1(a). The Trust Depositor or the Servicer shall deliver to the
Trust, the Indenture Trustee, the Servicer or the Trust Depositor (as
applicable) and each Rating Agency promptly after having obtained knowledge
thereof, but in no event later than three Business Days thereafter, written
notice in a certificate signed by any Responsible Officer of the Servicer of any
event which with the giving of notice or lapse of time, or both, would become a
Servicer Termination Event under any other clause of Section 8.1.
SECTION 3.11. Annual Independent Accountant's Report.
--------------------------------------
(a) The Servicer shall cause a firm of nationally recognized independent
certified public accountants (the "Independent Accountants"), who may also
render other services to the Servicer, to deliver to the Trust, the Indenture
Trustee and each Rating Agency, on or before ___________ (or 90 days after the
end of the Servicer's fiscal year, if other than [December 31]) of each year,
beginning on ______________, with respect to the twelve months ended the
preceding [December 31] (or other applicable date) (or such other period as
shall have elapsed from the Closing Date to the date of such certificate), a
statement (the "Accountant's Report") addressed to the Board of Directors of the
Servicer, to the Trust and to the Indenture Trustee, to the effect that such
firm has, at the request of the Servicer, reviewed certain documents and records
relating to the servicing of the Contracts in the Contracts Pool for such period
(including but not limited to the Servicer's Certificates for such year), and
based on such review, which was performed in accordance with generally accepted
standards for review engagements and which consisted primarily of inquiry,
analytical procedures and discussion related to information supplied to such
Independent Accountants, no matters came to the attention of such Independent
Accountants that caused them to believe that (i) such servicing was not
conducted in compliance with Article III of this Agreement or (ii) the
Servicer's Certificates for such year were not prepared in accordance with
Section 3.9.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Trust Depositor and the Servicer within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants.
(c) A copy of the Accountant's Report may be obtained by any Noteholder (or
by any Note Owner, upon certification that such Person is a Note Owner and
payment of any expenses associated with the distribution thereof) by a request
in writing to the Indenture Trustee addressed to the Corporate Trust Office.
SECTION 3.12. Access to Certain Documentation and Information Regarding
------------------------------------------------------------
Contracts. The Servicer shall provide to representatives of the Trust and the
- ---------
Indenture Trustee reasonable access to the documentation regarding the
Contracts. In each case, such access shall be afforded without charge but only
upon reasonable request and during normal business hours. Nothing in this
Section shall derogate from the obligation of the Servicer to observe any
applicable law, rule or contractual provision with an Obligor prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
SECTION 3.13. Certain Duties of the Servicer. The Servicer shall, and
------------------------------
hereby agrees that it will, monitor the Trust's compliance with all applicable
provisions of federal securities laws, notify the Trust of any actions to be
taken by the Trust necessary for compliance with such laws and prepare on behalf
of the Trust all notices, filings or other documents or instruments required to
be filed under such laws.
SECTION 3.14. Duties of the Servicer under the Indenture. The Servicer
---------------------------------------------
shall, and hereby agrees that it will, perform on behalf of the Trust the
following duties of the Trust under the Indenture (references are to the
applicable Sections in the Indenture):
(a) the direction to the Paying Agents, if any, to deposit moneys with the
Indenture Trustee (Section [3.03]);
(b) the obtaining and preservation of the Trust's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the Notes
and each other instrument and agreement included in the Trust Estate (Section
[3.04]);
(c) the preparation of all supplements, amendments, financing statements,
continuation statements, instruments of further assurance and other instruments,
in accordance with Section [3.05] of the Indenture, necessary to protect the
Trust Estate (Section [3.05]);
(d) the annual delivery of Opinions of Counsel, in accordance with Section
[3.06] of the Indenture, as to the Trust Estate, and the annual delivery of the
Officers' Certificate and certain other statements, in accordance with Section
[3.09] of the Indenture, as to compliance with the Indenture. (Sections [3.06]
and [3.09]);
(e) the preparation and obtaining of documents and instruments required for
the release of the Trust from its obligations under the Indenture (Section
[4.01]);
(f) the monitoring of the Trust's obligations as to the satisfaction and
discharge of the Indenture and the preparation of an Officers' Certificate and
the obtaining of the Opinion of Counsel and the Independent Certificate relating
thereto (Section [4.01]);
(g) the preparation of any written instruments required to confirm more
fully the authority of any co-trustee or separate trustee and any written
instruments necessary in connection with the resignation or removal of any
co-trustee or separate trustee (Sections [6.08] and [6.11]);
(h) the opening of one or more accounts in the Trust's name, the
preparation of Issuer Orders, Officers' Certificates and Opinions of Counsel and
all other actions necessary with respect to investment and reinvestment of funds
in the Trust Accounts (Sections [8.02], [8.04], [8.05] and [8.06]);
(i) the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures (Sections
[9.01], [9.02] and [9.03]);
(j) preparation of all Officers' Certificates, Opinions of Counsel and
Independent Certificates with respect to any requests by the Trust to the
Indenture Trustee to take any action under the Indenture (Section [11.01]); and
(k) the recording of the Indenture, if applicable (Section [11.15]).
ARTICLE IV
COLLECTIONS AND DEPOSITS; TRUST ACOCUNTS;
ALLOCATIONS AND DISTRIBUTIONS
SECTION 4.1. Initial Deposit. No later than the second Business Day
----------------
following the Closing Date, the Servicer shall deposit in the Collection Account
(i) all Scheduled Payments and Prepayments in respect of Contracts received by
the Servicer on or after the initial Cut-off Date (including those Scheduled
Payments due prior to, but not received as of, the initial Cut-off Date, but
excluding those Scheduled Payments due on or after, but received prior to, the
initial Cut-off Date) and on or prior to the second Business Day preceding such
date and (ii) all Liquidation Net Proceeds (including proceeds of Insurance
Policies to be treated as such in accordance with Section 3.4) realized in
respect of the Contracts and related Equipment and applied by the Servicer on
and after the initial Cut-off Date.
SECTION 4.2. Collections.
-----------
(a) The Servicer shall remit to the Collection Account all Pledged Revenues
received by the Servicer within two Business Days after receipt thereof.
Notwithstanding the foregoing, the Servicer may utilize an alternative
remittance schedule acceptable to the Servicer if such action satisfies the
Rating Agency Condition.
(b) Notwithstanding the provisions of subsection (a) hereof, the Servicer
will be entitled to be reimbursed from amounts on deposit in the Collection
Account with respect to a Collection Period for amounts previously deposited in
the Collection Account but later determined by the Servicer in good faith to (i)
have resulted from mistaken deposits or postings or checks returned for
insufficient funds, or (ii) be required to be repaid to an Obligor. The amount
to be reimbursed hereunder may be retained pursuant to Section 4.4 at any time
or may otherwise be paid to the Servicer on the related Payment Date [pursuant
to Section 8.03(i) of the Indenture] upon certification by the Servicer of such
amounts and the provision of such information to the Indenture Trustee as may be
necessary to verify the accuracy of such certification.
(c) 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 4.3. Application of Collections. For the purposes of this
--------------------------
Agreement, all Collections for a Collection Period shall be applied by the
Servicer as follows:
(a) With respect to each Contract, payments by or on behalf of the Obligor
thereof (other than Excluded Amounts with respect to such Contract), to the
extent collected, shall be applied to Scheduled Payments and Prepayments in
accordance with the terms of such Contract and the Servicer's Credit and
Collection Policy. With respect to each Defaulted Contract, the Liquidation Net
Proceeds shall be applied, for purposes of this Agreement and the Basic
Documents only, to Scheduled Payments and Prepayments on the Contract as if the
Liquidation Net Proceeds had been paid by the Obligor, and then to any other
amounts due and payable with respect to such Contract.
(b) With respect to each Contract that has become a Repurchased Contract,
the Repurchase Amount shall be applied as of the date as of which such
Repurchased Contract is repurchased, for purposes of this Agreement and the
Indenture only, to Scheduled Payments and Prepayments on the Contract as if the
Repurchase Amount had been paid by the Obligor in the Collection Period
preceding such date of repurchase. All payments by or on behalf of an Obligor
received with respect to any Repurchased Contract after the end of the
Collection Period preceding the date as of which such Repurchased Contract is
repurchased shall be paid to Seller and shall not be included in Pledged
Revenues.
(c) [Reserved]
SECTION 4.4. Net Deposits. So long as no Servicer Termination Event
-------------
shall have occurred and be continuing with respect to the Servicer, the Servicer
may make the remittances or transfers to be made by it pursuant to Section 4.2
net of amounts (which amounts may be netted prior to any such remittance or
transfer) that would otherwise be distributed to it pursuant to Section
[8.03(i)] of the Indenture; provided that the Servicer shall account for all of
--------
such amounts in the related Servicer's Certificate as if such amounts were
deposited and distributed separately. If an error is made by the Servicer in
calculating the amount to be deposited or retained by it, with the result that
an amount less than required is deposited in the Collection Account, the
Servicer shall make a payment of the deficiency to the Collection Account
immediately upon becoming aware, or receiving notice from the Indenture Trustee,
of such error.
SECTION 4.5. Servicer Advances. On each Determination Date, the Servicer
-----------------
will be required to advance and remit to the Indenture Trustee, in such manner
as will ensure that the Indenture Trustee will have immediately available funds
on account thereof by 1:00 p.m. New York City time on the second Business Day
prior to the next succeeding Payment Date, an amount (a "Servicer Advance")
equal to any Scheduled Payments due during the prior Collection Period but
unpaid prior to such Determination Date with respect to any Contract, but only
to the extent the Servicer determines in its sole discretion that such Servicer
Advance will be recoverable in future periods from Collections in respect of on
the related Contract. The Servicer will be reimbursed for Servicer Advances from
funds in the Collection Account in accordance with the Indenture on [the second
following Payment Date].
SECTION 4.6. Collection Account. On or before the Closing Date, the
-------------------
Trust Depositor shall establish the Collection Account in the name of the
Indenture Trustee for the benefit of the Noteholders. The Servicer and Indenture
Trustee are hereby required to ensure that each of the Trust Accounts is
established and maintained as a segregated corporate trust account with a
Qualified Institution. If any institution with which any of the accounts
established pursuant to this Section 4.6(a) are established ceases to be a
Qualified Institution, the Servicer or the Indenture Trustee (as the case may
be) shall within 10 Business Days establish a replacement account at a Qualified
Institution after notice of such event.
SECTION 4.7. [Reserved].
--------
SECTION 4.8. Trust Account Procedures. So long as no Event of Default
--------------------------
shall have occurred and the continuing, 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 Payment
Date. Once such funds are invested, the Indenture Trustee shall not change the
investment of such funds. 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 FDIC. 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 4.8. All
investment earnings on investments of funds in the Trust Accounts shall be
deposited in the Collection Account pursuant to Section 4.6 and distributed on
the next Payment Date pursuant to Section 4.10. 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) of collateral comprised of
"investment property" (within the meaning of Section 9-115 of the UCC) 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. Any losses on Qualified Eligible
Investments (whether or not invested at the direction of the Servicer) shall be
charged to the related Trust Account and shall reduce the Available Amount for
the related Payment Date.
SECTION 4.9. Noteholder Distributions. (a) Each Noteholder as of the
-------------------------
related Record Date shall be paid on the next succeeding Payment Date by check
mailed to such Noteholder at the address for such Noteholder appearing on the
Note Register or by wire transfer if such Noteholder provides written
instructions to the Indenture Trustee, or Owner Trustee, respectively, at least
ten days prior to such Payment Date.
(b) The Indenture Trustee shall serve as the Paying Agent hereunder
and shall make the payments to the Noteholders required hereunder. The Indenture
Trustee hereby agrees that all amounts held by it for payment hereunder to the
Noteholders will be held in trust for the benefit of the Noteholders.
SECTION 4.10. Allocations And Distributions.
-----------------------------
(a) On each Determination Date prior to an Event of Default or a
Restricting Event, the Servicer, pursuant to written monthly payment
instructions and notification, shall instruct the Indenture Trustee to withdraw,
and on the succeeding Payment Date the Indenture Trustee acting in accordance
with such written instructions shall withdraw, the amounts required to be
withdrawn from the Collection Account pursuant to this Section in order to make
the following payments or allocations from the Available Amounts for the related
Payment 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 Payment Date have been made), in the following order of priority:
(i) pay to the Owner Trustee, Indenture Trustee and the Administrator
the amount of any unpaid fees and expenses;
(ii) pay to the Servicer, the amount of any unreimbursed Servicer
Advance;
(iii) pay to the Servicer the monthly Servicing Fee for the preceding
Collection 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 Class A Noteholders, an amount equal to (i) interest
accrued in respect of the Class A Notes for the Accrual Period immediately
preceding such Payment Date, plus (ii) any accrued and unpaid interest from
prior Accrual Periods; provided that, if the Available Amounts remaining to
be allocated as described in this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be allocated
(A) among each Class of the Class A Notes pro rata based on the ratio of
--------
the interest payable on the Class A-1, Class A-2 and Class A-3 Notes, as
applicable, to the interest payable on the Class A Notes as a whole and (B)
among each Holder of each Class A-1, A-2 or A-3 Note, as applicable, pro
---
rata based on the Outstanding Principal Amount thereof;
----
(v) pay to 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 Payment 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 Class C Noteholders, an amount equal to the interest
accrued thereon at the Class C Interest Rate for the Accrual Period
immediately preceding such Payment 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 Class A Noteholders, the Class A Principal Payment
Amount for such Payment Date, together with any unpaid Class A Principal
Amount from prior Payment Dates, such Class A Principal Payment Amount to
be allocated, sequentially, among the Class A-1, Class A-2 and Class A-3
Notes so that the entire Class A Principal Payment Amount will be
allocated, first, to the Class A-1 Notes until the Class A-1 Notes are paid
in full, second, to the Class A-2 Notes until the Class A-2 Notes are paid
in full and, third, to the Class A-3 Notes until the Class A-3 Notes are
paid in full; provided, (i) that if the 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 or Class A-3 Note, that
pursuant to the allocation above is entitled to such distribution, 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 Note principal in full, then such excess shall be
applied in repayment of principal on the Class B Notes;
(viii) pay to the Class B Noteholders, the Class B Principal Payment
Amount for such Payment Date, together with any unpaid Class B Principal
Payment Amount from prior Payment Dates; 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;
(ix) pay to the Class C Noteholders, the Class C Principal Payment
Amount for such Payment Date, together with any unpaid Class C Principal
Amount from prior Payment Dates; 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 accordance with the
priority in clause (x) below; and
(x) pay any remaining Available Amounts to the Trust Depositor (or
any subsequent holder of the subordinate interests in the Trust).
(b) On each Determination Date after the occurrence and during the
continuance of an Event of Default or a Restricting Event, the Servicer,
pursuant to monthly payment instructions and notification, shall instruct the
Indenture Trustee to withdraw, and on the succeeding Payment Date the Indenture
Trustee acting in accordance with such instructions shall withdraw, the amounts
required to be withdrawn from the Collection Account pursuant to this Section in
order to make the following payments or allocations from the Available Amounts
for the related Payment Date, in the following order of priority (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 Payment Date have been
made):
(i) pay to the Owner Trustee, the Indenture Trustee and the
Administrator the amount of any unpaid fees and expenses;
(ii) pay to the Servicer, the amount of any unreimbursed Servicer
Advances;
(iii) pay to the Servicer the monthly Servicing Fee for the preceding
Collection Period together with any amounts in respect of the Servicing Fee that
were due in respect of prior Collection Periods that remain unpaid;
(iv) pay to the Class A Noteholders, an amount equal to (i) interest
accrued in respect of the Class A Notes for the Accrual Period immediately
preceding such Payment Date, plus (ii) any accrued and unpaid interest from
prior Accrual Periods; provided that, if the Available Amounts remaining to be
allocated as described in this clause are less than the full amount required to
be so paid, such remaining Available Amounts shall be allocated (A) among each
Class of the Class A Notes pro rata based on the ratio of the interest payable
--------
on the Class A-1, Class A-2 and Class A-3 Notes, as applicable, to the interest
payable on the Class A Notes as a whole and (B) among each Holder of each Class
A-1, A-2 or A-3 Note, as applicable, pro rata based on the outstanding Principal
--------
Amount thereof;
(v) pay to 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 Payment 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 Class C Noteholders, an amount equal to the interest
accrued thereon at the Class C Interest Rate for the Accrual Period immediately
preceding such Payment 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 Class A Noteholders, an amount equal to all remaining
Available Amounts for such Payment Date, until the aggregate Principal Amount of
the Class A Notes has been paid in full; with all amounts paid as described in
this clause to be allocated first to the Class A-1 Notes until the Class A-1
Notes have been paid in full and then among the Class A-2 and Class A-3 Notes,
pro rata, based on the outstanding principal amounts thereof;
- --- ----
(viii) after the Class A Notes have been paid in full, pay to the
Class B Noteholders, an amount equal to all remaining Available Amounts for such
Payment Date, until the aggregate Principal Amount of the Class B notes has been
paid in full;
(ix) after the Class B notes have been paid in full, pay to the Class
C Noteholders, an amount equal to all remaining Available Amounts until the
aggregate Principal Amount of the Class C notes have been paid in full and 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; and
(x) pay all other remaining Available Amounts to the Trust Depositor
(or any subsequent holder of the subordinate interests in the Trust).
ARTICLE V
TERMINATION
SECTION 5.1. Optional Purchase of All Contracts; Liquidation of Trust
------------------------------------------------------------
Assets.
- ------
(a) At such time as the sum of the Aggregate Principal Balance of the Notes
is less than 15% of the Initial Pool Discounted Contract Balance, the Trust
Depositor shall have the option to purchase all of the Contracts from the Trust;
provided that the amount to be paid for such purchase (as set forth in the
- --------
following sentence) shall be the greater of (i) an amount sufficient to pay the
full amount of unpaid principal of and interest payable on the Notes through the
date of redemption and (ii) the ADCB of all of the Contracts. To exercise such
option, the Trust Depositor shall give the Servicer, the Trust and the Indenture
Trustee [__] days prior written notice, and on the Business Day preceding any
Determination Date pay to the Servicer the aggregate purchase price for the
Contracts (as specified in the preceding sentence). The Servicer shall
immediately deposit the purchase price so paid into the Collection Account, to
be treated as Available Amounts and distributed in accordance with Section 4.10.
(b) Notice of any termination of the Trust shall be given by the Servicer
to the Trust and the Indenture Trustee as soon as practicable (but in no event
more than three Business Days) after the Servicer has received notice thereof.
ARTICLE VI
THE TRUST DEPOSITOR
SECTION 6.1. Liability of Trust Depositor. The Trust Depositor shall be
----------------------------
liable hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Trust Depositor and the representations made by
the Trust Depositor.
SECTION 6.2. Merger or Consolidation of, or Assumption of the Obligations
------------------------------------------------------------
of, Trust Depositor; Amendment of Certificate of Incorporation.
- ----------------------------------------------------------------
(a) The Trust Depositor shall not merge or consolidate with any other
Person or permit any other Person to become the successor to the Trust
Depositor's business except in accordance with the requirements of this Section.
The certificate of incorporation of any corporation (i) into which the Trust
Depositor may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Trust Depositor shall be a party, or (iii) succeeding
to the business of Trust Depositor, shall contain provisions relating to
limitations on business and other matters substantively identical to those
contained in the Trust Depositor's certificate of incorporation. Any such
successor corporation shall execute an agreement of assumption of every
obligation of the Trust Depositor under this Agreement and each other Basic
Document and, whether or not such assumption agreement is executed, shall be the
successor to the Trust Depositor under this Agreement without the execution or
filing of any document or any further act on the part of any of the parties to
this Agreement. The Trust Depositor shall provide prompt notice of any merger,
consolidation or succession pursuant to this Section 6.2 to the Trust, the
Indenture Trustee and the Rating Agencies. Notwithstanding the foregoing, the
Trust Depositor shall not merge or consolidate with any other Person or permit
any other Person to become a successor to the Trust Depositor's business, unless
(w) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 2.4 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time, or both, would become an Event of Default or a Servicer Termination Event
shall have occurred and be continuing, (x) the Trust Depositor shall have
delivered to the Trust and the Indenture Trustee a certificate of a Responsible
Officer of the Trust Depositor and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 6.2 and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, (y) the Trust
Depositor shall have delivered to the Trust and the Indenture Trustee an Opinion
of Counsel, stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the interest
of the Trust in the Trust Assets and reciting the details of the filings or (B)
no such action shall be necessary to preserve and protect such interest, and (z)
the Rating Agency Condition shall have been satisfied.
(b) The Trust Depositor hereby agrees that it shall not (i) take any action
prohibited by Article VIII of its certificate of incorporation or (ii) without
the prior written consent of the Trust and the Indenture Trustee and without
satisfaction of the Rating Agency Condition, amend Article III, Article V,
Article VI or Article VIII of its certificate of incorporation.
SECTION 6.3. Limitation on Liability of Trust Depositor and Others. The
------------------------------------------------------
Trust Depositor and the Owner Trustee may rely in good faith on the advice of
counsel or on any document of any kind prima facie properly executed and
------------
submitted by any Person respecting any matters arising under this Agreement. The
Trust Depositor shall not be under any obligation to appear in, prosecute or
defend any legal action that is not incidental to its obligations as transferor
of the Contracts under this Agreement and that in its opinion may involve it in
any expense or liability.
SECTION 6.4. Trust Depositor May Own Notes. Each of the Trust Depositor
-----------------------------
and any Affiliate of the Trust Depositor may in its individual or any other
capacity become the owner or pledgee of Notes with the same rights as it would
have if it were not the Trust Depositor or an Affiliate thereof except as
otherwise specifically provided herein or in the other Basic Documents. Notes so
owned by or pledged to the Trust Depositor or such Affiliate shall have an equal
and proportionate benefit under the provisions of this Agreement or any other
Basic Document, without preference, priority, or distinction as among all of
Notes; provided that any Notes owned by the Trust Depositor or any Affiliate
--------
thereof, during the time such Notes are owned by them, shall be without voting
rights for any purpose set forth in this Agreement or any other Basic Document.
The Trust Depositor shall notify the Trust and the Indenture Trustee promptly
after it or any of its Affiliates become the owner or pledgee of a Note.
SECTION 6.5. Covenants of the Trust Depositor. The Trust Depositor
-----------------------------------
hereby covenants that: The Trust Depositor will not permit its assets to be
commingled with those of the Seller and the Trust Depositor shall maintain
separate corporate records, books of accounts and bank accounts from those of
the Seller. The Seller will conduct its business solely in its own name so as
not to mislead others as to the identity of the entity with which those others
are concerned and will cause the Trust Depositor to conduct its business solely
in its own name. The Trust Depositor will provide for its own operating expenses
and liabilities from its own funds, except that the organizational expenses of
the Trust Depositor may be paid by the Seller. The Seller will not hold itself
out, or permit itself to be held out, as having agreed to pay, or as generally
being liable for, the debts of the Trust Depositor; provided, however, the
-------- -------
organizational expenses of the Trust Depositor may be paid by the Seller. The
Seller shall cause the Trust Depositor not to hold itself out, or permit itself
to be held out, as having agreed to pay, or as generally being liable for, the
debts of the Seller. The Trust Depositor will maintain an arm's length
relationship with the Seller with respect to any transactions between the Trust
Depositor, on the one hand, and the Seller, on the other.
ARTICLE VII
THE SERVICER
SECTION 7.1. Liability of Servicer; Indemnities.
----------------------------------
(a) The Servicer (in its capacity as such and, in the case of Mitsui Vendor
Leasing (U.S.A.) Inc., without limitation of its obligations under the Transfer
and Sale Agreement) shall be liable hereunder only to the extent of the
obligations in this Agreement specifically undertaken by the Servicer and the
representations made by the Servicer.
(b) The Servicer shall indemnify, defend and hold harmless the Trust, the
Indenture Trustee, the Trust Depositor, their respective officers, directors,
agents and employees and the Noteholders from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent that such cost,
expense, loss, claim, damage or liability arose out of, or was imposed upon the
Trust, the Indenture Trustee, the Trust Depositor or the Noteholders through the
Servicer's breach of this Agreement, the gross negligence, willful misfeasance
or bad faith of the Servicer in the performance of its duties under this
Agreement or by reason of reckless disregard of its obligations and duties under
this Agreement.
(c) The Servicer shall indemnify, defend and hold harmless the Trust, in
its individual capacity, its agents and employees, from and against all costs,
taxes, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties contained in the Basic Documents, except to the extent that such cost,
taxes (other than income taxes), expense, loss, claim, damage or liability is
due to the willful misfeasance or gross negligence of the Trust.
(d) Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer has made any indemnity payments pursuant to this Article and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts collected to the Servicer, together with any
interest earned thereon.
(e) Mitsui Vendor Leasing (U.S.A.) Inc., in its individual capacity, hereby
acknowledges that the indemnification provisions in the Transfer and Sale
Agreement benefiting the Trust and the Indenture Trustee are enforceable by each
hereunder.
(f) The provisions of this Section shall survive the termination of the
Basic Documents.
SECTION 7.2. Merger or Consolidation of, or Assumption of the Obligations
------------------------------------------------------------
of, the Servicer. The Servicer shall not merge or consolidate with any other
- ----------------
Person, convey, transfer or lease substantially all its assets as an entirety to
another Person, or permit any other Person to become the successor to the
Servicer's business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be an
Eligible Servicer and shall be capable of fulfilling the duties of the Servicer
contained in this Agreement. Any corporation (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
the Servicer shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; provided
--------
that nothing contained herein shall be deemed to release the Servicer from any
obligation. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section to the Trust, the Indenture Trustee and each
Rating Agency. Notwithstanding the foregoing, the Servicer shall not merge or
consolidate with any other Person or permit any other Person to become a
successor to the Servicer's business, unless (a) immediately after giving effect
to such transaction, no representation or warranty made pursuant to Section 3.6
shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such transaction)
and no event that, after notice or lapse of time, or both, would become a
Servicer Termination Event shall have occurred and be continuing, (b) the
Servicer shall have delivered to the Trust and the Indenture Trustee a
certificate of a Responsible Officer of the Servicer and an Opinion of Counsel
each stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, (c) the Servicer shall have delivered to the Trust and the Indenture
Trustee an Opinion of Counsel, stating that, in the opinion of such counsel,
either (1) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Trust in the Trust Assets and reciting the details of the
filings or (2) no such action shall be necessary to preserve and protect such
interest, and (d) the Rating Agency Condition has been satisfied.
SECTION 7.3. Limitation on Liability of Servicer and Others. Neither
---------------------------------------------------
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust, the Trust Depositor, the
Noteholders or the Indenture Trustee except as provided in this Agreement, for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement; provided that this provision shall not protect the
--------
Servicer or any such Person against any liability that would otherwise be
imposed by reason of a breach of this Agreement or willful misfeasance, bad
faith or gross negligence (excluding errors in judgment) in the performance of
duties, by reason of reckless disregard of obligations and duties under this
Agreement or any violation of law by the Servicer or such Person, as the case
may be; provided that this provision shall not affect any liability to indemnify
--------
the Trust and the Indenture Trustee for costs, taxes, expenses, claims,
liabilities, losses or damages paid by the Trust or the Indenture Trustee, each
in its individual capacity. The Servicer and any director, officer, employee or
agent of the Servicer may rely in good faith on the advice of counsel or on any
document of any kind prima facie properly executed and submitted by any Person
-----------
respecting any matters arising under this Agreement.
SECTION 7.4. Servicer Not to Resign. Subject to the provisions of
-------------------------
Section 7.2, the Servicer shall not resign from the obligations and duties
imposed on it by this Agreement as Servicer except upon a determination that by
reason of a change in legal requirements the performance of its duties under
this Agreement would cause it to be in violation of such legal requirements in a
manner which would have a material adverse effect on the Servicer, and a Note
Majority does not elect to waive the obligations of the Servicer to perform the
duties which render it legally unable to act or to delegate those duties to
another Person. Any such determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trust and the Indenture Trustee. No resignation of the Servicer shall become
effective until a successor Servicer that is an Eligible Servicer shall have
assumed the responsibilities and obligations of the Servicer; provided that in
--------
the event a successor Servicer is not appointed within 60 days after the
Servicer has given notice of its resignation and has provided the Opinion of
Counsel required by this Section, the Servicer may petition a court for its
removal.
SECTION 7.5. Corporate Existence. The Servicer shall maintain its
---------------------
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which the failure to so qualify would have an adverse effect on the validity or
enforceability of any Contract or this Agreement or on the ability of the
Servicer to perform its duties under this Agreement.
ARTICLE VIII
SERVICER TERMINATION EVENTS
SECTION 8.1. Servicer Termination Event. For purposes of this Agreement,
--------------------------
each of the following shall constitute a "Servicer Termination Event":
(a) Failure by the Servicer to deposit within the time periods specified in
this Agreement in the Collection Account for distribution to Noteholders, or to
distribute to the Trust Depositor, any proceeds or payment required to be so
deposited or distributed under the terms of this Agreement (or, if Mitsui Vendor
Leasing (U.S.A.) Inc. is the Servicer, the Transfer and Sale Agreement) that
continues unremedied for a period of three Business Days after written notice is
received by the Servicer from the Trust, the Trust Depositor or the Indenture
Trustee (or to the Servicer, the Trust, the Trust Depositor and the Indenture
Trustee by the Noteholders representing in aggregate no less than 25% of the
Principal Amount of any Class of Notes affected thereby) or after discovery of
such failure by a Responsible Officer of the Servicer; or
(b) Failure by the Servicer to deliver to the Indenture Trustee and the
Trust the Servicer's Certificate by the third Business Day prior to the related
Payment Date, or failure on the part of the Servicer to observe its covenants
and agreements set forth in Section 7.2; or
(c) Failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement (or, if Mitsui Vendor Leasing (U.S.A.) Inc. is the Servicer, the
Transfer and Sale Agreement), which failure (i) materially and adversely affects
the rights of the Trust or Noteholders, and (ii) continues unremedied for a
period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Trust, the Trust Depositor or the Indenture Trustee (or to the Servicer, the
Trust, the Trust Depositor and the Indenture Trustee by Noteholders representing
in aggregate no less than 25% of the Principal Amount of any Class of Notes
affected thereby) or after discovery of such failure by a Responsible Officer of
the Servicer; or
(d) (i) The commencement of an involuntary case under the federal
bankruptcy laws, as now or hereinafter in effect, or another present or future
federal or state bankruptcy, insolvency or similar law and such case is not
dismissed within 60 days; or (ii) the entry of a decree or order for relief by a
court or regulatory authority having jurisdiction in respect of the Servicer in
an involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal or state, bankruptcy, insolvency
or similar law, or appointing a receiver, liquidator, assignee, indenture
trustee, custodian, sequestrator or other similar official of the Servicer or of
any substantial part of their respective properties or ordering the winding up
or liquidation of the affairs of the Servicer; or
(e) The commencement by the Servicer of a voluntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or the consent by the
Servicer to the appointment of or taking possession by a receiver, liquidator,
assignee, indenture trustee, custodian, sequestrator or other similar official
of the Servicer or of any substantial part of its property or the making by the
Servicer of an assignment for the benefit of creditors or the failure by the
Servicer generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer in furtherance of any of the foregoing; or
(f) Any representation, warranty or statement of the Servicer made in this
Agreement or any certificate, report or other writing delivered by the Servicer
pursuant hereto shall prove to be incorrect in any material respect as of the
time when the same shall have been made, the incorrectness of such
representation, warranty or statement has a material adverse effect on the Trust
or Noteholders, and, for a period of 30 days after written notice thereof shall
have been given to the Servicer by the Trust, the Trust Depositor or the
Indenture Trustee (or to the Servicer, the Trust, the Trust Depositor and the
Indenture Trustee by the Noteholders representing in aggregate no less than 25%
of the Principal Amount of any Class of Notes affected thereby) such
incorrectness continues to affect such Noteholders materially and adversely for
such period.
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 (c) or (f) for a period of 60 days (in addition to any
period provided in (a), (b) or (f)) shall not constitute a Servicer Termination
Event until the expiration of such additional five Business Days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or other similar occurrences. Upon the occurrence of any such event
the Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Trust, the Trust Depositor and the Indenture
Trustee prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations.
SECTION 8.2. Consequences of a Servicer Termination Event. If a Servicer
--------------------------------------------
Termination Event shall occur and be continuing, the Indenture Trustee may, and
at the direction of a Note Majority shall, by notice given in writing to the
Servicer and the Trust, terminate all of the rights and obligations of the
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority, power, obligations and responsibilities of the
Servicer under this Agreement, whether with respect to the Notes, the Trust
Assets or otherwise, shall be terminated and automatically shall pass to, be
vested in and become obligations and responsibilities of the Back-up Servicer
(unless and until a successor Servicer is appointed in accordance with Section
8.3); provided that the Back-up Servicer shall have no liability with respect to
--------
any obligation which was required to be performed by the terminated Servicer
prior to the date that the Back-up Servicer becomes the Servicer or any claim of
a third party based on any alleged action or inaction of the terminated
Servicer. The Back-up Servicer is authorized and empowered by this Agreement to
execute and deliver, on behalf of the terminated Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination. The terminated Servicer agrees to
cooperate with the Back-up Servicer in effecting the termination of the
responsibilities and rights of the terminated Servicer under this Agreement,
including, without limitation, the transfer to the Back-up Servicer for
administration by it of all cash amounts that shall at the time be held by the
terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in any of the Trust Accounts or thereafter received with respect to
the Contracts and the delivery to the Back-up Servicer of all Contract Files,
Monthly Records and Collection Records and a computer tape in readable form as
of the most recent Business Day containing all information necessary to enable
the Back-up Servicer or a successor Servicer to service the Contracts and the
other Trust Assets. The terminated Servicer shall grant the Trust, the Indenture
Trustee and the successor Servicer reasonable access to the terminated
Servicer's premises at the terminated Servicer's expense.
SECTION 8.3. Back-up Servicer to Act; Appointment of Successor.
-------------------------------------------------
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.2, the Back-up 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 in this Agreement, and shall be
subject to all the responsibilities, restrictions, duties, liabilities and
termination provisions relating thereto placed on the Servicer by the terms and
provisions of this Agreement. As compensation therefor, the Back-up Servicer
shall be entitled to receive the Total Servicing Fee. The Trust and the
Indenture Trustee shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
(b) Notwithstanding the foregoing, the Trust Depositor may, if the Back-up
Servicer is legally unable to act as successor Servicer, appoint, or petition a
court of competent jurisdiction to appoint, any Eligible Servicer as the
successor to the Servicer hereunder in the performance of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Pending
appointment of a successor pursuant to the preceding sentence, the outgoing
Servicer shall continue to act as Servicer until a successor has been appointed
and accepted such appointment.
(c) In connection with such appointment and assumption, the Indenture
Trustee may make such arrangements for the compensation of such successor out of
payments on the Contracts as it and such successor shall agree; provided that no
--------
such monthly compensation shall, without the written consent of the Trust
Depositor and 100% of the Noteholders, exceed the Total Servicing Fee. The
Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
(d) If a successor Servicer is acting as Servicer hereunder, it shall be
subject to termination under Section 8.2 upon the occurrence of any Servicer
Termination Event applicable to it as Servicer.
SECTION 8.4. Notification to Noteholders. Upon any termination of, or
----------------------------
appointment of a successor to, the Servicer pursuant to this Article VIII, the
Trust shall give prompt written notice thereof to each Rating Agency, and the
Indenture Trustee shall give prompt written notice thereof to Noteholders at
their respective addresses appearing in the Note Register.
SECTION 8.5. Waiver of Past Defaults. A Note Majority may waive any
--------------------------
default by the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Termination Event arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
ARTICLE IX
SUBSTITUTION AND ADDITION OF CONTRACTS
SECTION 9.1. Permitted Substitutions for Defaulted Contracts; Conditions
------------------------------------------------------------
for All Substitutions and Additions.
- -----------------------------------
(a) Subject to the satisfaction of the requirements set forth in Section
9.1(b) hereof and pursuant to the terms set forth in Section 2.6 above, the
Seller will have the right (but not the obligation) at any time to substitute
one or more Substitute Contracts and the related Equipment subject thereto for
Defaulted Contract and related Equipment.
(b) Each transfer of a Substitute Contract will be subject to the
satisfaction of the following conditions precedent:
(i) if such Substitute Contract relates to a Defaulted Contract or
Adjusted Contract, the aggregate Discounted Contract Balance of the
Defaulted Contracts and Adjusted Contracts that are Predecessor Contracts
shall not in the aggregate exceed 10% of the Initial Pool Discounted
Contract Balance
(ii) after giving effect to such substitutions and any adjustments
pursuant to Section 3.2, the aggregate Book Value of all Substitute
Contracts (including such Substitute Contract) must be not less than 90% of
the Book Value of the all Predecessor Contracts (including the Predecessor
Contract related to such Substitute Contract);
(iii) either the final payment on such Substitute Contract must be on
or prior to ______________, 20___ or, to the extent the final payment on
such Substitute Contract is due subsequent to _______________, 20__, only
scheduled payments due on or prior to such date may be included in the
Discounted Contract Balance of such Substitute Contract for the purpose of
making any calculation under the Indenture;
(iv) the ADCB, after giving effect to such adjustments and
substitutions, must not be less than the ADCB prior to such adjustment or
substitution; and
(v) the weighted average life of the Notes, after giving effect to
such adjustments and substitutions, must not differ materially from the
weighted average life of the Notes prior to such adjustments and
substitutions.
(c) Each transfer of an Additional Contract will be subject to the
satisfaction of the following conditions precedent:
(i) either the final payment on such Additional Contract must be on or
prior to ______________, 20___ or, to the extent the final payment on such
Additional Contract is due subsequent to _______________, 20__, only
scheduled payments due on or prior to such date may be included in the
Discounted Contract Balance of such Additional Contract for the purpose of
making any calculation under the Indenture;
(ii) the ADCB, after giving effect to such additions, must not be less
than the ADCB prior to such additions;
(iii) the weighted average life of the Notes, after giving effect to
such additions, must not differ materially from the weighted average life
of the Notes prior to such additions; and
(iv) after giving effect to such additions, the aggregate ADCB must
not be less than the aggregate ADCB prior to such additions.
SECTION 9.2. Procedures.
----------
(a) By 11:00 a.m. on the Business Day prior to each Transfer Date, the
Seller shall give written notice to the Servicer of any substitution of
Substitute Contracts and/or addition of Additional Contracts for such Transfer
Date. By 11:00 a.m. on such Transfer Date, the Seller shall deliver to the
Servicer and the Servicer shall deliver to the Indenture Trustee and, to the
extent not included in the Servicer's Certificate, the Indenture Trustee shall
promptly deliver to each Rating Agency (i) a supplement to Exhibit A hereto
setting forth the information shown thereon for each such Substitute Contract or
Additional Contract, as applicable, (ii) an Officer's Certificate (A) certifying
that each such Substitute Contract or Additional Contract, as applicable, is an
Eligible Contract, (B) specifying each Predecessor Contract for which a
substitution has been made or each Prepaid Contract for which an addition has
been made, as applicable, and the Discounted Contract Balance and the Book Value
under each such Predecessor Contract or Prepaid Contract, as applicable, and the
Discounted Contract Balance and the Book Value under each Substitute Contract or
Additional Contract, as applicable, being transferred thereby and (C) that all
conditions precedent to such addition or substitution have been satisfied and
(iii) such additional information concerning such Substitute Contracts,
Predecessor Contracts, Additional Contracts or Prepaid Contracts as may be
needed for the Servicer to prepare its Servicer's Certificates pursuant to
Section 3.9 and to otherwise carry out its duties as servicer hereunder.
(b) Subject to the provisions of Section 9.3, the delivery of any Officer's
Certificate and supplement to Exhibit A pursuant to Section 9.2 shall be
conclusive evidence, without further act or deed, that during the preceding
Collection Period and as of the related Cut-off Date, (i) in the case of either
a Substitute Contract or an Additional Contract conveyed by the Seller, (A) the
Seller assigned to the Trust Depositor pursuant to the Transfer and Sale
Agreement all of the Seller' right, title and interest in and to the Substitute
Contracts or the Additional Contracts, as applicable, identified in such
supplement and the related rights described in Section 2.1 of the Transfer and
Sale Agreement, (B) the Seller assigned to the Trust Depositor pursuant to the
Transfer and Sale Agreement, all of the Seller' right, title and interest in and
to the Equipment subject to such Substitute Contracts or such Additional
Contracts, as applicable, and the other Transferred Property described in
Section 2.1 of the Transfer and Sale Agreement, and (C) the Trust Depositor
assigned and transferred to the Seller, without representation or warranty, all
of the Trust Depositor's right, title and interest in and to the Predecessor
Contracts or the Prepaid Contracts, as applicable, identified in such Officer's
Certificate and the Equipment subject thereto and (ii) in the case of a
Substitute Contract conveyed by the Servicer, (A) the Servicer assigned to the
Trust Depositor pursuant to [________________] all of the Servicer's right,
title and interest in and to the Substitute Contracts identified in such
supplement and the related rights described in [___________________], and (B)
the Servicer assigned to the Trust Depositor pursuant to
[_____________________], all of the Servicer's right, title and interest in and
to the Equipment subject to such Substitute Contracts and the other Transferred
Property described in [__________________], and . The Seller shall promptly
deliver to the Servicer (in the case of the Seller) the original executed copy
of each Substitute Contract assigned to the Trust Depositor pursuant to Section
9.1 hereof and the related Contract File and the Trust Depositor shall promptly
request the Servicer to deliver to the Seller the original executed copy of each
Predecessor Contract for which substitution has been made pursuant to Section
9.1 hereof and the related Contract File (in the case of a substitution by the
Servicer, the foregoing provisions of this sentence shall be deemed to have
occurred).
(c) Subject to the provisions of Section 9.3, the delivery of any Officer's
Certificate and supplement to Exhibit A pursuant to Section 9.2 shall be
conclusive evidence, without further act or deed, that during the preceding
Collection Period and as of the related Cut-off Date (i) the Trust Depositor
assigned to the Trust pursuant to Section 9.1 hereof all of the Trust
Depositor's right, title and interest in and to the Substitute Contracts or
Additional Contracts, as applicable, identified in such supplement and the
related rights described in Section 2.1 hereof, (ii) the Trust Depositor
transferred to the Trust all of the Trust Depositor's right, title and interest
in and to the rights described in Section 2.1 hereof as they relate to the
Equipment subject to such Substitute Contracts or Additional Contracts, as
applicable, and (iii) the Trust assigned and transferred to the Trust Depositor,
without representation or warranty, all of the Trust's right, title and interest
in and to the Predecessor Contracts or Prepaid Contracts, as applicable,
identified in such Officer's Certificate and the Equipment subject thereto. Upon
such assignment of a Substitute Contract or an Additional Contract, as
applicable, the Trust shall be deemed to have appointed and the Servicer shall
be deemed to have accepted appointment as custodian of the related Contract File
pursuant to Section 2.2.
SECTION 9.3. Objection and Repurchase. If any holder of the Notes objects
------------------------
to any substitution or addition of Contracts within ten days of receipt of the
Servicer's Certificate providing notice thereof pursuant to Section 3.9, on the
grounds either that any Substitute Contract or Additional Contract, as
applicable, is not an Eligible Contract or that such substitution or addition is
otherwise not permitted under the provisions of Section 9.1 hereof, the Seller
or the Servicer (as applicable) shall be entitled to present such additional
information as it deems appropriate in an effort to demonstrate that such
Contract is an Eligible Contract and that such substitution or addition is
permitted under the provisions of Section 9.1 hereof. Following such
presentation, the substitution or addition shall remain effective if each Person
originally objecting to the substitution or addition withdraws his objection. If
the conditions specified in the preceding sentence are not satisfied, or if at
any time it is established that any Contract was not, at the time of
substitution or addition, as applicable, an Eligible Contract, then the Seller
or the Servicer (as applicable) shall be required to repurchase such Contract in
accordance with the provisions of Section 2.6 hereof (and in the case of any
such repurchase by the Servicer, as if the provisions of said Section applied to
it instead of the Seller).
SECTION 9.4. The Seller's and the Servicer's Subsequent Obligations.
------------------------------------------------------------
Upon any substitution or addition of Contracts in accordance with the provisions
of this Section 9.4, the Seller's and the Servicer's obligations hereunder with
respect to the Predecessor Contract or Prepaid Contract, as applicable, shall
cease but the Seller and the Servicer shall each thereafter have the same
obligations with respect to the Substitute Contract or Additional Contract, as
applicable, substituted or added, as applicable, as it has with respect to all
other Contracts subject to the terms hereof.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Amendment.
---------
(a) This Agreement may be amended by the Trust Depositor, the Seller, the
Servicer, the Trust and the Indenture Trustee without the consent of any of the
Noteholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions in this Agreement that may be inconsistent with any other provision
herein, or (iii) to make any other provisions with respect to matters or
questions arising under this Agreement that are not inconsistent with the
provisions hereof; provided that such action shall not, as evidenced by an
--------
Opinion of Counsel, adversely affect in any material respect the interests of
the Noteholders; provided further that such action shall be deemed not to
adversely affect in any material respect to interests of the Noteholders and. no
such Opinion of Counsel need be delivered if the Rating Agency Condition is
satisfied.
(b) This Agreement may also be amended from time to time by the Trust
Depositor, the Seller, the Servicer, the Trust and the Indenture Trustee with
the consent of a Note Majority (which consent of any Holder of a Note given
pursuant to this Section or pursuant to any other provision of this Agreement
shall be conclusive and binding on such Holder and on all future Holders of such
Note and of any Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the Note)
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Notes; provided that no such amendment shall
--------
(a) increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Contracts or distributions required to be
made on any Note or the rate of interest payable thereon, (b) amend any
provisions of Section 5.06 or 8.03 of the Indenture in such a manner as to
affect the priority of payment of interest or principal to Noteholders, or (c)
reduce the aforesaid percentage required to consent to any such amendment or any
waiver hereunder, without the consent of the Holders of all Notes then
Outstanding and affected thereby; and provided, further, that no such amendment
shall be effective unless and until the Rating Agency Condition has been
satisfied.
(c) Promptly after the execution of any such amendment or consent, the
Trust or the Indenture Trustee, as appropriate, shall furnish written
notification of the substance of such amendment or consent to each Noteholder.
(d) It shall not be necessary for the consent of Noteholders pursuant to
Section 10.1(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Noteholders provided for in this Agreement) and of evidencing the authorization
of the execution thereof by Noteholders shall be subject to such reasonable
requirements as the Trust or Indenture Trustee, as applicable, may prescribe,
including the establishment of record dates.
(e) Prior to the execution of any amendment to this Agreement, the Trust
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement, in
addition to the Opinion of Counsel referred to in Section 10.2(h). The Trust
may, but shall not be obligated to, enter into any such amendment which affects
the Trust's own rights, duties or immunities under this Agreement or otherwise.
SECTION 10.2 Protection of Title to Trust Assets.
-----------------------------------
(a) The Trust Depositor shall execute and file such financing statements
and cause to be executed and filed such continuation and other statements
(including those prepared by the Servicer pursuant to Section 3.14(c)), all in
such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Trust, the Trust and the Indenture
Trustee in the Trust Assets and in the proceeds thereof; except that (i) UCC-1
financing statements and continuation statements, listing the Obligor as debtor
and the related Equipment as collateral, need be filed only as required by
Section 3.5; and (ii) no assignments of any such financing statements relating
to the Equipment shall be filed to reflect the assignment of the Contracts by
the Seller to the Trust Depositor and by the Trust Depositor to the Trust. The
Trust Depositor shall deliver (or cause to be delivered) to the Trust 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 Trust Depositor nor the Trust shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Trust Depositor
in accordance with paragraph (a) above seriously misleading within the meaning
of Section 9-402(7) of the UCC, unless it shall have given the Trust and the
Indenture Trustee at least 60 days' prior written notice thereof, and shall
promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) Each of the Trust Depositor, the Servicer and the Trust shall give the
Trust and the Indenture Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement. The Servicer shall at all times maintain each office from
which it services Contracts and its principal executive office within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each Contract
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Contract, including payments and recoveries made and
payments owing (and the nature of each) and (ii) reconciliation between payments
or recoveries on (or with respect to) each Contract and the amounts from time to
time deposited in the Collection Account in respect of such Contract.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of transfer and assignment under this Agreement of the Contracts
to the Trust, the Servicer's master computer records (including any backup
archives) that refer to any Contract indicate clearly that the Contract is owned
by the Trust. Indication of the Trust's ownership of a Contract shall be deleted
from or modified on the Servicer's computer systems when, and only when, the
Contract has been paid in full, liquidated (including receipt of all recoveries
reasonably expected to be collected), a Substitute Contract substituted
therefor, or purchased by the Trust Depositor or the Seller.
(f) Upon receipt by the Servicer of reasonable prior notice, Servicer shall
permit the Trust, the Indenture Trustee and their respective agents, at any time
during the Servicer's normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Contracts or any other
portion of the Trust Assets.
(g) The Servicer shall furnish to the Trust and the Indenture Trustee at
any time upon request a list (which may, at the option of the Servicer, be on a
computer disk or other electronic storage medium) of all Contracts then held as
part of the Trust Assets, together with a reconciliation of such list to the
Schedule of Contracts and to each of the Servicer's Certificates furnished
before such request indicating removal of Contracts from the Trust. Upon
request, the Servicer shall furnish a copy of any list to the Trust Depositor.
Subject to the following sentence, the Trust shall hold any such list and
Schedule of Contracts for examination by interested parties during normal
business hours at the Corporate Trust Office upon reasonable notice by such
Persons of their desire to conduct an examination. The Trust shall and shall
cause its representatives to hold in confidence all information thereon relating
to the identity of the Obligors except to the extent disclosure may be required
by Section 9-208 of the UCC or by other applicable law (and all reasonable
applications for confidential treatment are unavailing) and except to the extent
that the Trust may reasonably determine that such disclosure is consistent with
its obligations under the Indenture.
(h) The Trust Depositor and the Servicer shall deliver to the Trust and the
Indenture Trustee simultaneously with the execution and delivery of this
Agreement and of each amendment thereto and upon the occurrence of the events
giving rise to an obligation to give notice pursuant to Section 10.2(b) or (c),
an Opinion of Counsel either (a) stating that, in the opinion of such Counsel,
all financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the Trust
and the Indenture Trustee in the Contracts and the other Trust Assets, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (b) stating that, in the opinion of such
counsel, no such action is necessary to preserve and protect such interest.
(i) The Servicer shall deliver to the Trust and the Indenture Trustee,
within 90 days after the beginning of each calendar year beginning with the
first calendar year beginning more than three months after the Closing Date, 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 Trust and
the Indenture Trustee in the Contracts, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are given, or
(b) stating that, in the opinion of such counsel, no action shall be necessary
to preserve and protect such interest.
SECTION 10.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.4 Severability of Provisions. If any one or more of the
---------------------------
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
respective rights of the Holders thereof.
SECTION 10.5 Assignment. Notwithstanding anything to the contrary
----------
contained in this Agreement, except as provided in Section 7.2 or Section 8.2
(and as provided in the provisions of the Agreement concerning the resignation
of the Servicer), this Agreement may not be assigned by the Trust Depositor or
the Servicer without (i) the prior written consent of the Trust, the Indenture
Trustee and a Note Majority, and (ii) satisfaction of the Rating Agency
Condition.
SECTION 10.6 Third-Party Beneficiaries. This Agreement shall inure to
--------------------------
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, any benefit or any legal or equitable right, remedy or claim under
this Agreement.
SECTION 10.7 Counterparts. For the purpose of facilitating its execution
------------
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 10.8 Intention of Parties. The parties hereto intend that, in the
--------------------
event that the conveyance of the Contracts and other Trust Assets pursuant to
this Agreement is determined to be made as security for a loan made by the Trust
or the Noteholders to the Trust Depositor, the Trust Depositor hereby grants to
the Trust to secure such loan a first priority security interest in all of the
Trust Depositor's right, title and interest in and to the rights and property
intended to be conveyed to the Trust pursuant to Section 2.1(a). This Agreement
shall, in such event, constitute a security agreement under applicable law.
SECTION 10.9 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, the Seller or the Servicer:
Mitsui Vendor Leasing (U.S.A.) Inc.
6363 Greenwich Drive, Suite 100
San Diego, California 92122
Fax No.: (619) 558-5050
Attention: General Counsel
(ii) if to the Back-up Servicer:
(iii) if to Fitch:
Fitch IBCA, Inc.
(iv) if to the Indenture Trustee:
(v) if to the Issuer or the Trust:
Mitsui Vendor Leasing Asset Trust 1998-1
6363 Greenwich Drive, Suite 100
San Diego, California 92122
Fax No.: (619) 558-5050
Attention: General Counsel
(vi) if to Moody's:
(vii) if to the Owner Trustee:
(viii) if to the Purchaser or the Trust Depositor:
Mitsui Vendor Leasing Funding Corp. II
#6363 Greenwich Drive, Suite 100
San Diego, California 92122
Fax No.: (619) 558-5050
Attention: General Counsel
Each Party may, by notice given in accordance herewith to each of the
other parties affected thereby, designate any further or different address to
which subsequent notices shall be sent.
SECTION 10.10 Income Tax Characterization. The Trust Depositor has
------------------------------
structured the Indenture and the Notes with the intention that the Notes will
qualify under applicable federal, state, local and foreign tax law as
indebtedness of the Trust Depositor secured by the Contracts. The Trust
Depositor and the Servicer agree to treat and to take no action inconsistent
with the treatment of the Notes as such indebtedness for purposes of federal,
state, local and foreign income or franchise taxes and any other tax imposed on
or measured by income.
SECTION 10.11 Payment of Fees and Expenses by Trust. The Trust shall pay,
-------------------------------------
as provided in Section 4.10, to the Indenture Trustee, the Owner Trustee and the
Administrator, and the Indenture Trustee, the Owner Trustee and the
Administrator, as applicable, shall be entitled to, certain annual fees as
agreed to by such Person and the Trust on or prior to the Closing Date and the
Trust shall reimburse the Indenture Trustee, the Owner Trustee and the
Administrator, as applicable, for all ordinary and reasonable out-of-pocket
expenses incurred or made by it in connection with the performance of their
respective duties under the Basic Documents (excluding those fees and expenses
incurred by the Indenture Trustee, [Owner Trustee] and Administrator incurred or
made in the performance of their duties under Section 6.07(b) of the Indenture
and Sections 1(a)(ii)(B) and 1(a)(i)(C) of the Administration Agent,
respectively).
IN WITNESS WHEREOF, the Trust, the Trust Depositor, the Seller, the
Servicer and the Indenture Trustee have caused this Sale and servicing agreement
to be duly executed by their respective officers as of the day and year first
above written.
MITSUI VENDOR LEASING ASSET TRUST 1998-1
By _________________, not in its individual
capacity but solely as Owner Trustee
By _____________________________________
Name:
Title:
MITSUI VENDOR LEASING FUNDING CORP. II
By _____________________________________
Name:
Title:
MITSUI VENDOR LEASING (U.S.A.) INC.,
as Seller and Servicer
By _____________________________________
Name:
Title:
________________________________________,
as Indenture Trustee and Back-up Servicer
By _____________________________________
Name:
Title:
[Exhibit 4.3]
================================================================================
[FORM OF MITSUI VENDOR LEASING ASSET TRUST 1998-1]
Issuer
and
BANKERS TRUST COMPANY
Indenture Trustee
=====================================
INDENTURE
Dated as of August 1, 1998
$_________________ Class A-1 Receivable-Backed Notes
$_________________ Class A-2 Receivable-Backed Notes
$_________________ Class A-3 Receivable-Backed Notes
$_________________ Class B Receivable-Backed Notes
$_________________ Class C Receivable-Backed Notes
================================================================================
Table of Contents
Page
----
ARTICLE 1
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 2
THE NOTES
SECTION 2.01. Form .........................................................7
SECTION 2.02. Execution, Authentication And Delivery........................7
SECTION 2.03. Temporary Notes...............................................8
SECTION 2.04. Registration; Registration Of Transfer And Exchange; Transfer
Restriction..................................................8
SECTION 2.05. Mutilated, Destroyed, Lost Or Stolen Notes....................10
SECTION 2.06. Persons Deemed Owner..........................................11
SECTION 2.07. Payment Of Principal And Interest; Defaulted Interest ........11
SECTION 2.08. Cancellation..................................................12
SECTION 2.09. Book-Entry Notes..............................................12
SECTION 2.10. Notices To Clearing Agency....................................13
SECTION 2.11. Definitive Notes..............................................13
SECTION 2.12. Release Of Collateral.........................................14
SECTION 2.13. Tax Treatment.................................................14
ARTICLE 3
COVENANTS; REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Payment Of Principal And Interest.............................16
SECTION 3.02. Maintenance Of Office Or Agency...............................16
SECTION 3.03. Money For Payments To Be Held In Trust........................16
SECTION 3.04. Existence.....................................................18
SECTION 3.05. Protection Of Collateral......................................18
SECTION 3.06. [Reserved]....................................................19
SECTION 3.07. Performance Of Obligations; Servicing Of Contracts. ..........19
SECTION 3.08. Negative Covenants............................................20
SECTION 3.09. Issuer May Consolidate, Etc...................................21
SECTION 3.10. Successor Or Transferee. .....................................22
SECTION 3.11. No Other Business.............................................23
SECTION 3.12. No Borrowing..................................................23
SECTION 3.13. Notice Of Events Of Default...................................23
SECTION 3.14. Further Instruments And Acts..................................23
SECTION 3.15. Compliance With Laws..........................................23
SECTION 3.16. Amendments Of Trust Agreement.................................23
SECTION 3.17. Removal Of Administrator......................................23
SECTION 3.18. Representations And Warranties Of Issuer......................24
ARTICLE 4
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction And Discharge Of Indenture.......................26
SECTION 4.02. Application Of Trust Money....................................27
SECTION 4.03. Repayment Of Moneys Held By Paying Agent......................27
SECTION 4.04. Release Of Collateral.........................................27
ARTICLE 5
REMEDIES
SECTION 5.01. Events Of Default.............................................28
SECTION 5.02. Rights Upon Event Of Default; Notice..........................29
SECTION 5.03. Collection Of Indebtedness And Suits For Enforcement By
Indenture Trustee; Authority Of Indenture Trustee ...........29
SECTION 5.04. Remedies......................................................32
SECTION 5.05. Optional Preservation Of The Contracts........................33
SECTION 5.06. Priorities ...................................................33
SECTION 5.07. Limitation Of Suits...........................................37
SECTION 5.08. Unconditional Rights Of Noteholders To Receive Principal And
Interest ....................................................37
SECTION 5.09. Restoration Of Rights And Remedies............................38
SECTION 5.10. Rights And Remedies Cumulative................................38
SECTION 5.11. Delay Or Omission Not A Waiver................................38
SECTION 5.12. Control By Noteholders........................................38
SECTION 5.13. Waiver Of Past Defaults.......................................39
SECTION 5.14. Undertaking For Costs.........................................39
SECTION 5.15. Waiver Of Stay Or Extension Laws..............................39
SECTION 5.16. Action On Notes...............................................39
SECTION 5.17. Performance And Enforcement Of Certain Obligations ...........40
ARTICLE 6
THE INDENTURE TRUSTEE
SECTION 6.01. Duties Of Indenture Trustee ..................................41
SECTION 6.02. Rights Of Indenture Trustee ..................................42
SECTION 6.03. Individual Rights Of Indenture Trustee........................43
SECTION 6.04. Indenture Trustee's Disclaimer................................43
SECTION 6.05. Notice Of Defaults............................................43
SECTION 6.06. Reports By Indenture Trustee To Holders.......................44
SECTION 6.07. Compensation And Indemnity....................................44
SECTION 6.08. Replacement Of Indenture Trustee..............................44
SECTION 6.09. Successor Indenture Trustee By Merger.........................46
SECTION 6.10. Appointment Of Co-Indenture Trustee Or Separate Indenture
Trustee .....................................................46
SECTION 6.11. Eligibility...................................................47
SECTION 6.12. Preferential Collection Of Claims Against Issuer..............48
SECTION 6.13. Representations And Warranties Of Indenture Trustee...........48
ARTICLE 7
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names And Addresses Of
Noteholders .................................................50
SECTION 7.02. Preservation Of Information: Communication To Noteholders.....50
SECTION 7.03. Reports By Issuer.............................................50
SECTION 7.04. Reports By Indenture Trustee..................................51
ARTICLE 8
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection Of Money...........................................52
SECTION 8.02. Trust Accounts; Allocations and Distributions ................52
SECTION 8.03. [Reserved]....................................................52
SECTION 8.04. Release Of Collateral ........................................52
SECTION 8.05. Opinion Of Counsel............................................53
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent Of Noteholders........54
SECTION 9.02. Supplemental Indentures With Consent Of Noteholders...........55
SECTION 9.03. Execution Of Supplemental Indentures..........................56
SECTION 9.04. Effect Of Supplemental Indenture..............................56
SECTION 9.05. Conformity With Trust Indenture Act...........................56
SECTION 9.06. Reference In Notes To Supplemental Indentures.................57
ARTICLE 10
REDEMPTION OF NOTES
SECTION 10.01. Redemption...................................................58
SECTION 10.02. Form Of Redemption Notice....................................58
SECTION 10.03. Notes Payable On Redemption Date.............................59
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Compliance Certificates And Opinions, Etc....................60
SECTION 11.02. Form Of Documents Delivered To Indenture Trustee.............62
SECTION 11.03. Acts Of Noteholders..........................................62
SECTION 11.04. Notices......................................................63
SECTION 11.05. Notices To Noteholders; Waiver...............................63
SECTION 11.06. Alternate Payment And Notice Provisions......................64
SECTION 11.07. Effect Of Headings And Table Of Contents.....................64
SECTION 11.08. Successors And Assigns.......................................64
SECTION 11.09. Separability.................................................64
SECTION 11.10. Benefits Of Indenture........................................64
SECTION 11.11. Legal Holidays...............................................65
SECTION 11.12. GOVERNING LAW................................................65
SECTION 11.13. Counterparts.................................................65
SECTION 11.14. Recording Of Indenture.......................................65
SECTION 11.15. Trust Obligation.............................................65
SECTION 11.16. No Petition..................................................65
SECTION 11.17. Inspection...................................................66
SECTION 11.18. Conflict With Trust Indenture Act............................66
SECTION 11.19. Communication By Note Owners With Other Note Owners..........66
EXHIBITS
--------
Exhibit A - [Reserved]............................................A-1
Exhibit B - Form of Class A-1 Note................................B-1
Exhibit C-1 - Form of Class A-2 Note..............................C-1-1
Exhibit C-2 - Form of Class A-3 Note..............................C-2-1
Exhibit D - Form of Class B Note..................................D-1
Exhibit E - Form of Class C Note..................................E-1
Exhibit F - Form of Note Assignment...............................F-1
Exhibit G - Form of Note Depository Agreement.....................G-1
CROSS-REFERENCE TABLE
---------------------
Trust Indenture Indenture
Act of 1939 Indenture SECTION
- --------------------------- -------
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.11
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.11
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.12
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.12
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.01, 7.02
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.02
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.02
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.04
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.04
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.04
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.03
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.05, 7.03
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.01
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.05
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.01
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.01
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.14
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.07, 5.04
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .N.A.
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.03
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.03
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.18
This Indenture, dated as of August 1, 1998 (this "Indenture"), is
between Mitsui Vendor Leasing Asset Trust 1998-1, a Delaware business trust (the
"Issuer") and Bankers Trust Company, a New York banking corporation, as
indenture trustee (the "Indenture Trustee").
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 B
Receivable-Backed Notes (the "Class B Notes"), [____]% Class C Receivable-
Backed Notes (the "Class C Notes"); and, together with the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class B Notes, the "Notes"): and
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 Trust 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 Basic Document, and
to secure compliance with the provisions of this Indenture, all as provided in
this Indenture. The Indenture Trustee 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 1
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).
---
Authorized Officer: With respect to the Issuer, any officer of the
-------------------
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter) or, 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: 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.
Clearing Agency: An organization registered as a "clearing agency"
----------------
pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant: 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: Shall have the meaning specified in the Granting Clause
----------
hereof.
Corporate Trust Office: 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 _______________________________, 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: 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.
----------------
Depository: Shall have the meaning specified in Exhibit G hereto.
----------
DTC: The Depository Trust Company, and its successors.
---
ERISA: The Employment Retirement Income Security Act of 1974, as
-----
amended.
Event Of Default: Shall have the meaning specified in Section 5.01.
----------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Executive Officer: With respect to any corporation, the Chief Executive
-----------------
Officer, Chief Operating Officer, Chief Financial Officer, President, Executive
Vice President, any Vice President, the Secretary or the Treasurer of such
corporation; and with respect to any partnership, any general partner thereof.
Grant: To 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: Any registered holder of a Note.
------
Indenture Trustee: Bankers Trust Company, as Indenture Trustee under
------------------
this Indenture, or any successor Indenture Trustee under this Indenture.
Indenture Trustee Documents: Shall have the meaning specified in
-----------------------------
Section 6.13.
Independent: 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: 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: 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 B Interest
Rate and the Class C Interest Rate, or any of them, in each case as defined in
the Sale and Servicing Agreement.
Issuer Documents: Shall have the meaning specified in Section 3.18.
----------------
Issuer Order and Issuer Request: 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.
Note Depository Agreement: 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 G hereto.
Noteholder: Any Holder.
----------
Note Owner: With respect to a Book-Entry Note, the Person who is the
----------
owner of such Book-Entry Note, as reflected on the books of the Clearing Agency,
or on the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency participant or as an indirect participant, in
each case in accordance with the rules of such Clearing Agency) and with respect
to a Definitive Note the Person in whose name a Note is registered on the Note
Register.
Note Register and Note Registrar: Shall have the respective meanings
---------------------------------
specified in Section 2.04.
Officer's Certificate: 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.
Outstanding: As of the date of determination, all Notes theretofore
-----------
authenticated and delivered under this Indenture except: (i) Notes theretofore
cancelled by the Note Registrar or delivered to the Note Registrar for
cancellation; (ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee or
any Paying Agent in trust for the Holders of such Notes (provided, however, that
if such Notes are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision for such notice has been made,
satisfactory to the Indenture Trustee, has been made); and (iii) Notes in
exchange for or in lieu of other Notes which have been authenticated and
delivered pursuant to this Indenture unless proof satisfactory to the Indenture
Trustee is presented that any such Notes are held by a bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Basic 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: 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.
Paying Agent: 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 Collection Account,
including payment of principal of or interest on the Notes on behalf of the
Issuer.
Predecessor Note: 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: Any suit in equity, action at law or other judicial or
----------
administrative proceeding.
Redemption Date: 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
Payment 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: (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 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 due and owing the Noteholders (as determined in
accordance with this Indenture), but not in excess of the amount specified in
clause (i) above.
Registered Holder: The Person in whose name a Note is registered on the
-----------------
Note Register on the applicable Record Date.
Sale And Servicing Agreement: The Sale and Servicing Agreement, dated
----------------------------
as of the date hereof, among the Trust, the Trust Depositor, the Seller, the
Servicer, the Indenture Trustee and the Back-up Servicer.
State: Any one of the 50 states of the United States, or the District
-----
of Columbia or any of its territories.
Targeted Holder: 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);
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: 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: The Amended and Restated Trust Agreement, dated as of
---------------
the date hereof, between the Trust Depositor and the Owner Trustee.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939.
------------------- ---
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Sale and Servicing Agreement.
SECTION 1.02. Incorporation By Reference Of Trust Indenture Act.
------------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
Commission: means the Securities and Exchange Commission.
----------
Indenture Securities: The Notes.
--------------------
Indenture Security Holder: A Noteholder.
-------------------------
Indenture to be Qualified: This Indenture.
-------------------------
Indenture Trustee or Institutional Trustee: The Indenture Trustee.
----------------- ---------------------
Obligor: With respect Indenture Securities, the Issuer and any other
-------
obligor on the Indenture Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. Rules Of Construction. Unless the context otherwise
----------------------
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in effect
from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular;
(vi) any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns; and
(vii) the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Indenture shall refer to this Indenture as a whole and
not to any particular provision of this Indenture; Section, subSection and
Schedule references contained in this Indenture are references to Sections,
subSections and Schedules in or to this Indenture unless otherwise specified.
ARTICLE 2
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 in the related 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 B Notes in an aggregate principal amount of
$_____________, and (v) Class C 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.
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.
SECTION 2.04. Registration; Registration Of Transfer And Exchange;
------------------------------------------------------
Transfer Restriction. The Issuer shall cause to be kept a register (the "Note
- ---------------------
Register") in which, subject to such reasonable regulations as it may prescribe,
the Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Indenture Trustee shall be "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and the amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located in the city in which the Corporate Trust Office is
located, or by a member firm of a national securities exchange, and such other
documents as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 not involving
any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
Neither the Trustee nor the Note 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.
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 or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. Persons Deemed Owner. Prior to due presentment for
----------------------
registration of transfer of any Note, the Issuer, the Indenture Trustee, and any
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 Payment Date as specified in
the related Note, subject to Section 3.01. Any installment of interest or
principal, if any, payable on any Note which is punctually paid or duly provided
for by the Issuer on the applicable Payment Date shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered on the
Record Date, by check mailed first class, postage prepaid to such Person's
address as it appears on the Note Register on such Record Date, except that,
unless Definitive Notes have been issued pursuant to Section 2.11, with respect
to Notes registered on the Record Date in the name of the nominee of the
Depository, payment will be made by wire transfer in immediately available funds
to the account designated by such nominee and except for the final installment
of principal payable with respect to such Note on a Payment Date or on the
related final Payment Date, as the case may be (and except for the Redemption
Date Amount for any Note called for redemption pursuant to Section 10.01(a)),
which shall be payable as provided below. The funds represented by any such
checks returned undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable on each Payment Date to
the extent provided in the form of the related Note set forth as an Exhibit
hereto. Notwithstanding the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable, if not previously paid, on the date on which an
Event of Default shall have occurred and be continuing, unless the Required
Holders have waived such Event of Default in the manner provided in Section
5.02. All principal payments on each Class of Notes shall be made pro rata to
the Noteholders of such Class entitled thereto. The Indenture Trustee shall
notify the Person in whose name a Note is registered at the close of business on
the Record Date preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be mailed 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 Payment Date in the manner and to the extent provided in the
Sale and Servicing Agreement.
(d) All payments to be made by the Issuer under this Indenture shall be
made only from the income and proceeds from the Collateral and only to the
extent that the Issuer shall have sufficient income or proceeds from the Trust
Estate to enable the Issuer to make payments in accordance with the terms
hereof. The Indenture Trustee is not personally liable for any amounts payable
under this Indenture, except as expressly provided herein.
SECTION 2.08. Cancellation. All Notes surrendered for payment,
------------
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is timely
and the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.09. Book-Entry Notes. The Notes, upon original issuance, will
----------------
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to DTC, the initial Depository, by, or on behalf of, the
Issuer. Such Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no
Noteholder of such Notes will receive a Definitive Note representing such
Noteholder's interest in such Note, except as provided in Section 2.11. Unless
and until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Noteholders pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture (including
the payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Noteholders;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Noteholders shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Noteholders and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Note Depository Agreement,
unless and until Definitive Notes are issued pursuant to Section 2.11, the
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and interest
on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Noteholders evidencing a specified
percentage of the Outstanding Amount, the Clearing Agency shall be deemed
to represent such percentage only to the extent that it has received
instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
SECTION 2.10. Notices To Clearing Agency. Whenever a notice or other
---------------------------
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Noteholders pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders of the Notes to the Clearing Agency,
and shall have no obligation to the Noteholders.
SECTION 2.11. Definitive Notes. If (i)(A) the Administrator advises the
----------------
Indenture Trustee in writing that DTC 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 or (ii) the Administrator at its option advises the
Indenture Trustee in writing that it elects to terminate the book-entry system
through DTC then the Indenture Trustee shall notify all Noteholders of the
related Class or Classes of Notes, through DTC, of the occurrence of any such
event and of the availability of Definitive Notes for such class. Upon surrender
to the Indenture Trustee of the Note or Notes representing the Book-Entry Notes
by DTC, accompanied by registration instructions, the Issuer shall execute and
the Indenture Trustee shall authenticate the Definitive Notes in accordance with
the instructions of DTC. 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 Payment Date. [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.]
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 Sale and Servicing Agreement. Distributions will be made
by check, mailed to the address of such Holder as it appears on the Note
register. Upon at least 10 days' notice to Noteholders for such Class, however,
the final payment on any Note (whether the Definitive Notes or the Note for such
Class registered in the name of Cede representing the Notes of such Class) will
be made only upon presentation and surrender of such Note at the office or
agency specified in the notice of final distribution to Noteholders.
Definitive Notes of each Class will be transferable and exchangeable at
the offices of the Indenture Trustee or its agent in New York, New York, which
the Indenture Trustee shall designate on or prior to the issuance of any
Definitive Notes with respect to such Class. No service charge will be imposed
for any registration of transfer or exchange, but the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
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 Sale and Servicing Agreement or the Notes. While the Notes are
held in book-entry form, holders of beneficial interests in the Notes will not
have access to a list of other holders of beneficial interests in the Notes,
which may impede the ability of such holders of beneficial interests to
communicate with each other.
SECTION 2.12. Release Of Collateral. Subject to Section 11.01 and the
---------------------
terms of the Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture only upon receipt of an Issuer Request accompanied by
an Officer's Certificate.
SECTION 2.13. Tax Treatment. The Issuer and the purchasers of the Notes
-------------
intend, and will take all actions consistent with the intention, that the Notes
be treated as indebtedness which is solely secured by the assets of the Trust
for all federal, state, local, and foreign income and franchise tax purposes and
that, pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii) as in effect
for periods after January 1, 1997, the Trust be disregarded as a separate entity
from the Trust Depositor for federal income tax purposes. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
agree to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness.
ARTICLE 3
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 allocated and distributed all amounts under and as provided in
Section 4.10 of the Sale and Servicing Agreement (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 B Notes,
to the Class B Noteholders, and for the benefit of the Class C Notes, to the
Class C 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 San Diego, California, 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 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 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 Payment Date and Redemption Date, the Issuer shall allocate an aggregate
sum sufficient to pay the amounts then becoming due, such sum to be held in
trust for the benefit of the Persons entitled thereto and (unless the Paying
Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee of
its action or failure to so act. The Issuer will cause each Paying Agent other
than the Indenture Trustee to execute and deliver to the Indenture Trustee an
instrument in which such Paying Agent shall agree with the Indenture Trustee
(and if the Indenture Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) in the making of any payment required to
be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and upon receipt of an Issuer Request shall be deposited by the Indenture
Trustee in the Collection Account; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Issuer for payment thereof,
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that if such money or
any portion thereof had been previously deposited by the Issuer with the
Indenture Trustee for the payment of principal or interest on the Notes, and
provided, further, that the Indenture Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to or for the
account of the Issuer. The Indenture Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but not have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or of any
Paying Agent, at the last address of record for each such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
---------
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Collateral.
SECTION 3.05. Protection Of Collateral. The Issuer intends the security
------------------------
interest Granted pursuant to this Indenture in favor of the Indenture Trustee on
behalf of the Noteholders to be prior to all other liens in respect of the
Collateral, and the Issuer shall take all actions necessary to obtain and
maintain, for the benefit of the Indenture Trustee on behalf of the Noteholders,
a first lien on and a first priority, perfected security interest in the
Collateral. In connection therewith, pursuant to Section 2.3 of the Sale and
Servicing Agreement, the Issuer shall cause to be delivered into the possession
of the Indenture Trustee as pledgee hereunder, indorsed in blank, any
"instruments" (within the meaning of the UCC), not constituting part of chattel
paper, evidencing any Contract which is part of the Collateral. The Indenture
Trustee agrees to maintain continuous possession of such delivered instruments
as pledgee hereunder until this Indenture shall have terminated in accordance
with its terms or until, pursuant to the terms hereof or of the Sale and
Servicing Agreement, the Indenture Trustee is otherwise authorized to release
such instrument from the Collateral. The Issuer will from time to time execute
and deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, all as prepared by the Servicer and delivered to the Issuer, and
will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Collateral;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) created by this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Collateral and the rights of the
Indenture Trustee and the Noteholders in such Collateral against the claims
of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Collateral when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute all financing statements, continuation statements or
other instruments required to be executed pursuant to this Section.
SECTION 3.06. [Reserved]
SECTION 3.07. Performance Of Obligations; Servicing Of Contracts.
------------------------------------------------------
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any such Person's material covenants or obligations under any instrument or
agreement included in the Collateral or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in the Basic 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 Basic
Documents and in the instruments and agreements included in the Collateral,
including but not limited to filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within the
time periods provided for herein and therein. Except as otherwise expressly
provided therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Basic 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
Termination Event, the Issuer shall promptly notify the Indenture Trustee and
each Rating Agency thereof. Upon any termination of the Servicer's rights and
powers pursuant to the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee. As soon as a successor Servicer is appointed, the
Issuer shall notify the Indenture Trustee and the Rating Agencies of such
appointment (to the extent such party has not already been notified pursuant to
the Sale and Servicing Agreement), specifying in such notice the name and
address of such successor Servicer.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Basic Documents if the effect thereof would adversely affect the Holders of the
Notes.
SECTION 3.08. Negative Covenants. Until the Termination Date, the
-------------------
Issuer shall not:
(i) except as expressly permitted by the Basic 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 and except as expressly provided in the
Basic Documents; or
(ii) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code or applicable state law) or
assert any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Collateral; or
(iii) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien created by this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenant; or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Collateral or any part
thereof or any interest therein or the proceeds thereof (other than
Permitted Liens), (C) permit the lien created by this Indenture not to
constitute a valid first priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Collateral, or (D)
amend, modify or fail to comply with the provisions of the Basic Documents
without the prior written consent of the Indenture Trustee, except where
the Basic Documents allow for amendment or modification without the consent
or approval of the Indenture Trustee; or
(iv) dissolve or liquidate in whole or in part.
SECTION 3.09. Issuer May Consolidate, Etc., Only On Certain Terms.
--------------------------------------------------
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States or any State and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Indenture
Trustee, in form and substance satisfactory to the Indenture Trustee, the
due and punctual payment of the principal of and interest on all Notes and
the performance or observance of every agreement and covenant of this
Indenture and each other Basic 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;
(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 3 and that all conditions
precedent herein provided for relating to such transaction have been
complied with; and
(vii) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (A) greater than zero and (B) not less
than the net worth of the Issuer immediately prior to giving effect to such
consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Collateral, to any
Person (except as expressly permitted by the Basic 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 Basic 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;
(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 3 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.
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 Basic
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 Basic Documents. The proceeds of the Notes shall
be used exclusively to fund the Issuer's purchase of the Contracts and the other
assets specified in the Sale and Servicing Agreement, to fund the Reserve
Account 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 Termination Event under the Sale and
Servicing Agreement.
SECTION 3.14. Further Instruments And Acts. Upon request of the
-------------------------------
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
SECTION 3.15. Compliance With Laws. The Issuer shall comply with the
---------------------
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
SECTION 3.16. Amendments Of Trust Agreement. The Issuer shall not agree
-----------------------------
to any amendment to Section 11.01 of the Trust Agreement to eliminate the
requirements thereunder that the Indenture Trustee or the Holders of the Notes
consent to amendments thereto as provided therein.
SECTION 3.17. Removal Of Administrator. So long as any Notes are issued
------------------------
and outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection with
such removal.
SECTION 3.18. Representations And Warranties Of Issuer. The Issuer
-------------------------------------------
represents and warrants as follows:
(a) Power And Authority. It has full power, authority and legal right
-------------------
to execute, deliver and perform its obligations as Issuer under this Indenture
and the Notes (the foregoing documents, the "Issuer Documents").
(b) Due Authorization. The execution and delivery of the Issuer
------------------
Documents and the consummation of the transactions provided for therein have
been duly authorized by all necessary action on its part.
(c) No Conflict. The execution and delivery of the Issuer Documents,
-----------
the performance of the transactions contemplated thereby and the fulfillment of
the terms thereof will not conflict with, result in any material breach of any
of the materials terms and provisions of, or constitute (with or without notice
or lapse of time or both) a material 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 result in any breach of any of the
terms and provisions of or constitute (with or without notice or lapse of time,
or both) a default under, the organizational documents of the Issuer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the
Issuer is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument, other
than the Issuer Documents, or violate any law, order, rule or regulation
applicable to the Issuer of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Issuer or any of its properties, except in each case to
the extent it would not have a material adverse effect on the validity or
enforceability of, or the Issuer's performance under the Issuer Documents or the
validity or enforceability of the Contracts or on the Indenture Trustee's
interest in any Contract or other Trust Assets.
(e) All Consents Required. The Issuer holds all necessary licenses,
----------------------
certificates and permits from all Governmental Authorities necessary for
conducting its business as it is presently conducted, and 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 the Issuer Documents to which it is a
party, except for such consents, licenses, approvals or authorizations, or
registrations or declarations, as shall have been obtained or filed, as the case
may be, prior to the Closing Date.
(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 San Diego,
California. The Issuer agrees that it will not change the location of such
office to a location outside of San Diego, California, without at least 30 days
prior written notice to the Seller, the Servicer, the Indenture Trustee and the
Rating Agencies.
ARTICLE 4
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 the Collection 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 Payment
Date (if Notes shall have been called for redemption
pursuant to Section 10.01(a)), as the case may be;
(B) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to
or on behalf of the Indenture Trustee for the benefit of the
Noteholders under this Indenture or the Notes; and
(C) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel and (if required
by the TIA or the Indenture Trustee) an Independent Certificate
from a firm of certified public accountants, each meeting the
applicable requirements of Section 11.01(a) and, subject to
Section 11.02, stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this
Indenture have been complied with and the Rating Agency Condition
has been satisfied.
SECTION 4.02. Application Of Trust Money. All moneys deposited with the
--------------------------
Indenture Trustee pursuant to Section 4.01 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
moneys need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.03. Repayment Of Moneys Held By Paying Agent. In connection
----------------------------------------
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.03 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
SECTION 4.04. Release Of Collateral. Subject to Section 11.01 and the
---------------------
terms of the Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture only upon receipt of an Issuer Request accompanied by
an Officer's Certificate and an Opinion of Counsel and Independent Certificates
in accordance with TIA Sections 314(c) and 314(d)(1) or an Opinion of Counsel in
lieu of such Independent Certificates to the effect that the TIA does not
require any such Independent Certificates.
ARTICLE 5
REMEDIES
SECTION 5.01. Events Of Default. "Event Of Default," wherever used
-----------------
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) failure to pay on each Payment Date the full amount of accrued
interest on any Class A Note, Class B Note or Class C Note;
(b) failure to pay the then outstanding principal amount of any Note,
if any, on its related Maturity Date;
(c) (i) failure on the part of the Seller or the Servicer to make any
payment or deposit required under the Sale and Servicing Agreement or the
Indenture within three Business Days after the date the payment or deposit is
required to be made, or (ii) failure on the part of the Seller, the Servicer, or
the Issuer to observe or perform any other covenants or agreements of such
entity set forth in the Sale and Servicing Agreement or the Indenture, which
failure has a material adverse effect on the Noteholders and which continues
unremedied for a period of 60 days after written notice; provided, that only a
five day cure period shall apply in the case of a failure by the Seller or the
Owner Trustee to observe their respective covenants not to grant a security
interest in or otherwise intentionally create a lien on the Contracts;
(d) any representation or warranty made by the Issuer, the Seller or
the Trust Depositor in the Sale and Servicing Agreement or the Indenture or any
information required to be given by the Seller or the Trust Depositor to the
Indenture Trustee to identify the Contracts proves to have been incorrect in any
material respect when made and continues to be incorrect in any material respect
which failure has a material adverse effect on the Noteholders and which
continues unremedied for a period of 60 days after written notice (it being
understood and acknowledged that, if any such breach occurs with respect to one
or more Contracts, the Seller, through the Trust Depositor, may remedy such
breach by the repurchase of such Contracts during such period in accordance with
the provisions of the Sale and Servicing Agreement and the Transfer and Sale
Agreement);
(e) the occurrence of an Insolvency Event relating to the Issuer or the
Trust; or
(f) the Issuer becomes an "Investment Company" within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 5.02. Rights Upon Event Of Default; Notice.
------------------------------------
(a) 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.
(b) In the case of any event described in clause (a), (b), (c) (d) or
(f) above, an Event of Default with respect to the Notes will be deemed to have
occurred, 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, provided such Event of Default may be waived if the
Required Holders provide written notice to the Trust Depositor, Indenture
Trustee and the Servicer of such waiver. In the event the Indenture Trustee has
actual knowledge of an Event of Default, it shall give written notice thereof to
the Trust Depositor, the Seller, the Servicer, the Owner Trustee and the Rating
Agencies.
(c) If an Insolvency Event relating to the Trust Depositor occurs,
pursuant to the Trust Agreement and the Sale and Servicing Agreement, on the day
of such Insolvency Event, the Trust Depositor shall promptly give notice to the
Indenture Trustee of the Insolvency Event, and the Indenture Trustee shall,
unless notified to the contrary by the Required Holders, promptly act pursuant
to and in accordance with the terms thereof to sell, dispose of or otherwise
liquidate the Collateral in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from any such sale, disposition or liquidation of
Contracts shall be deposited in the Collection Account and allocated as
described in the Sale and Servicing Agreement and herein.
Promptly following its receipt of notice hereunder or under any other
Basic Document of any Event of Default, the Indenture Trustee shall send a copy
thereof to the Issuer and each Rating Agency.
SECTION 5.03. Collection Of Indebtedness And Suits For Enforcement By
--------------------------------------------------------
Indenture Trustee; Authority Of Indenture Trustee.
- -------------------------------------------------
(a) The Issuer covenants that if the Notes are accelerated following
the occurrence of an Event of Default, the Issuer will, upon demand of the
Indenture Trustee, pay to it, for the benefit of the Holders of the Notes, the
whole amount then due and payable on such Notes for principal and interest, with
interest, with interest upon the overdue principal, and, to the extent payment
at such rate of interest shall be legally enforceable, upon overdue installments
of interest, at the applicable Interest Rate and in addition thereto such
further amount as shall be sufficient to cover costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel.
(b) The Indenture Trustee following the occurrence of an Event of
Default, shall have full right, power and authority to take, or defer from
taking, any and all acts with respect to the administration, maintenance or
disposition of the Collateral.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may in its discretion (except as provided in Section 5.03(d)), proceed
to protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Indenture Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture, if an Event of Default shall have occurred and be continuing, and if
the Issuer fails to perform its obligations under Section 10.01(b) when and as
due, the Indenture Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Noteholders by such appropriate Proceedings as
the Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for specific performance of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law, provided that the Indenture Trustee shall
only be entitled to take any such actions to the extent such actions (i) are
taken only to enforce the Issuer's obligations to redeem the principal amount of
Notes, and (ii) are taken only against the Collateral, any investments therein
and any proceeds thereof.
(e) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Collateral, Proceedings under any Insolvency Laws, 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.
(h) In any Proceedings brought by the Indenture Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Indenture Trustee shall be held to represent all of the Holders of the
Notes, and it shall not be necessary to make any Noteholder a party to any such
proceedings.
SECTION 5.04. Remedies. If an Event of Default shall have occurred and
--------
be continuing the Indenture Trustee (subject to Section 5.05) may, and shall, if
so directed by the Required Holders in writing:
(i) institute Proceedings in its own name and as or on behalf of a
trustee of an express trust for the collection of all amounts then payable
on the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Collateral;
(iii) exercise any remedies of a secured party under the UCC and
any other remedy available to the Indenture Trustee and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee on behalf of the Noteholders under this Indenture or the
Notes; and
(iv) direct the Owner Trustee to sell the Collateral or any
portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Collateral following an Event of Default, other than an Event
of Default described in Section 5.01(a) or (b), unless (A) the Holders of
100% of the Principal Amount of the Notes consent thereto, (B) the proceeds
of such sale or liquidation distributable to the Noteholders are sufficient
to discharge in full all amounts then due and unpaid upon such Notes for
principal and interest or (C) the Indenture Trustee determines that the
Collateral will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, and the Indenture Trustee
provides prior written notice to each Rating Agency and obtains the consent
of the Required Holders. In determining such sufficiency or insufficiency
with respect to clauses (B) and (C), the Indenture Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment banking
or accounting firm or national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Collateral for such
purpose; provided, however, upon the occurrence of an Event of Default
described in Section 5.01(e), caused solely from an event described in such
subparagraph occurring with respect to the Trust Depositor, the Collateral
will be liquidated by the Indenture Trustee and the Trust will be
terminated 90 days after the date of such Insolvency Event, unless, before
the end of such 90-day period, the related Trustee shall have received
written instructions from the Required Holders, to the effect that such
Required Holders disapprove of the liquidation of such Collateral and
termination of such Trust.
SECTION 5.05. Optional Preservation Of The Contracts. Following an
-----------------------------------------
Event of Default and if such Event of Default has not been rescinded and
annulled, and except as otherwise provided above, the Indenture Trustee may, but
need not, elect to maintain possession of the Collateral pursuant to the terms
of this Article 5. 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) After the occurrence and during the Continuance of an Event of
Default or a Restricting Event, allocations shall be made in accordance with the
terms and conditions of Section 4.10(b) of the Sale and Servicing Agreement.
(b) The Indenture Trustee may fix a record date and payment date for
any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
SECTION 5.07. Limitation Of Suits. No Holder of any Note shall have any
-------------------
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless (and in all events subject to Section 11.16):
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Indenture Trustee to institute
such Proceeding in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority of the Outstanding Amount of the Notes, voting together as a
single class.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.08. Unconditional Rights Of Noteholders To Receive Principal
--------------------------------------------------------
And Interest. Notwithstanding any other provisions in the Indenture, the Holder
- ------------
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
SECTION 5.09. Restoration Of Rights And Remedies. If the Indenture
------------------------------------
Trustee or any Noteholders has instituted any Proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Indenture Trustee
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
SECTION 5.10. Rights And Remedies Cumulative. No right or remedy herein
------------------------------
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay Or Omission Not A Waiver. No delay or omission of
------------------------------
the Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default 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 5 or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.12. Control By Noteholders. The Required Holders shall have
----------------------
the right to direct the time, method and place of conducting any Proceeding for
any remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee (in all events
subject to Section 6.02(f)); provided that:
(i) such direction shall not be in conflict with any rule of law
or with any other provision of this Indenture;
(ii) subject to the terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Collateral shall be by the
Holders of Notes representing not less than 100% of the Outstanding Amount
of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Collateral
pursuant to such Section, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Outstanding Amount of
the Notes to sell or liquidate the Collateral shall be of no force and
effect; and
(iv) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or might materially and adversely affect the
rights of any Noteholders not consenting to such action.
SECTION 5.13. Waiver Of Past Defaults. In the case of any waiver of an
-----------------------
Event of Default, the Issuer, the Indenture Trustee and the Holders of the notes
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Event of Default or
impair any right consequent thereto. Upon any such waiver, such Event of Default
shall cease to exist and be deemed to have been cured and not to have occurred,
for every purpose of this Indenture.
SECTION 5.14. Undertaking For Costs. All parties to this Indenture
----------------------
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Indenture Trustee, (ii) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (iii) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.15. Waiver Of Stay Or Extension Laws. The Issuer covenants
---------------------------------
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.16. Action On Notes. The Indenture Trustee's right to seek
---------------
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Collateral or
upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.06.
SECTION 5.17. Performance And Enforcement Of Certain Obligations.
------------------------------------------------------
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer shall take all such lawful action
as the Indenture Trustee may request to compel or secure the performance and
observance by the Trust Depositor and the Servicer as applicable, of each of
their obligations to the Issuer under or in connection with the Sale and
Servicing Agreement in accordance with the terms thereof, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale and Servicing Agreement to the extent and
in the manner directed by the Indenture Trustee, including the transmission of
notices of default on the part of the Trust Depositor or the Servicer thereunder
and the institution of legal of administrative actions or proceedings to compel
or secure performance by the Trust Depositor or the Servicer of each of their
obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing, including facsimile) of the Required Holders shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the Trust
Depositor or the Servicer under or in connection with the Sale and Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Trust Depositor or the Servicer of each of
their obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
ARTICLE 6
THE INDENTURE TRUSTEE
SECTION 6.01. Duties Of Indenture Trustee.
---------------------------
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and in the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the factual
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture and the other Basic 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 willful
misconduct, except that:
(i) this paragraph does not limit the effect of Section 6.01(b);
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) The Indenture Trustee shall have no discretionary duties other than
those explicitly set forth in this Indenture.
(i) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 6.02. Rights Of Indenture Trustee.
---------------------------
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate (with respect to factual matters) or an Opinion
of Counsel, as applicable. The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officer's
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of Notes,
pursuant to the provisions of this Indenture, unless such Holders of Notes shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities that may be incurred therein or thereby;
provided, however, that the Indenture Trustee shall, upon the occurrence of an
Event of Default (that has not been cured), exercise the rights and powers
vested in it by this Indenture in a manner consistent with Section 6.01.
(g) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless so requested by the Holders of Notes evidencing
not less than 25% of the Outstanding Amount of the Notes; provided, however,
that if the payment within a reasonable time to the Indenture Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Indenture Trustee, not reasonably
assured to the Indenture Trustee by the security afforded to it by the terms of
this Indenture or the Sale and Servicing Agreement, the Indenture Trustee may
require reasonable indemnity against such cost, expense or liability as a
condition to so proceeding; the reasonable expense of every such examination
shall be paid by the Person making such request, or, if paid by the Indenture
Trustee, shall be reimbursed by the Person making such request upon demand.
SECTION 6.03. Individual Rights Of Indenture Trustee. The Indenture
----------------------------------------
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee is required to comply with Section 6.11.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
--------------------------------
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Collateral or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
SECTION 6.05. Notice Of Defaults. If a Default occurs and is continuing
------------------
and if it is known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to each Noteholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal of
or interest on any Note (including payments pursuant to the redemption of such
Notes), the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
SECTION 6.06. Reports By Indenture Trustee To Holders. The Indenture
----------------------------------------
Trustee shall deliver to each Noteholder such information, including without
limitation, Internal Revenue Service 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,
----------------------------
pursuant to the terms of Section 4.10 of the Sale and Servicing Agreement, the
Indenture Trustee from time to time reasonable compensation for its services as
agreed to in writing on or prior to the Closing Date. The Indenture Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall 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; provided, however,
the Indenture Trustee shall obtain the Issuer's written approval prior to
incurring such reasonable out-of-pocket expenses unless its pursuit of such
approval or failure to obtain such approval would, in the Indenture Trustee's
reasonable judgment, result in a breach of its fiduciary duties to the
Noteholders under any of the Basic Documents. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Indenture Trustee's agents, counsel, accountants and experts. The Issuer shall
indemnify or shall cause the Administrator or Servicer to indemnify the
Indenture Trustee against any and all loss, liability or expense (including
reasonable 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 shall not be made
from the Trust Assets. The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under the Insolvency Laws.
SECTION 6.08. Replacement Of Indenture Trustee. The Indenture Trustee
--------------------------------
may resign at any time by so notifying the Issuer and the Servicer. The Issuer
may remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal
or state banking or bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, shall have entered a decree or order granting
relief or appointing a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator (or similar official) for the
Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the
Indenture Trustee's affairs, provided any such decree or order shall
have continued unstayed and in effect for a period of 30 consecutive
days;
(iii) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator or other similar official for the
Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due
or takes any corporate action in furtherance of any of the foregoing;
or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The Issuer or the successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders 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,
consolidation or transfer 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 necessary or desirable. If the Administrator shall not have joined
in such appointment within 15 days after the receipt by it of a request so to
do, the Indenture Trustee alone shall have the power to make such appointment.
No co-Indenture Trustee or separate Indenture Trustee hereunder shall be
required to meet the terms of eligibility of a successor Indenture Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-Indenture
Trustee or separate Indenture Trustee shall be required under Section 6.08
(b) Every separate Indenture Trustee and co-Indenture Trustee shall, to
the extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
Indenture Trustee or co-Indenture Trustee jointly (it being understood
that such separate Indenture Trustee or co-Indenture Trustee is not
authorized to act separately without the Indenture Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed the Indenture
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate Indenture Trustee or co-Indenture Trustee, but solely at the
direction of the Indenture Trustee;
(ii) no Indenture Trustee hereunder shall be personally liable by
reason of any act or omission of any other Indenture Trustee
hereunder; and
(iii) the Indenture Trustee and the Administrator may at any time
accept the resignation of or remove any separate Indenture Trustee or
co-Indenture Trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate Indenture
Trustees and co-Indenture Trustees, as effectively as if given to each of them.
Every instrument appointing any separate Indenture Trustee or co-Indenture
Trustee shall refer to this Agreement and the conditions of this Article. Each
separate Indenture Trustee and co-Indenture Trustee, upon its acceptance of the
trusts conferred, shall be vested with the estates or property specified in its
instrument of co-appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee and a copy thereof given to the Administrator.
(d) Any separate Indenture Trustee or co-Indenture Trustee may at any
time constitute the Indenture Trustee, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Agreement on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, become incapable
of acting, resign or be removed, all of its estates, properties, rights,
remedies and trusts shall vest in and be exercised by the Indenture Trustee, to
the extent permitted by law, without the appointment of a new or successor
Indenture Trustee. Notwithstanding anything to the contrary in this Indenture,
the appointment of any separate Indenture Trustee or co-Indenture Trustee shall
not relieve the Indenture Trustee of its obligations and duties under this
Indenture.
SECTION 6.11. Eligibility. The Indenture Trustee shall at all times
-----------
satisfy the requirements of TIA Section 310(a). The Indenture Trustee hereunder
shall at all times be a financial institution organized and doing business under
the laws of the United States of America or any state, authorized under such
laws to exercise corporate trust powers, whose long term unsecured debt is rated
at least Baa3 by Moody's and shall have a combined capital and surplus of at
least $50,000,000 or shall be a member of a bank holding system the aggregate
combined capital and surplus of which is $50,000,000 and subject to supervision
or examination by federal or state authority, provided that the Trustee's
separate capital and surplus shall at all times be at least the amount required
by Section 310(a)(2) of the TIA. If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of a supervising or
examining authority, then for the purposes of this Section 6.ll, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 6.ll, the Trustee shall resign immediately in the
manner and with the effect specified in Section 6.08. The Indenture Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. Preferential Collection Of Claims Against Issuer. The
--------------------------------------------------
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
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 New York 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 Sale and Servicing Agreement (the
foregoing documents, the "Indenture Trustee Documents") and to authenticate the
Notes.
(b) Due Authorization. The execution and delivery of the Indenture
------------------
Trustee Documents, the consummation of the transactions provided for therein and
the authentication of the Notes have been duly authorized by all necessary
corporate action on its part, either in its individual capacity or as Indenture
Trustee, as the case may be.
(c) No Conflict. The execution and delivery of the Indenture Trustee
-----------
Documents, the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof (including the authentication of the Notes),
will not conflict with, result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or both) a
default under, any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which the Indenture Trustee is a party or by which it or any
of its property is bound.
(d) No Violation. The execution and delivery of the Indenture Trustee
------------
Documents, the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof (including the authentication of the Notes),
will not conflict with or violate, in any material respect, any requirements of
law applicable to the Indenture Trustee.
(e) All Consents Required. All approvals, authorizations, consents,
----------------------
orders or other actions of any Person or any governmental body applicable to the
Indenture Trustee, required in connection with the execution and delivery of the
Indenture Trustee Documents, the performance by the Indenture Trustee of the
transactions contemplated thereby and the fulfillment by the Indenture Trustee
of the terms thereof (including the authentication of the Notes), have been
obtained.
(f) Validity, Etc. Each Indenture Trustee Document constitutes a legal,
--------------
valid and binding obligation of the Indenture Trustee, enforceable against the
Indenture Trustee in accordance with its terms, except as such enforceability
may be limited by Insolvency Laws and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at law or
in equity) or by an implied covenant of good faith and fair dealing.
ARTICLE 7
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names And Addresses
--------------------------------------------------------
Of Noteholders. The Issuer will furnish or cause to be furnished to the
- ---------------
Indenture Trustee (i) not more than five days after the earlier of (a) each
Record Date and (b) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Noteholders as of such Record Date and (ii) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than ten days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
SECTION 7.02. Preservation Of Information: Communication To
-----------------------------------------------------
Noteholders.
- -----------
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.01 and the names and addresses of Noteholders received by the Indenture
Trustee in its capacity as Note Registrar and shall otherwise comply with TIA
Section 312(a). The Indenture Trustee may destroy any list furnished to it as
provided in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 7.03. Reports By Issuer. (a) The Issuer shall:
-----------------
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required (if at all) to file the same with the Commission,
copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) that the Issuer may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations;
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA Section
313(c)) such summaries of any information, documents and reports
required to be filed by the issuer pursuant to clauses (i) and (ii) of
this Section 7.03(a) and by rules and regulations prescribed from time
to time by the Commission;
(iv) file with the Indenture Trustee reports in compliance with
TIA Section 314(a) and TIA Section 314(b).
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on [December 31] of each year.
SECTION 7.04. Reports By Indenture Trustee.
----------------------------
(a) On or before [December] 31 of each calendar year, commencing
[December 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, 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.
(b) If required by TIA Section 313(a), within 60 days after January 31
beginning with January 31, 1998, the Indenture Trustee shall mail to each
Noteholder as required by TIA Section 313(c) a brief report dated as of such
date that complies with TIA Section 313(a). The Indenture Trustee also shall
comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE 8
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection Of Money. Except as otherwise expressly
---------------------
provided herein and in the Sale and Servicing Agreement, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture and the Sale and Servicing Agreement. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Collateral, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article 5.
SECTION 8.02. Trust Accounts; Allocations and Distributions.
-----------------------------------------------------
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders, the Trust Accounts as provided in Section 4.6 of
the Sale and Servicing Agreement.
(b) [Reserved]
(c) The Indenture Trustee shall make allocations and distributions in
respect of the Notes as provided in Section 4.10 of the Sale and Servicing
Agreement, which Section 4.10 of the Sale and Servicing Agreement is hereby
incorporated by reference. All distributions to Noteholders made in accordance
with the preceding sentence shall be made by the Indenture Trustee as provided
in Section 2.07.
SECTION 8.03. [Reserved]
SECTION 8.04. Release Of Collateral.
---------------------
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Indenture Trustee may, and when required by the provisions of this
Indenture or the Sale and Servicing Agreement shall, execute instruments to
release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article 8 shall
be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid, release any remaining portion of the Collateral that secured the
Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.04(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA as so stated in the Opinion of Counsel) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) and in each case meeting the
applicable requirements of Section 11.01.
SECTION 8.05. Opinion Of Counsel. The Indenture Trustee shall receive
------------------
at least seven days prior written notice when requested by the Issuer to take
any action pursuant to Section 8.04(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions for this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Collateral. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent Of Noteholders.
-------------------------------------------------------
Without the consent of the Holders of any Notes and with prior notice to each
Rating Agency, the Issuer and the Indenture Trustee, when authorized by an
Issuer Order, and the other parties hereto at any time from time to time, may
enter into one or more indentures supplemental hereto (which shall conform to
the provisions of the TIA as in force at the date of the execution thereof), in
form satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required
to be subjected to the lien created by this Indenture, or to subject to
the lien created by this Indenture;
(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
Basic Documents;
(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 6;
(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 make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Indenture Trustee, adversely affect
in any material respect the interests of the Holders of the Notes;
provided further that such action shall be deemed not to adversely
affect in any material respect the interests of the Noteholders and no
such Opinion of Counsel need be delivered if the Rating Agency
Condition is satisfied.
The Indenture Trustee is hereby authorized to join in the exemption of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
SECTION 9.02. Supplemental Indentures With Consent Of Noteholders. The
---------------------------------------------------
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to each Rating Agency, and with the consent of a Required
Holders, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however,
that, no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Note affected thereby:
(i) reduce the amount or extend the time of payment of any amount
owing or payable under any Note or (except as otherwise provided
herein) increase or reduce the interest payable on any Note
(except that only the consent of the affected holder of a Note
shall be required for any decrease in an amount of or the rate of
interest payable on such Note or any extension for the time of
payment of any amount payable under such Note), or alter or modify
the provisions with respect to the order of priorities in which
distributions thereunder shall be made or with respect to the
amount or time of payment of any such distribution, or
(ii) reduce, modify or amend any indemnities in favor of any Noteholder
or in favor of or to be paid by the trust Depositor, or alter the
definition of "Indemnities" to exclude any Noteholder (except as
consented to by each Noteholder adversely affected thereby), or
(iii)make any Note payable in money other than U.S. dollars, or
(iv) modify the definitions in the Indenture of Required Holders, or
otherwise modify the percentage of Noteholders required to effect
any modification of the Indenture.
Neither the Issuer, the Indenture Trustee nor any of their respective
affiliates shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Noteholder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture, the Sale and Servicing Agreement or the Notes
unless such consideration is offered to be paid to all Noteholders that so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of the Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Indenture Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
SECTION 9.03. Execution Of Supplemental Indentures. In executing, or
-------------------------------------
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.04. Effect Of Supplemental Indenture. Upon the execution of
---------------------------------
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
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 TIA as then in effect so long
as this Indenture shall then be qualified under the TIA.
SECTION 9.06. Reference In Notes To Supplemental Indentures. Notes
-----------------------------------------------
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture. If
the Issuer or the Indenture Trustee shall so determine, new notes so modified as
to conform, in the opinion of the Indenture Trustee and the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for Outstanding
Notes.
ARTICLE 10
REDEMPTION OF NOTES
SECTION 10.01. Redemption.
----------
(a) In the event that the Seller pursuant to Section [5.1] of the Sale
and Servicing Agreement purchases (through the Trust Depositor) the corpus of
the Trust, the Notes are subject to redemption in whole, but not in part, on the
Payment Date on which such repurchase occurs, for a purchase price equal to the
outstanding principal, and accrued interest on the Notes; provided, however,
that the Issuer has available funds sufficient to pay such amounts. Seller, the
Servicer or the Issuer shall furnish each Rating Agency notice of such
redemption. If the Notes are to be redeemed pursuant to this Section 10.01(a),
the Servicer or the Issuer shall furnish notice of such election to the
Indenture Trustee not later than 20 days prior to the Redemption Date and the
Issuer shall deposit with the Indenture Trustee 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(c) of this Indenture, the
proceeds of such sale shall be distributed as provided in Section 5.06. If
amounts are to be paid to Noteholders pursuant to this Section 10.01(b), the
Servicer or the Issuer shall, to the extent practicable, furnish notice of such
event to the Indenture Trustee not later than 20 days prior to the Redemption
Date whereupon all such amounts shall be payable on the Redemption Date.
SECTION 10.02. Form Of Redemption Notice. Notice of redemption under
--------------------------
Section 10.01(a) shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than five days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Date Amount; and
(iii) the place where such Notes are to be surrendered for payment
of the Redemption Date Amount (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
SECTION 10.03. Notes Payable On Redemption Date. The Notes or portions
--------------------------------
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Date Amount and (unless the Issuer shall default in the payment of
the Redemption Date Amount) no interest shall accrue on the Redemption Date
Amount for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Date Amount.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Compliance Certificates And Opinions, Etc.
------------------------------------------
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, and (iii) (if required by the TIA as so stated in the Opinion of
Counsel) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section and TIA Section 314(c),
except that, in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Indenture, no additional certificate or opinion need be furnished. Every
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for
authentication and delivery of the Notes or the release of any property subject
to the lien created by this Indenture, the Issuer shall, in addition to any
obligation imposed in Section 11.01(a) or elsewhere in this Indenture, furnish
to the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of the signer thereof as to the fair value (within 90 days of such
deposit) to the Issuer of the Collateral or other property or securities to be
so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (i) above, the
Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the named matters, if the fair value to the Issuer of
the property to be so deposited and of all other such property made the
basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the
certificates delivered pursuant to clause (i) above and this clause
(ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any property so
deposited, if the fair value thereof to the Issuer as set forth in the
related Officer's Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in clause
(A) or (B) of Section 11.01(b)(v) below, whenever any property or
securities are to be released from the lien created by this Indenture,
the Issuer shall also furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such release)
of the property or securities proposed to be released and 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) below) 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 Basic
Documents, (B) make cash payments out of the Trust Accounts as and to
the extent permitted or required by the Basic Documents, so long as the
Issuer shall deliver to the Indenture Trustee every twelve months,
commencing on the [________, 199__] Payment 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 Basic
Documents.
SECTION 11.02. Form Of Documents Delivered To Indenture Trustee. In any
------------------------------------------------
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Person as to other matters, and any such Person may certify or given an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article 6.
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, and communications hereunder shall
-------
be in writing and shall be effective (a) upon receipt when sent through the U.S.
mails, registered or certified mail, return receipt requested, postage prepaid,
with such receipt to be effective the date of delivery indicated on the return
receipt, or (b) one Business Day after delivery to an overnight courier, or (c)
on the date personally delivered to an Authorized Officer of the party to which
sent, or (d) on the date transmitted by legible telecopier transmission with a
confirmation of receipt, in all cases addressed to the recipient at the address
specified in the Sale and Servicing Agreement for such recipient.
Each party hereto may, by notice given in accordance herewith to each
of the other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 11.05. Notices To Noteholders; Waiver. Where this Indenture
--------------------------------
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.06. Alternate Payment And Notice Provisions. Notwithstanding
---------------------------------------
any provisions of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods 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 Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles [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 Trust Depositor or the Issuer, or join in any institution against
the Trust Depositor or the Issuer, 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 Basic
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 TIA,
such required provision shall control.
SECTION 11.19. Communication By Note Owners With Other Note Owners.
-----------------------------------------------------
Note Owners may communicate with other Note Owners with respect to their rights
under this Indenture or the Notes pursuant to Section 312(b) of the TIA. Every
Note Owner, by receiving and holding the same, agrees with the Issuer and the
Indenture Trustee that none of the Issuer and the Indenture Trustee nor any
agent of the Issuer and the Indenture Trustee shall be deemed to be in violation
of any existing law, or any law hereafter enacted which does not specifically
refer to Section 312 of the TIA, by reason of the disclosure of any such
information as to the names and addresses of the Note Owners in accordance with
Section 312 of the TIA, regardless of the source from which such information was
derived, and that the Indenture Trustee shall not be held accountable by reason
of mailing any material pursuant to a request made under Section 312(b) of the
TIA.
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.
* * * *
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.
MITSUI VENDOR LEASING ASSET TRUST 1998-1
By: ___________________, not in its individual
capacity but solely as Owner Trustee
By:_____________________________________
Name:
Title:
BANKERS TRUST COMPANY
By:_____________________________________
Name:
Title:
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]
- -----------------------
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]
- -----------------------
Exhibit A
[Reserved]
EXHIBIT B
FORM OF CLASS A-1 NOTE
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.
MITSUI VENDOR LEASING ASSET TRUST 1998-1
[ ]% CLASS A-1 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. __________
Mitsui Vendor Leasing Asset Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [____] Dollars ($____) 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 Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made
on the preceding Payment Date), subject to certain limitations contained in
the Indenture. Interest on this Note will accrue for each Payment Date from
and including the most recent Payment Date on which interest has been paid to
but excluding the following Payment Date or, if no interest has yet been paid,
from and including the Closing Date to but excluding the first Payment Date
thereafter. Interest will be computed on the basis of the actual number of
days in each Accrual Period specified pursuant to the preceding sentence and a
360-day year. 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.
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: [ ] MITSUI VENDOR LEASING ASSET TRUST 1998-1
By: ______________________, not in its
individual capacity but solely on behalf
of the Issuer as Owner Trustee, under the
Agreement
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By:_______________________________
Authorized Signatory
[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 August 1, 1998 (the
"Indenture"), between the Issuer and Bankers Trust Company, as Indenture
Trustee (the "Indenture Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Class A-1 Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or
pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes and the other Notes described in the Indenture
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture subject to
the priorities of allocations as to interest and principal payments as
described therein and in the Sale and Servicing Agreement.
Principal of the Class A-1 Notes will be payable on the earlier of the
Class A-1 Maturity Date and the Redemption Date, if any, selected pursuant to
the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class A-1 Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders have waived such Event of Default.
Payments of interest on this Note due and payable on each Payment Date
shall be made by check or wire transfer (pursuant to written wire transfer
instructions provided at least ten days prior to the applicable Payment Date)
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 Payment 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 Payment 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 Payment Date by notice
mailed within five Business Days of such Payment Date and the amount then due
and payable shall be payable only upon presentation and surrender of this Note
at the Corporate Trust Office of the Indenture Trustee or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
New York.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other
documents as the Indenture Trustee may require, and thereupon one or more new
program, and such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer
or exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder by acceptance of a Note or a beneficial interest in a Note
covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Basic 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 principal 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.
EXHIBIT C-1
FORM OF CLASS A-2 NOTE
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.
MITSUI VENDOR LEASING ASSET TRUST 1998-1
[ ]% CLASS A-2 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. __________
Mitsui Vendor Leasing Asset Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [______ ] Dollars ($___________)
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 Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made
on the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from and
including the most recent Payment Date on which interest has been paid to but
excluding the following Payment Date or, if no interest has yet been paid, from
and including the Closing Date to but excluding the first Payment Date
thereafter. Interest will be computed on the basis of a 360-day year consisting
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.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] MITSUI VENDOR LEASING ASSET TRUST 1998-1
By: ___________________________, not in its
individual capacity but solely on behalf
of the Issuer as Owner Trustee, under
the Agreement
By:_____________________________________
Printed Name:____________________________
Title:___________________________________
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee
By:_______________________________
Authorized Signatory
[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 August 1, 1998 (the
"Indenture"), between the Issuer and Bankers Trust Company, as Indenture
Trustee (the "Indenture Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Class A-2 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class A-2 Notes will be payable on the earlier of the
Class A-2 Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-2 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment Date
shall be made by check or wire transfer (pursuant to written wire transfer
instructions provided at least ten days prior to the applicable Payment Date)
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 Payment 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 Payment 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 Payment Date by notice
mailed within five Business Days of such Payment Date and the amount then due
and payable shall be payable only upon presentation and surrender of this Note
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in the City
of New York.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Seller, on any Payment 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.
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 Basic 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 principal 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.
EXHIBIT C-2
FORM OF CLASS A-3 NOTE
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.
MITSUI VENDOR LEASING ASSET TRUST 1998-1
[ ]% CLASS A-3 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. __________
Mitsui Vendor Leasing Asset Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [____] Dollars ($___________) 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 Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made
on the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from and
including the most recent Payment Date on which interest has been paid to but
excluding the following Payment Date or, if no interest has yet been paid, from
and including the Closing Date to but excluding the first Payment Date
thereafter. Interest will be computed on the basis of a 360-day year consisting
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.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [ ] MITSUI VENDOR LEASING ASSET TRUST 1998-1
By: ____________________________, not in its
individual capacity but solely on behalf
of the Issuer as Owner Trustee, under
the Agreement
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By:_______________________________
Authorized Signatory
[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 August 1, 1998 (the
"Indenture"), between the Issuer and Bankers Trust Company, as Indenture
Trustee (the "Indenture Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Class A-3 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class A-3 Notes will be payable on the earlier of the
Class A-3 Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-3 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment Date
shall be made by check or wire transfer (pursuant to written wire transfer
instructions provided at least ten days prior to the applicable Payment Date)
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 Payment 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 Payment 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 Payment Date by notice
mailed within five Business Days of such Payment Date and the amount then due
and payable shall be payable only upon presentation and surrender of this Note
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in the City
of New York.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Seller, on any Payment 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.
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 Basic 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 principal 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.
EXHIBIT D
FORM OF CLASS B NOTE
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.
MITSUI VENDOR LEASING ASSET TRUST 1998-1
[ ]% CLASS B RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. __________
Mitsui Vendor Leasing Asset Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [_______] Dollars ($_________) 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 Notes has been paid in full. After the
occurrence of an Event of Default or Restricting Event (as defined in the Sale
and Servicing Agreement), no payments of principal of the Class B Notes shall
be made until the principal on the Class A Notes.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made
on the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from and
including the most recent Payment Date on which interest has been paid to but
excluding the following Payment Date or, if no interest has yet been paid, from
and including the Closing Date to but excluding the first Payment Date
thereafter. Interest will be computed on the basis of a 360-day year consisting
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.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:[ ] MITSUI VENDOR LEASING ASSET TRUST 1998-1
By: _____________________________, not
in its individual capacity but
solely on behalf of the Issuer as
Owner Trustee, under the Agreement
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee
By:_______________________________
Authorized Signatory
[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 August 1,,1998 (the
"Indenture"), between the Issuer and Bankers Trust Company, as Indenture Trustee
(the "Indenture Trustee"), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Class B Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class B Notes will be payable on the earlier of the Class
B Maturity Date and the Redemption Date, if any, pursuant to Section 10.01 of
the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class B Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment Date
shall be made by check or wire transfer (pursuant to written wire transfer
instructions provided at least ten days prior to the applicable Payment Date)
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 Payment 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 Payment 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 Payment Date by notice
mailed within five Business Days of such Payment Date and the amount then due
and payable shall be payable only upon presentation and surrender of this Note
at the Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in the City
of New York.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Seller, on any Payment 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.
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 Basic 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 principal 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.
EXHIBIT E
FORM OF CLASS C NOTE
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.
MITSUI VENDOR LEASING ASSET TRUST 1998-1
[ ]% CLASS C RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1 CUSIP NO. __________
Mitsui Vendor Leasing Asset Trust 1998-1, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of [_____] Dollars ($_________) 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 Notes and Class B Notes has been paid in
full. After the occurrence of an Event of Default or Restricting Event (as
defined in the Sale and Servicing Agreement), no payments of principal of the
Class C Notes shall be made until the principal on the Class A 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 Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made
on the preceding Payment Date), subject to certain limitations contained in the
Indenture. Interest on this Note will accrue for each Payment Date from and
after the most recent Payment Date on which interest has been paid to but
excluding the following Payment Date or, if no interest has yet been paid, from
and including the Closing Date to but excluding the first Payment Date
thereafter. Interest will be computed on the basis of a 360-day year consisting
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.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:[ ] MITSUI VENDOR LEASING ASSET TRUST 1998-1
By: _____________________________, not in its
individual capacity but solely on behalf
of the Issuer as Owner Trustee, under the
Agreement
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee
By:_______________________________
Authorized Signatory
[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 August 1, 1998 (the
"Indenture"), between the Issuer and Bankers Trust Company, as Indenture
Trustee (the "Indenture Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.
The Class C Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class C Notes will be payable on the earlier of the Class
C Maturity Date and the Redemption Date, if any, pursuant to Section 10.01 of
the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class C Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Payment Date
shall be made by check or wire transfer (pursuant to written instructions
provided at least ten days prior to the applicable Payment Date) 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 Payment 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 Payment 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 Payment Date by notice mailed within five Business Days of such Payment
Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in the City of New York.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Seller, on any Payment 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.
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 Basic 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 principal 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.
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
Transfer Agent's Medallion Program of the within Note in every
(STAMP) or similar guarantee program. particular, without alteration or
enlargement or any change whatsoever
(Authorized Officer)
EXHIBIT G
FORM OF NOTE DEPOSITORY AGREEMENT
[Exhibit 4.4]
================================================================================
[FORM OF ADMINISTRATION AGREEMENT]
among
MITSUI VENDOR LEASING ASSET TRUST 1998-1
Issuer
MITSUI VENDOR LEASING (U.S.A.) INC.
Administrator
MITSUI VENDOR LEASING FUNDING CORP. II
Trust Depositor
and
---------------------------------------
Indenture Trustee
Dated as of August 1, 1998
================================================================================
TABLE OF CONTENTS
Page
----
SECTION 1. Duties Of The Administrator.....................................4
SECTION 2. Records........................................................10
SECTION 3. Compensation...................................................10
SECTION 4. Additional Information To Be Furnished To The Issuer...........10
SECTION 5. Independence Of The Administrator..............................10
SECTION 6. No Joint Venture...............................................10
SECTION 7. Other Activities Of Administrator..............................10
SECTION 8. Term Of Agreement; Resignation And Removal Of Administrator....10
SECTION 9. Action Upon Termination, Resignation Or Removal................11
SECTION 10 Notices........................................................11
SECTION 11 Amendments.....................................................12
SECTION 12 Successors And Assigns.........................................13
SECTION 13 Governing Law..................................................13
SECTION 14 Headings.......................................................13
SECTION 15 Counterparts...................................................13
SECTION 16 Severability...................................................13
SECTION 17 Not Applicable To Mitsui In Other Capacities...................13
SECTION 18 Limitation Of Liability Of Owner Trustee And Indenture
Trustee ......................................................13
SECTION 19 Third-Party Beneficiary........................................14
SECTION 20 Survivability..................................................14
This Administration Agreement, dated as of August 1, 1998, is among
Mitsui Vendor Leasing Asset Trust 1998-1 (the "Issuer"), Mitsui Vendor Leasing
(U.S.A.) Inc. ( together with its successors and assigns "Mitsui") in its
capacity as administrator (the "Administrator"), Mitsui Vendor Leasing Funding
Corp. II (together with its successors and assigns, the "Trust Depositor") and
____________________, in its capacity as Indenture Trustee (together with its
successors and assigns, the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, the Issuer is issuing [____]% Class A-1 Receivable-Backed
Notes, [____]% Class A-2 Receivable-Backed Notes, [____]% Class A-3
Receivable-Backed Notes, [____]% Class B Receivable-Backed Notes and [____]%
Class C Receivable-Backed Notes (collectively, the "Notes") pursuant to the
Indenture, dated as of the date hereof (the "Indenture"), between the Issuer and
the Indenture Trustee (capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Sale and Servicing
Agreement or, if not defined in the Sale and Servicing Agreement, in the
Indenture);
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes, including (i) a Sale and Servicing Agreement,
dated as of the date hereof (the "Sale and Servicing Agreement"), among the
Issuer, the Trust Depositor, the Seller, the Servicer, the Indenture Trustee and
the Back-up Servicer, (ii) the Indenture and (iii) the other Basic Documents;
WHEREAS, pursuant to the Basic Documents, the Issuer and the Owner
Trustee are required to perform certain duties in connection with the Notes and
the Collateral therefor pledged pursuant to the Indenture;
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 Basic Documents as the
Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Duties Of The Administrator.
---------------------------
(a) Duties with respect to the Indenture.
------------------------------------
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee under
the Basic Documents. In addition, the Administrator shall consult with
the Owner Trustee regarding the duties of the Issuer or the Owner
Trustee under the Indenture. The Administrator shall monitor the
performance of the Issuer and shall advise the Owner Trustee when
action is necessary to comply with the respective duties of the Issuer
and the Owner Trustee under the Indenture. The Administrator shall
prepare for execution by the Issuer or shall cause the preparation by
other appropriate persons of, all such documents, reports, filings,
instruments, certificates and opinions that it shall be the duty of
the Issuer or the Owner Trustee to prepare, file or deliver pursuant
to the Indenture. In furtherance of the foregoing, the Administrator
shall take all appropriate action that the Issuer or the Owner Trustee
is required to take pursuant to the Indenture including, without
limitation, such of the foregoing as are required with respect to the
following matters under the Indenture (references are to Sections of
the Indenture):
(A) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note Registrar and the
location, or change in location, of the Note Register (Section 2.04);
(B) the notification of Noteholders of the final principal
payment on their Notes (Section 2.07(b));
(C) the preparation of or obtaining of the documents and
instruments required for execution and authentication of the Notes and delivery
of the same to the Indenture Trustee (Section 2.02);
(D) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release of
Collateral (Section 2.12);
(E) the 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 Termination Event under the Sale and Servicing Agreement;
(M) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the Indenture
(Section 3.10(b));
(N) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.01);
(O) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Collateral in a commercially reasonable
manner if an Event of Default shall have occurred and be continuing (Section
5.04);
(P) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee (Section 6.08);
(Q) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or removal of
the Indenture Trustee or any co-trustee or separate trustee (Sections 6.08 and
6.10);
(R) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is not the
Note Registrar (Section 7.01);
(S) the opening of one or more accounts in the Indenture
Trustee's name, the preparation and delivery of Issuer Orders, Officer's
Certificates and Opinions of Counsel and all other actions necessary with
respect to investment and reinvestment of funds in the Trust Accounts (Sections
8.02 and 8.03);
(T) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Collateral (Sections 8.04 and
8.05);
(U) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental indentures and
the mailing to the Noteholders of notices with respect to such supplemental
indentures (Sections 9.01, 9.02 and 9.03);
(V) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.06);
(W) the duty to notify Noteholders of redemption of the Notes or
to cause the Indenture Trustee to provide such notification (Section 10.02);
(X) the preparation and delivery of all Officer's Certificates,
Opinions of Counsel and Independent Certificates with respect to any requests by
the Issuer to the Indenture Trustee to take any action under the Indenture
(Section 11.01(a));
(Y) the preparation and delivery of Officer's Certificates and
the obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.01(b));
(Z) the notification of the Rating Agencies, upon the failure of
the Issuer, the Owner Trustee or the Indenture Trustee to provide notification;
(AA) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment and notice
provisions (Section 11.06); and
(BB) the recording of the Indenture, if applicable (Section
11.14).
(ii) The Administrator will:
(A) except as otherwise expressly provided in the Indenture or
the Sale and Servicing Agreement, pay the Indenture Trustee's fees and reimburse
the Indenture Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Indenture Trustee in
accordance with any provision of the Indenture (including the reasonable
compensation, expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its negligence
or bad faith;
(B) indemnify the Indenture Trustee and its agents for, and hold
them harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection with the
acceptance or administration of the transactions contemplated by the Indenture,
including the reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of
their powers or duties under the Indenture; and
(C) indemnify the Owner Trustee and its agents for, and hold them
harmless against, any loss, liability or expense incurred without or bad faith
on their part, arising out of or in connection with the acceptance or
administration of the transactions contemplated by the Trust Agreement,
including the reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of
their powers or duties under the Trust Agreement (and including without
limitation, an indemnity as described above with respect to the Trust
Depositor's obligations in favor of the Owner Trustee under Section 8.02 of the
Trust Agreement).
(b) Additional Duties.
-----------------
(i) In addition to the duties set forth in Section 1(a)(i), the
Administrator shall perform such calculations and shall prepare or shall cause
the preparation by other appropriate persons of, and shall execute on behalf of
the Issuer or the Owner Trustee, all such documents, reports, filings,
instruments, certificates and opinions that the Issuer or the Owner Trustee are
required to prepare, file or deliver pursuant to the Basic Documents or Sections
7.01, 7.02 and 7.03 of the Indenture, 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 Basic Documents. In furtherance thereof, the
Owner Trustee shall, on behalf of itself and of the Issuer, execute and deliver
to the Administrator and to each successor Administrator appointed pursuant to
the terms hereof, one or more powers of attorney substantially in the form of
Exhibit A hereto, appointing the Administrator the attorney-in-fact of the Owner
Trustee and the Issuer for the purpose of executing on behalf of the Owner
Trustee and the Issuer all such documents, reports, filings, instruments,
certificates and opinions. Subject to Section 5 hereof, 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 Basic 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 Basic 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
Issuer's payments (or allocations of income) to an Owner as contemplated in
Section [5.02(c)] of the Trust Agreement. Any such notice shall specify the
amount of any withholding tax required to be withheld by the Owner Trustee
pursuant to such provision.]
(iii) Notwithstanding anything in this Agreement or the Basic Documents
to the contrary, the Administrator shall be responsible for performance of the
duties of the Owner Trustee set forth in Section 5.05(a), (b), (c) and (d), the
penultimate sentence of Section 5.05 and Section 5.06(a) of the Trust Agreement
with respect to, among other things, accounting and reports to Owners; provided,
however, that the Owner Trustee shall retain responsibility for the distribution
of information forms necessary to enable each Owner to prepare its federal and
state income tax returns.
(iv) The Administrator shall satisfy its obligations with respect to
clauses (ii) and (iii) above by retaining, at the expense of the Issuer 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 Basic
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 Basic
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 which shall be solely an obligation of the Servicer as contemplated in
Section 9.15 of the Sale and Servicing Agreement and which shall be in an amount
as shall be agreeable to the Trust Depositor and the Administrator.
SECTION 4. Additional Information To Be Furnished To The Issuer.
-----------------------------------------------------
The Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
SECTION 5. Independence Of The Administrator. For all purposes of
---------------------------------
this Agreement, the Administrator shall be an independent contractor and shall
not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or the
Owner Trustee in any way and shall not otherwise be deemed an agent of the
Issuer or the Owner Trustee.
SECTION 6. No Joint Venture. Nothing contained in this Agreement
----------------
(i) shall constitute the Administrator and either of the Issuer or the Owner
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 7. Other Activities Of Administrator. Nothing herein
------------------------------------
shall prevent the Administrator or its Affiliates from engaging in other
business or, in its sole discretion, from acting in a similar capacity as an
administrator for any other Person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
SECTION 8. Term Of Agreement; Resignation And Removal Of
----------------------------------------------------
Administrator. This Agreement shall continue in force until the dissolution of
- -------------
the Issuer, upon which event this Agreement shall automatically terminate.
(a) Subject to Section 8(d) and Section 8(e), the Administrator
may resign its duties hereunder by providing the Issuer with at least 60 days'
prior written notice.
(b) Subject to Section 8(d) and Section 8(e), the Issuer may
remove the Administrator without cause by providing the Administrator with at
least 60 days' prior written notice.
(c) Subject to Section 8(d) and Section 8(e), at the sole option
of the Issuer, the Administrator may be removed immediately upon written notice
of termination from the Issuer to the Administrator if any of the following
events shall occur:
(i) the Administrator shall default in the performance of any of
its duties under this Agreement and, after notice of such default, shall
not cure such default within ten days (or, if such default cannot be cured
in such time, shall not give within ten days such assurance of cure as
shall be reasonably satisfactory to the Issuer); or
(ii) an Insolvency Event shall occur with respect to the
Administrator.
The Administrator agrees that if any of the events specified in
clause (ii) above shall occur, it shall give written notice thereof to the
Issuer and the Indenture Trustee within seven days after the occurrence of such
event.
(d) No resignation or removal of the Administrator pursuant to
this Section shall be effective until (i) a successor Administrator shall have
been appointed by the Issuer and (ii) such successor Administrator shall have
agreed in writing to be bound by the terms of this Agreement in the same manner
as the Administrator is bound hereunder.
(e) The appointment of any successor Administrator shall be
effective only after the satisfaction of the Rating Agency Condition with
respect to the proposed appointment.
(f) Subject to Section 8(d) and 8(e), the Administrator
acknowledges that upon the appointment of a successor Servicer pursuant to the
Sale and Servicing Agreement, the Administrator shall immediately resign
(subject to Section 8(d) hereof).
SECTION 9. Action Upon Termination, Resignation Or Removal.
----------------------------------------------------
Promptly upon the effective date of termination of this Agreement pursuant to
Section 8 or the resignation or removal of the Administrator pursuant to Section
8(a), (b) or (c) respectively, the Administrator shall be entitled to be paid
all fees and reimbursable expenses accruing to it to the date of such
termination, resignation or removal. The Administrator shall forthwith upon such
termination pursuant to Section 8 deliver to the Issuer all property and
documents of or relating to the Collateral then in the custody of the
Administrator. In the event of the resignation or removal of the Administrator
pursuant to Section (a), (b) or (c), respectively, the Administrator shall
cooperate with the Issuer and take all reasonable steps requested to assist the
Issuer in making an orderly transfer of the duties of the Administrator.
SECTION 10. Notices. All notices, demands, certificates, requests
-------
and communications hereunder ("Notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to a Responsible Officer of the party to which sent, or (d)
on the date transmitted by legible telecopier transmission with a confirmation
of receipt, in all cases addressed to the recipient at the address specified in
the Sale and Servicing Agreement for such recipient.
Each party hereto may, by notice given in accordance herewith to
each of the other parties hereto, designate any further or different address to
which subsequent notices shall be sent.
SECTION 11. 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, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Noteholders; provided that such amendment will not,
in the Opinion of Counsel satisfactory to the Indenture Trustee, materially and
adversely affect the interest of any Noteholder; provided further that such
action shall be deemed not to adversely affect in any material respect the
interests of the Noteholders and no such Opinion of Counsel need be delivered if
the Rating Agency Condition is satisfied. 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; 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 (ii) reduce the
aforesaid percentage of the holders of Notes which are required to consent to
any such amendment, without the consent of the Insurer and the holders of all
outstanding Notes. Notwithstanding the foregoing, the Administrator may not
amend this Agreement without the permission of the Trust Depositor, which
permission shall not be unreasonably withheld.
SECTION 12. Successors And Assigns. This Agreement may not be
-----------------------
assigned by the Administrator unless such assignment is previously consented to
in writing by the Issuer, the Indenture Trustee and the Owner Trustee and
subject to the satisfaction of the Rating Agency Condition in respect thereof.
An assignment with such consent and satisfaction, if accepted by the assignee,
shall bind the assignee hereunder in the same manner as the Administrator is
bound hereunder. Notwithstanding the foregoing, this Agreement may be assigned
by the Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Administrator; provided that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement, in form and substance reasonably satisfactory to
the Owner Trustee and the Indenture Trustee, in which such corporation or other
organization agrees to be bound hereunder by the terms of said assignment in the
same manner as the Administrator is bound hereunder. Subject to the foregoing,
this Agreement shall bind any successors or assigns of the parties hereto.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK 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 Mitsui In Other Capacities. Nothing
--------------------------------------------
in this Agreement shall affect any obligation Mitsui 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 _____________________________ not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall _____________________________ 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.
SECTION 19. Third-Party Beneficiary. The Owner Trustee is a
------------------------
third-party beneficiary to this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
SECTION 20. Survivability. The obligations of the Administrator
-------------
described in Section 1(a)(ii) hereof shall survive termination of this
Agreement.
[this portion of page intentionally left blank]
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.
MITSUI VENDOR LEASING ASSET TRUST 1998-1
By: _____________________________, not in
its individual capacity but solely as
Owner Trustee
By:___________________________________
Name:______________________________
Title:_____________________________
MITSUI VENDOR LEASING FUNDING CORP. II,
as Trust Depositor
By:
Name: ____________________________
Title:____________________________
By:
Name: ____________________________
Title: ____________________________
_____________________________________________,
as Indenture Trustee
By:
Name: _____________________________
Title: _____________________________
MITSUI VENDOR LEASING (U.S.A.) INC.,
as Administrator
By:
Name: ____________________________
Title: ____________________________
EXHIBIT A
LIMITED POWER OF ATTORNEY
State of _________________)
) ss.
County of ________________)
KNOW ALL PERSONS BY THESE PRESENTS, that ________________
_____________, a ____________________________ (the "OWNER TRUSTEE"), by and
through its duly elected and authorized officer, ________________________, a
___________________, on behalf of itself and of Mitsui Vendor Leasing Asset
Trust 1998-1 (the "Issuer") as Issuer under the Administration Agreement, dated
as of __________, 1998 (the "Administration Agreement"), among the Issuer,
Mitsui Vendor Leasing Funding Corp. II,
_________________________________________ as Indenture Trustee, and Mitsui
Vendor Leasing (U.S.A.) Inc., as Administrator, does hereby nominate, constitute
and appoint Mitsui Vendor Leasing (U.S.A.) 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, and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
Executed as of this ____ day of ______________, 1998.
_______________________________,
not in its individual capacity but
solely as Owner Trustee,
By:
Name: ________________________
Title: ________________________
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] ______________________________
[Exhibit 4.5]
================================================================================
[FORM OF TRANSFER AND SALE AGREEMENT]
among
MITSUI VENDOR LEASING FUNDING CORP. II
Purchaser
and
MITSUI VENDOR LEASING (U.S.A.) INC.
Seller and Servicer
-----------------------
Dated as of August 1, 1998
-----------------------
================================================================================
Table of Contents
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 General..........................................................1
SECTION 1.2 Specific Terms...................................................2
SECTION 1.3 Certain References...............................................3
SECTION 1.4 No Recourse......................................................3
SECTION 1.5 Action by or Consent of Noteholders..............................3
ARTICLE II
CONVEYANCE OF THE TRANSFERRED ASSETS
SECTION 2.1 Conveyance of Transferred Assets..................................3
SECTION 2.2 Assignment and Granting of the Purchaser's Rights
Under this Agreement.............................................4
SECTION 2.3 Intention of the Parties..........................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Seller......................4
SECTION 3.2 Representations and Warranties of the Purchaser...................7
ARTICLE IV
COVENANTS OF THE SELLER
SECTION 4.1 Protection of Title of the Purchaser and the Trust ...............9
SECTION 4.2 Reserved]........................................................11
SECTION 4.3 Costs and Expenses...............................................11
SECTION 4.4 Indemnification..................................................11
SECTION 4.5 Further Assurances...............................................13
SECTION 4.6 Negative Covenant................................................13
ARTICLE V
REPURCHASES
SECTION 5.1 Repurchase of Contracts Upon Breach of Representation
or Warranty ....................................................13
SECTION 5.2 Reassignment of Repurchased Contracts and Equipment..............14
SECTION 5.3 Waivers..........................................................14
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 [Reserved].......................................................15
SECTION 6.2 Merger or Consolidation of the Seller or the Purchaser...........15
SECTION 6.3 Limitation on Liability of the Seller and Others ................15
SECTION 6.4 The Seller May Own Notes.........................................16
SECTION 6.5 Amendment........................................................16
SECTION 6.6 Notices..........................................................17
SECTION 6.7 Merger and Integration...........................................17
SECTION 6.8 Severability of Provisions.......................................17
SECTION 6.9 GOVERNING LAW....................................................17
SECTION 6.10 Counterparts.....................................................17
SECTION 6.11 Conveyance of the Contracts to the Trust.........................18
SECTION 6.12 Nonpetition Covenant.............................................18
SCHEDULES
Schedule A -- Schedule of Contracts and Equipment
Schedule B -- Schedule of Representations and Warranties of the Seller
TRANSFER AND SALE AGREEMENT
This TRANSFER AND SALE AGREEMENT dated as of August 1, 1998, between
Mitsui Vendor Leasing Funding Corp. II, a Delaware corporation, as purchaser
(the "Purchaser"), and Mitsui Vendor Leasing (U.S.A.) Inc., a Delaware
corporation, as seller (in such capacity, the "Seller") and servicer (in such
capacity, the "Servicer").
W I T N E S S E T H:
WHEREAS, the Seller owns certain Contracts (the "Contracts") as are
more particularly described in Schedule A attached hereto and has an ownership
or security interest in the items of Equipment subject thereto (the
"Equipment"), as more particularly described in Schedule A attached hereto; and
WHEREAS, the Purchaser has agreed to acquire the Contracts and the
other Transferred Assets described herein from the Seller, and the Seller has
agreed to transfer the Contracts and the other Transferred Assets to the
Purchaser; and
WHEREAS, pursuant to the terms of a Sale and Servicing Agreement dated
as of August 1, 1998 (the "Sale and Servicing Agreement") among Mitsui Vendor
Leasing Asset Trust 1998-1 (the "Trust"), Mitsui Vendor Leasing Funding Corp.
II, as Trust Depositor , Mitsui Vendor Leasing (U.S.A.) Inc., as Seller and
Servicer, Bankers Trust Company, as Indenture Trustee and Back-up Servicer, to
be executed concurrently with the execution of this Agreement, the Purchaser
will convey the Transferred Assets and the other Trust Assets (including the
Purchaser's rights hereunder) to the Trust; and
WHEREAS, pursuant to the terms of an Indenture, dated as of August 1,
1998 (the "Indenture"), between the Trust and Bankers Trust Company, as
Indenture Trustee (the "Indenture Trustee"), to be executed concurrently with
this Agreement, the Trust will, on the Closing Date, issue the Notes, secured by
a pledge of the Transferred Assets and the other Trust Assets (including the
Purchaser's rights hereunder).
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and for other good and valuable consideration, the receipt of which
is acknowledged, the Purchaser, the Seller and the Servicer, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General.
-------
(a) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, and Article, Section, Schedule and
Exhibit references, unless otherwise specified, refer to Articles and Sections
of and Schedules and Exhibits to this Agreement. All capitalized terms used
herein without definition shall have the respective meanings assigned to such
terms in the Sale and Servicing Agreement or, if not defined in the Sale and
Servicing Agreement, in the Indenture.
(b) With respect to all terms used in this Agreement, the singular
includes the plural and the plural the singular; words importing any gender
include the other gender; references to "writing" include printing, typing,
lithography, and other means of reproducing words in a visible form; references
to agreements and other contractual instruments include all subsequent
amendments thereto or changes therein entered into in accordance with their
respective terms and not prohibited by this Agreement or the Sale and Servicing
Agreement; references to Persons include their permitted successors and assigns;
and the terms "include" or "including" mean "include without limitation" or
"including without limitation."
SECTION 1.2 Specific Terms. Whenever used in this Agreement, the
---------------
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
Agreement: This Transfer and Sale Agreement and all amendments hereof
---------
and supplements hereto.
Closing Date: August __, 1998.
------------
Obligor UCC Filing Requirement: With respect to any Contract, the
-------------------------------
Seller has obtained appropriate UCC financing statements (Form UCC-1) executed
by or on behalf of the Obligor of such Contract, which UCC financing statements
have been filed in all applicable jurisdictions, so that, if such Contract is a
security agreement (as that term is used in the UCC), the Seller would
reasonably be expected to have a first priority perfected security interest in
the Equipment subject to such Contract.
Repurchase Event: With respect to any Contract, a breach of any of the
----------------
representations and warranties set forth in the Schedule of Representations that
materially and adversely affects the value of such Contract.
Sale and Servicing Agreement: The Sale and Servicing Agreement, dated
----------------------------
as of the date hereof, among the Trust, the Trust Depositor, the Seller, the
Servicer, the Indenture Trustee and the Back-up Servicer.
Schedule of Representations: The Schedule of Representations and
-----------------------------
Warranties of the Seller attached hereto as Schedule B.
Transferred Assets: The property and proceeds of every description
-------------------
conveyed pursuant to Section 2.1(a) hereof.
SECTION 1.3 Certain References. All references to the Discounted
-------------------
Contract Balance of a Contract as of an Cut-off Date shall refer to the close of
business on such day, or as of the first day of a Collection Period shall refer
to the opening of business on such day. All references to the last day of a
Collection Period shall refer to the close of business on such day.
SECTION 1.4 No Recourse. Without limiting the obligations of the
------------
Purchaser, the Seller or the Servicer hereunder, no recourse may be taken,
directly or indirectly, under this Agreement or any certificate or other writing
delivered in connection herewith or therewith, against any stockholder, officer
or director, as such, of any of the Purchaser, the Seller or the Servicer, or of
any predecessor or successor of any of such Persons.
SECTION 1.5 Action by or Consent of Noteholders. Whenever any
----------------------------------------
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to Noteholders of record as
of the Record Date immediately preceding the date on which such action is to be
taken, or consent given, by such Noteholders. Solely for the purposes of any
action to be taken, or consented to, by Noteholders, any Note registered in the
name of any of the Purchaser or the Seller or any Affiliate thereof, shall be
deemed not to be outstanding, and the related principal balance, as applicable,
evidenced thereby shall not be taken into account in determining whether the
requisite principal balance necessary to effect any such action or consent has
been obtained; provided however that, solely for the purpose of determining
whether the Indenture Trustee is entitled to rely upon any such action or
consent, only Notes which the Indenture Trustee knows to be so owned shall be so
disregarded.
ARTICLE II
CONVEYANCE OF THE TRANSFERRED ASSETS
SECTION 2.1 Conveyance of Transferred Assets.
--------------------------------
(a) The Seller hereby sells, transfers, assigns, and otherwise conveys
to the Purchaser, without recourse (but without limitation of its obligations in
this Agreement), and the Purchaser hereby acquires, all right, title and
interest, including security interests, whether now owned or hereafter acquired,
of the Seller in and to the following:
(i) the Contracts, including all Additional Contracts and Substitute
Contracts, and all moneys due or to become due in payment of such Contracts
on and after the applicable Cut-off Date, any Prepayments, 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
applicable Cut-off Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts including all proceeds
from any loan or other disposition of such Equipment;
(iii) the related Contract Files;
(iv) all payments since the applicable Cut-off Date made or to be made
in the future with respect to the Contracts or the Obligor thereunder and
the related Vendor Program Agreement or the Vendor thereunder and under any
other guarantee or similar credit enhancement with respect to the
Contracts;
(v) all Insurance Proceeds with respect to each the Contract; and
(vi) all income and proceeds of the foregoing.
(b) THE PURCHASER ACKNOWLEDGES THAT THE SELLER IS TRANSFERRING THE
EQUIPMENT "AS-IS, WHERE-IS," AND THAT THE SELLER MAKES NO REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT, INCLUDING WITHOUT LIMITATION
ITS MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
SECTION 2.2 Assignment and Granting of the Purchaser's Rights Under
---------------------------------------------------------
this Agreement. The Seller and the Purchaser agree that the Purchaser will
- ---------------
assign to the Trust, and the Trust will immediately Grant to the Indenture
Trustee, all of the Purchaser's rights under this Agreement at the Closing Date
and that the Indenture Trustee will thereafter be entitled to enforce this
Agreement against the Purchaser directly or on behalf of the Noteholders.
SECTION 2.3 Intention of the Parties. The execution and delivery of
------------------------
this Agreement shall constitute an acknowledgment by each of the Seller and the
Purchaser that they intend that each assignment and transfer herein contemplated
constitute a sale and assignment outright, and not for security, of the property
described in Section 2.1(a), conveying good title thereto free and clear of any
Liens, from the Seller to the Purchaser, and that all such property shall not be
a part of the estate of the Seller in the event of the bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, or the
occurrence of another similar event, of, or with respect to the Seller. In the
event that such conveyance is determined to be made as security for a loan made
by the Purchaser or the Trust to the Seller, the Seller hereby grants to the
Purchaser a security interest in all of the Seller's right, title and interest
in and to the property described in Section 2.1(a) to secure the loan determined
to have been made to the Seller and the payment and performance of the other
obligations of the Seller under this Agreement, and agrees that in such event
this Agreement shall constitute a security agreement under applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Seller. The Seller
---------------------------------------------
makes the following representations and warranties, on which the Purchaser
relies in purchasing the Transferred Assets and in transferring the Transferred
Assets to the Trust under the Sale and Servicing Agreement. Such representations
are made as of the Closing Date, or with respect to each Substitute Contract or
Additional Contract, as of the applicable Transfer Date, but shall survive the
sale, transfer and assignment of the Contracts and other Transferred Assets
hereunder and the transfer of the Contracts and the other Transferred Assets by
the Purchaser to the Trust under the Sale and Servicing Agreement, and the
Granting thereof under the Indenture.
(a) Schedule of Representations. With respect to each Contract, the
----------------------------
representations and warranties set forth on the Schedule of Representations
are true and correct as of the date specified therein.
(b) Organization and Good Standing. The Seller has been duly organized
------------------------------
and is validly existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority to own its properties and
to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now
has, power, authority and legal right to acquire, own and sell the
Contracts and other Transferred Assets sold to the Purchaser.
(c) Due Qualification. The Seller is duly qualified to do business as
-----------------
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in each jurisdiction in which the ownership or
lease of its property or the conduct of its business requires such
qualification and in which the failure to so qualify would not have a
material adverse effect on the validity or enforceability of, or the
Seller's performance under, this Agreement or the other Basic Documents to
which it is a party or the validity or enforceability of the Contracts, or
on the Purchaser's, the Trust's or the Noteholder's interest in any
Contracts or other Transferred Assets.
(d) Power and Authority. The Seller has the power and authority to
--------------------
execute and deliver this Agreement and the other Basic Documents to which
it is a party and to carry out its terms and their terms, respectively, and
the execution, delivery and performance of this Agreement and the other
Basic Documents to which it is a party have been duly authorized by the
Seller by all necessary corporate action.
(e) No Consents. The Seller holds all necessary licenses, certificates
-----------
and permits from all Governmental Authorities necessary for conducting its
business as it is presently conducted, and 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
Basic Documents to which it is a party, except for such consents, licenses,
approvals or authorizations, or registrations or declarations, as shall
have been obtained or filed, as the case may be, prior to the Closing Date.
(f) Valid Sale; Binding Obligations. This Agreement and the other
---------------------------------
Basic Documents to which the Seller is a party have been duly executed and
delivered, this Agreement and effect a valid sale, transfer and assignment
of the Contracts and the other Transferred Assets, enforceable against the
Seller, and creditors of and purchasers from the Seller; and this Agreement
and each of other Basic Documents to which the Seller is a party constitute
legal, valid and binding obligations of the Seller, enforceable in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(g) No Violation. The execution and delivery of this Agreement, the
------------
consummation of the transactions contemplated by this Agreement and the
other Basic Documents and the fulfillment of the terms of this Agreement
and the other Basic Documents shall not conflict with, result in any breach
of any of the terms and provisions of or constitute (with or without notice
or lapse of time, or both) a default under, the certificate of
incorporation or bylaws of the Seller, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Seller is a party
or by which it is bound, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other
than this Agreement, the Sale and Servicing Agreement and the Indenture, or
violate any law, order, rule or regulation applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or
any of its properties, except in each case to the extent it would not have
a material adverse effect on the validity or enforceability of, or the
Seller's performance under, this Agreement or the other Basic Documents or
the validity or enforceability of the Contracts or on the Purchaser's, the
Trust's or the Noteholders' interest in any Contracts or other Transferred
Assets.
(h) No Proceedings. There are no proceedings or investigations pending
--------------
or, to the knowledge of the Seller, threatened against the Seller, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or any
properties of the Seller (i) asserting the invalidity of this Agreement or
any of the other Basic Documents, (ii) seeking to prevent the issuance of
the Notes or the consummation of any of the transactions contemplated by
this Agreement or any of the other Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement or any of the other Basic Documents to
which it is a party or (iv) seeking to affect adversely the federal income
tax or other federal, state or local tax attributes of, or seeking to
impose any excise, franchise, transfer or similar tax upon, the transfer
and acquisition of the Contracts and other Transferred Assets hereunder or
under the Sale and Servicing Agreement.
(i) Chief Executive Offices. The chief executive office of the Seller
-----------------------
is located at 6363 Greenwich Drive, Suite 100, San Diego, California 92122,
and the offices where the Seller keeps its records concerning the Contracts
and related documents are at 6363 Greenwich Drive, Suite 100, San Diego,
California 92122.
(j) Vendor Program Agreements. The Seller has assigned to the
---------------------------
Purchaser the Seller's rights under the Vendor Program Agreements to the
extent related to payments to be made in respect of the related Contracts;
provided that, so long as no Event of Default has occurred and is
continuing, the Purchaser (and the Trust and the Indenture Trustee as
assignees of the Purchaser) will not deal directly with any Vendor under
the related Vendor Program Agreement. [With respect to each Vendor Program
Agreement, the Seller confirms that, following the occurrence and during
the continuance of an Event of Default, the Purchaser (and the Trust and
the Indenture Trustee as assignees of the Purchaser) shall have the right
to enforce with respect to any related Contract, the rights and remedies of
the Seller under such Vendor Program Agreement, including the Seller's
rights pursuant to the power of attorney granted pursuant to such Vendor
Program Agreement, but without any obligation on the part of the Purchaser
(or the Trust or the Indenture Trustee as assignees of the Purchaser) to
perform any of the obligations of the Seller under such Vendor Program
Agreement.] Notwithstanding the assignment by the Seller to the Purchaser
of the Seller's rights under the Vendor Program Agreements to the extent
related to payments to be made in respect of the Contracts, the Seller
shall retain the right to exercise all consents and approvals under the
Vendor Program Agreements (until such time as an Event of Default shall
have occurred and be continuing at which time such right shall be exercised
by the Purchaser (or the Trust or the Indenture Trustee as assignees of the
Purchaser (or their designees)); provided that the Seller agrees that it
will not amend any Vendor Program Agreement in any manner that would have a
material adverse effect on the Purchaser's (or the Trust's or the Indenture
Trustee's, as assigneess of the Purchaser) rights to payments in respect of
any related Contract. The Servicer covenants that, if there are claims
under multiple Contracts pledged by the Issuer to be asserted under any
Vendor Program Agreement, the Servicer shall assert such claims on a
non-discriminatory basis based on when such claims arose.
SECTION 3.2 Representations and Warranties of the Purchaser. The
---------------------------------------------------
Purchaser makes the following representations and warranties, on which the
Seller relies in selling, assigning, transferring and conveying the Contracts
and the other Transferred Assets to the Purchaser hereunder. Such
representations are made as of the Closing Date but shall survive the sale,
transfer and assignment of the Contracts and other Transferred Assets hereunder
and the transfer thereof by the Purchaser to the Trust under the Sale and
Servicing Agreement.
(a) Organization and Good Standing. The Purchaser has been duly
--------------------------------
organized and is validly existing and in good standing as a corporation
under the laws of the State of Delaware, with the power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and has, full power, authority and legal right to acquire
and own the Contracts and the other Transferred Assets and to transfer the
Contracts and the other Transferred Assets to the Trust pursuant to the
Sale and Servicing Agreement.
(b) Due Qualification. The Purchaser is duly qualified to do business
-----------------
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in each jurisdiction where the failure to do so
would have a material adverse effect on the validity or enforceability of
or the Purchaser's performance under this Agreement or the other Basic
Documents to which it is a party or the validity or enforceability of the
Contracts.
(c) Power and Authority. The Purchaser has the power and authority to
-------------------
execute and deliver this Agreement and the other Basic Documents to which
it is a party and to carry out its terms and their terms, respectively, and
to acquire the Contracts and the other Transferred Assets; and the
execution, delivery and performance of this Agreement and the other Basic
Documents to which it is a party and all of the documents required pursuant
hereto or thereto have been duly authorized by the Purchaser by all
necessary action.
(d) No Consents. The Purchaser holds all necessary licenses,
------------
certificates and permits from all government authorities necessary for
conducting its business as it is presently conducted, and 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 or the
other Basic Documents to which it is a party, except for such consents,
licenses, approvals or authorizations, or registrations or declarations, as
shall have been obtained or filed, as the case may be, prior to the Closing
Date.
(e) Binding Obligation. This Agreement and the other Basic Documents
-------------------
to which the Purchaser is a party constitute a legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms; and this Agreement and the other Basic Documents
to which it is a party constitute legal, valid and binding obligations of
the Purchaser, enforceable in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The execution, delivery and performance by the
-------------
Purchaser of this Agreement, the consummation of the transactions
contemplated by this Agreement and the other Basic Documents and the
fulfillment of the terms of this Agreement and the other Basic Documents do
not and will not conflict with, result in any breach of any of the terms
and provisions of or constitute (with or without notice or lapse of time,
or both) a default under the articles of incorporation or bylaws of the
Purchaser, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Purchaser is a party or by which the Purchaser is
bound or to which any of its properties are subject, or result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or
other instrument (other than the Sale and Servicing Agreement and the
Indenture), or violate any law, order, rule or regulation, applicable to
the Purchaser or its properties, of any federal or state regulatory body or
any court, administrative agency, or other governmental instrumentality
having jurisdiction over the Purchaser or any of its properties, except in
each case to the extent it would not have a material adverse effect on the
validity or enforceability of, or the Purchaser's performance under, this
Agreement or the other Basic Documents to which it is a party.
(g) No Proceedings. There are no proceedings or investigations
---------------
pending, or, to the knowledge of the Purchaser, threatened against the
Purchaser, before any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality having jurisdiction over the
Purchaser or its properties: (i) asserting the invalidity of this Agreement
or any of the other Basic Documents, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
any of the other Basic Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the Purchaser
of its obligations under, or the validity or enforceability of, this
Agreement or any of the other Basic Documents to which it is a party or
(iv) that may adversely affect the federal or state income tax attributes
of, or seeking to impose any excise, franchise, transfer or similar tax
upon, the transfer and acquisition of the Contracts and the other
Transferred Assets hereunder or the transfer of the Contracts and the other
Transferred Assets to the Trust pursuant to the Sale and Servicing
Agreement.
(h) Chief Executive Offices. The chief executive office of the
-------------------------
Purchaser is located at 6363 Greenwich Drive, Suite 100, San Diego,
California 92122 and the offices where the Purchaser keeps its records
concerning the Contracts and other Basic Documents are at 6363 Greenwich
Drive, Suite 100, San Diego, California 92122.
In the event of any breach of a representation and warranty made by the
Purchaser hereunder, the Seller covenants and agrees that (i) it will not take
any action or pursue any remedy that it may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all Notes
have been paid in full, and (ii) any remedy it may have hereunder is subject to
Section 6.12. Each of the Purchaser and the Seller agrees that damages will not
be an adequate remedy for breach of the foregoing covenant and that this
covenant may be specifically enforced by the Purchaser on behalf of the Trust.
ARTICLE IV
COVENANTS OF THE SELLER
SECTION 4.1 Protection of Title of the Purchaser and the Trust.
--------------------------------------------------
(a) At or prior to the Closing Date, the Seller shall have filed or
caused to be filed UCC-1 financing statements, executed by the Seller, as seller
or debtor, naming the Purchaser, as purchaser or secured party, and the Trust as
assignee, and describing the Contracts and the other Transferred Assets
described in Section 2.1 as collateral, filed with the office of the Secretary
of State of the State of California. The Seller shall deliver (or cause to be
delivered) to the Purchaser, the Trust and the Indenture Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as soon
as available following such filing. In the event that the Seller fails to
perform its obligations under this subsection, the Purchaser or the Trust may do
so at the expense of the Seller.
(b) If the Seller changes its name, identity, or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by the Seller (or by the Purchaser or the Trust on
behalf of the Seller) in accordance with paragraph (a) above, seriously
misleading within the meaning of ss. 9-402(7) of the UCC, it shall give the
Purchaser, the Trust and the Indenture Trustee written notice thereof no later
than 10 days following the occurrence of such change, and shall file appropriate
amendments to all such previously filed financing statements and continuation
statements within the time period required by the UCC.
(c) If the Seller relocates its principal executive office and, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement, it shall give the Purchaser, the
Trust and the Indenture Trustee written notice thereof; and shall promptly file
such appropriate amendments or financing statements within the time period
required by the UCC.
(d) The Seller shall at all times maintain its principal executive
office, and any office from which it services Contracts, within the United
States of America.
(e) The Seller shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Contracts and the other
Transferred Assets to the Purchaser, and the conveyance of the Contracts and the
other Transferred Assets by the Purchaser to the Trust, the master computer
records (including archives) of the Seller that shall refer to a Contract
indicate clearly that such Contract and related Transferred Assets have been
sold to the Purchaser and that such Contract and related Transferred Assets have
been conveyed by the Purchaser to the Trust. Indication of the Trust's ownership
of a Contract and related Transferred Assets shall be deleted from or modified
on any of the Seller's computer systems when, and only when, the Contract has
been paid in full, liquidated (including receipt of all recoveries reasonably
expected to be collected) or repurchased or purchased by the Seller or the
Servicer (as applicable).
(f) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in lease contracts of a
character similar to the Contracts to any prospective purchaser, lender or other
transferee, the Seller shall give to such prospective purchaser, lender, or
other transferee computer tapes, records, or print-outs (including any restored
from archives) that, if they shall refer in any manner whatsoever to any
Contract, shall indicate clearly that such Contract has been sold to the
Purchaser and is owned by the Trust. The Seller and the Purchaser agree that, if
any one of them receives an inquiry from a bona fide potential creditor
regarding whether any lease contract or item of equipment is identified on the
Schedule of Contracts, they will instruct the Indenture Trustee to disclose the
contents of the Schedule of Contracts to such potential creditor in accordance
with the provisions of Section 11.17 of the Indenture.
(g) If the Seller receives payments in respect of Contracts or other
Transferred Assets, the Seller agrees to pay or cause to be paid to the Servicer
all such payments as soon as practicable after identification thereof, but in no
event later than two Business Days after receipt thereof by the Seller.
(h) The Seller shall notify the Purchaser and the Indenture Trustee
within three Business Days after becoming aware of any Lien on any Contract or
any other Transferred Assets, other than the conveyances hereunder or under the
Sale and Servicing Agreement.
(i) The Seller will promptly pay and discharge all taxes, assessments,
levies and other governmental charges imposed on it which may materially and
adversely affect any of the Contracts or other Transferred Assets, or the
Purchaser's rights with respect thereto.
(j) The Seller hereby agrees that it will perform its obligations
under the agreements relating to the Contracts in conformity with its customary
and usual policies and procedures relating to the Contracts.
SECTION 4.2 [Reserved]
SECTION 4.3 Costs and Expenses. The Seller shall pay all reasonable
-------------------
costs and disbursements in connection with the performance of its obligations
hereunder and under the other Basic Documents.
SECTION 4.4 Indemnification. The Seller shall defend, indemnify and
---------------
hold harmless the Purchaser, the Trust and the Indenture Trustee from and
against:
(a) any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from any breach of any representations
and warranties of the Seller contained herein (other than those set forth in the
Schedule of Representations, the exclusive remedies for which are specified in
Section 5.1);
(b) any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership or operation of
any item of Equipment (notwithstanding the disclaimer of Section 2.1(b));
(c) any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from any action taken, or failed to be
taken, by it in respect of any portion of the Trust Assets other than any action
taken in accordance with this Agreement or any other Basic Document;
(d) any taxes that may at any time be asserted against the Purchaser,
the Trust and the Indenture Trustee with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the sale, transfer and assignment of the Transferred
Assets to the Purchaser and of the Trust Assets to the Trust or the issuance and
original sale of the Notes, or asserted with respect to ownership of the
Contracts or the Trust Assets, which shall be indemnified by the Seller pursuant
to clause (e) below), or federal, state or other income taxes, arising out of
distributions on the Notes or transfer taxes arising in connection with the
transfer of the Notes) and costs and expenses in defending against the same,
arising or imposed against such Persons by reason of the acts to be performed by
the Seller under this Agreement or any other Basic Document;
(e) any taxes which may at any time be asserted against such Persons
with respect to, and as of the date of, the conveyance or ownership of all or
any portion of the Contracts and the other Transferred Assets under this
Agreement or the Trust Assets under the Sale and Servicing Agreement or the
issuance and original sale of the Notes, including, without limitation, any
sales, gross receipts, personal property, tangible or intangible personal
property, privilege or license taxes (but not including any federal or other
income taxes, including franchise taxes, arising out of the transactions
contemplated hereby or transfer taxes arising in connection with the transfer of
Notes) and costs and expenses in defending against the same, arising or imposed
against such Persons;
(f) any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon the Purchaser, the Trust or the
Indenture Trustee, through the gross negligence, willful misfeasance, or bad
faith of the Seller in the performance of its duties under this Agreement or by
reason of reckless disregard of the obligations and duties of the Seller under
this Agreement;
Indemnification under this Section 4.4 shall include reasonable fees
and expenses of counsel and expenses of litigation and shall survive termination
of the Basic Documents. The indemnity obligations hereunder shall be in addition
to any obligation that the Seller may otherwise have.
Promptly after receipt by an indemnified party under this Section 4.4
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
SECTION 4.5 Further Assurances. Following the Closing Date, the Seller
------------------
shall, at the reasonable request of the Purchaser or the Indenture Trustee, and
at the Seller's expense, execute and deliver any further instruments of transfer
or other documents, and shall take all such other actions that may be necessary,
appropriate or desirable, to fully convey the Contracts and the Equipment to the
Trust or otherwise to evidence, effectuate or implement the transactions
contemplated hereby. In addition, the Seller, as agent for the Purchaser, shall
defend the Contracts and the Equipment against any and all claims and demands of
all Persons at any time claiming the same or any interest therein adverse to
that of the Purchaser.
SECTION 4.6 Negative Covenant. The Seller (a) shall not engage in any
-----------------
transaction or series of transactions or otherwise take any action or omit to
take any action which could result in a determination that the Seller shall have
received less than reasonably equivalent value for the transfer and conveyance
of the Contracts and the other property described in Section 2.1(a) to the
Purchaser either on the Closing Date or thereafter and (b) in any event, shall
not use the proceeds received from the transfer and conveyance of the Contracts
and the other property described in Section 2.1(a) either on the Closing Date or
thereafter (i) to pay any dividend or make any distribution on or in respect of
its capital stock or (ii) to purchase, redeem or otherwise acquire or retire for
value any of its capital stock or the capital stock of any of its affiliates
(other than any of its wholly owned subsidiaries), if, in the case of either (i)
or (ii), at the time of any such action and after giving effect thereto (x) the
present fair saleable value of the assets of the Seller is less than the amount
that would be required to be paid on or in respect of the Seller's total
liabilities (including a reasonable estimate of its contingent liabilities (net
of tax benefits to the extent reasonably likely to be realized)), (y) the assets
of the Seller constitute an unreasonably small capital to carry out the Seller's
business as it is then conducted or as the Seller then intends to conduct its
business or (z) the Seller has incurred, intends to incur, or believes that it
will incur, debts that would be beyond the Seller's ability to pay as they
mature.
ARTICLE V
REPURCHASES
SECTION 5.1 Repurchase of Contracts Upon Breach of Representation or
----------------------------------------------------------
Warranty. After the Seller's discovery or receipt of notice from the Indenture
- --------
Trustee or the Servicer of a Repurchase Event with respect to any Contract
(including any Defaulted Contract), the Seller shall, (i) as of the second
Business Day preceding the third Determination Date following such discovery or
receipt of notice (unless such Repurchase Event shall have been cured in all
material respects by such Business Day), repurchase (or substitute a Substitute
Contract for) such Contract and related Equipment (or security interest therein)
from the Trust and (ii) on or prior to the second Business Day preceding the
third Determination Date following such discovery or receipt of notice (unless
such Repurchase Event shall have been cured in all material respects by such
Business Day) the Seller shall either pay the Repurchase Amount to the Servicer
on behalf of the Trust and the Purchaser in accordance with Section 2.6 of the
Sale and Servicing Agreement or deliver a Substitute Contract in accordance with
Article IX of the Sale and Servicing Agreement. It is understood and agreed
that, except as set forth in the following paragraph, the obligation of the
Seller to repurchase any Contract and the related Equipment as to which a breach
has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against the Seller for such breach available to the
Purchaser, the Trust, the Noteholders or the Indenture Trustee on behalf of the
Noteholders. The provisions of this Section 5.1 are intended to grant the Trust
and the Indenture Trustee a direct right against the Seller to demand
performance hereunder, and in connection therewith, the Seller waives any
requirement of prior demand against the Purchaser with respect to such
repurchase obligation. Notwithstanding any other provision of this Agreement or
the Sale and Servicing Agreement to the contrary, the obligation of the Seller
under this Section shall not terminate upon a termination of the Seller as
Servicer under the Sale and Servicing Agreement and shall be performed by the
Seller in accordance with the terms hereof notwithstanding the failure of the
Servicer or the Purchaser to perform any of their respective obligations with
respect to such Contract under the Sale and Servicing Agreement.
In addition to the foregoing and notwithstanding whether the related
Contract and the related Equipment shall have been repurchased by the Seller,
the Seller shall indemnify the Purchaser, the Trust, the Indenture Trustee and
the Noteholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach.
SECTION 5.2 Reassignment of Repurchased Contracts and Equipment. Upon
---------------------------------------------------
deposit in the Collection Account of the Repurchase Amount of any Contract and
the related Equipment (if applicable) repurchased by the Seller under Section
5.1, or upon delivery of a Substitute Contract, the Purchaser, the Trust and the
Indenture Trustee shall take such steps as may be reasonably requested by the
Seller in order to assign to the Seller all of the Purchaser's, the Trust's and
the Indenture Trustee's right, title and interest in and to such Contract and
the related Equipment (if applicable) and all security and documents conveyed to
the Purchaser and the Trust directly relating thereto, without recourse,
representation or warranty, except as to the absence of liens, charges or
encumbrances created by or arising as a result of actions of the Purchaser or
the Trust. Such assignment shall be a sale and assignment outright, and not for
security. If, following the reassignment of a Repurchased Contract and the
related Equipment (if applicable), in any enforcement suit or legal proceeding,
it is held that the Seller may not enforce any such Contract on the ground that
it shall not be a real party in interest or a holder entitled to enforce the
Contract, the Purchaser, the Trust and the Indenture Trustee shall, at the
expense of the Seller, take such steps as the Seller deems reasonably necessary
to enforce the Contract, including bringing suit in the Purchaser's or the
Trust's name or the name of the Indenture Trustee on behalf of the Noteholders.
SECTION 5.3 Waivers. No failure or delay on the part of the Purchaser
-------
or the Trust in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other or future exercise thereof or the
exercise of any other power, right or remedy.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 [Reserved]
SECTION 6.2 Merger or Consolidation of the Seller or the Purchaser.
---------------------------------------------------------
Any corporation or other entity (i) into which the Seller or the Purchaser may
be merged or consolidated, (ii) resulting from any merger or consolidation to
which the Seller or the Purchaser is a party or (iii) succeeding to the business
of the Seller or the Purchaser, shall be the successor to the Seller or the
Purchaser, as the case may be (without relieving the Seller or the Purchaser of
its responsibilities hereunder, if it survives such merger or consolidation)
without the execution or filing of any document or any further act by any of the
parties to this Agreement. The Seller or the Purchaser shall promptly inform the
other parties, the Trust and the Indenture Trustee of such merger, consolidation
or purchase and assumption. Notwithstanding the foregoing, as a condition to the
consummation of the transactions referred to in clauses (i), (ii) and (iii)
above, (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Sections 3.1 (other than subsection
(i)) and 3.2 (other than subsection (h)) of this Agreement shall have been
breached (for purposes hereof, such representations and warranties shall speak
in respect of such corporation or other entity as of the date of the
consummation of such transaction), (y) the Seller or the Purchaser, as
applicable, shall have delivered written notice of such consolidation, merger or
purchase and assumption to the Rating Agencies prior to the consummation of such
transaction and shall have delivered to the Trust and the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 6.2 and that all conditions precedent, if any, provided for in this
Agreement, relating to such transaction have been complied with, and (z) the
Seller or the Purchaser, as applicable, shall have delivered to the Trust and
the Indenture Trustee an Opinion of Counsel, stating that, in the opinion of
such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary to
preserve and protect the interest of the Trust in the Trust Assets and reciting
the details of the filings or (B) no such action shall be necessary to preserve
and protect such interest.
SECTION 6.3 Limitation on Liability of the Seller and Others.
------------------------------------------------
(a) Except with respect to the Representations and Warranties herein
and in the Schedule of Representations, and the indemnification obligations set
forth in Section 4.4 herein, the Seller may rely in good faith on the advice of
counsel or on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement. The
Seller shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its obligations under this Agreement or
the other Basic Documents to which it is a party and that in its reasonable
judgment may involve it in any expense or liability.
(b) Any officer, director, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Seller shall be under no obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
under this Agreement or the other Basic Documents to which it is a party and
that in its reasonable judgment may involve it in any expense or liability.
SECTION 6.4 The Seller May Own Notes. Subject to the provisions of the
------------------------
Sale and Servicing Agreement, the Seller, and any Affiliate of the Seller, may
in its individual or any other capacity become the owner or pledgee of Notes
with the same rights as it would have if it were not the Seller or an Affiliate
thereof (except as provided in Section 1.5).
SECTION 6.5 Amendment.
---------
(a) This Agreement may be amended by the Seller and the Purchaser
without the consent of the Trust, the Indenture Trustee or the Noteholders (i)
to cure any ambiguity; (ii) to correct or supplement any provisions in this
Agreement that may be inconsistent with any other provisions herein; or (iii) to
make any other provisions with respect to matters or questions arising under
this Agreement that are not inconsistent with the provisions hereof; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Trust and the Indenture Trustee, adversely affect in any
material respect the interests of the Noteholders; provided further that such
action shall be deemed not to adversely affect in any material respect the
interests of the Noteholders and no such Opinion of Counsel need be delivered if
the Rating Agency Condition is satisfied.
(b) This Agreement may also be amended from time to time by the Seller
and the Purchaser, with the prior written consent of a Note Majority (which
consent of any Holder of a Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Note and of any Note issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Note), for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Noteholders;
provided, however, that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Contracts, distributions that shall be required to be made on any
Note or the applicable rate of interest payable thereon, or (ii) reduce the
aforesaid percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all Notes then Outstanding and
affected thereby; and provided further, that no such amendment shall be
effective unless and until the Rating Agency Condition has been satisfied.
(c) Promptly after the execution of any such amendment or consent, the
Trust or the Indenture Trustee, as applicable, shall furnish written
notification of the substance of such amendment or consent to each Noteholder.
(d) It shall not be necessary for the consent of Noteholders pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Noteholders provided for in this Agreement) and of evidencing the authorization
of the execution thereof by Noteholders shall be subject to such reasonable
requirements as the Trust or the Indenture Trustee, as applicable, may
prescribe, including the establishment of record dates. The consent of any
Holder of a Note given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
on all future Holders of such Note and of any Note issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Note.
SECTION 6.6 Notices. All demands, notices and communications to the
-------
Seller or the Purchaser hereunder shall be in writing, Personally delivered, or
sent by facsimile (subsequently confirmed in writing), reputable overnight
courier or mailed by certified mail, return receipt requested, and shall be
deemed to have been given upon receipt:
(a) in the case of the Seller, to 6363 Greenwich Drive, Suite 100, San
Diego, California 92122 (facsimile no. (619) 558-5050), Attention: General
Counsel, or such other address as shall be designated by the Seller in a written
notice delivered to the other parties and to the Trust and the Indenture
Trustee; and
(b) in the case of the Purchaser, to 6363 Greenwich Drive, Suite 100,
San Diego, California 92122 (facsimile no. (619) 558-5050), Attention: General
Counsel, or such other address as the Purchaser shall be designated by a written
notice delivered to the other parties and to the Trust and the Indenture
Trustee.
SECTION 6.7 Merger and Integration. Except as specifically stated
-----------------------
otherwise herein, this Agreement and the other Basic Documents set forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement and
the other Basic Documents. This Agreement may not be modified, amended, waived
or supplemented except as provided herein.
SECTION 6.8 Severability of Provisions. If any one or more of the
----------------------------
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 6.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 6.10 Counterparts. For the purpose of facilitating the
------------
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 6.11 Conveyance of the Contracts to the Trust. The Seller
-------------------------------------------
acknowledges that the Purchaser intends, pursuant to the Sale and Servicing
Agreement, to convey the Contracts and the other Transferred Assets, together
with its rights under this Agreement, to the Trust on the Closing Date. The
Seller acknowledges and consents to such conveyance and waive any further notice
thereof and covenants and agrees that the representations and warranties of the
Seller contained in this Agreement and the rights of the Purchaser hereunder are
intended to benefit the Trust, the Indenture Trustee and the Noteholders. In
furtherance of the foregoing, the Seller covenants and agrees to perform its
duties and obligations hereunder, in accordance with the terms hereof, for the
benefit of the Trust, the Indenture Trustee and the Noteholders and that,
notwithstanding anything to the contrary in this Agreement, the Seller shall be
directly liable to the Trust and the Indenture Trustee (notwithstanding any
failure by the Servicer or the Purchaser to perform its duties and obligations
hereunder or under the Sale and Servicing Agreement) and that the Trust and the
Indenture Trustee may enforce the duties and obligations of the Seller under
this Agreement against the Seller for the benefit of the Noteholders.
SECTION 6.12 Nonpetition Covenant. None of the Purchaser, the Seller
--------------------
or the Servicer shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Trust (or, in the case of the Seller and the Servicer, against the
Purchaser) under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Trust (or the Purchaser, as applicable) or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trust (or, in the case of the Seller and the Servicer, of the
Purchaser).
IN WITNESS WHEREOF, the parties have caused this Transfer and Sale
Agreement to be duly executed by their respective officers as of the day and
year first above written.
MITSUI VENDOR LEASING FUNDING
CORP. II
By ____________________________
Name:
Title:
MITSUI VENDOR LEASING (U.S.A.) INC.
By ____________________________
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF LEASES AND EQUIPMENT
<PAGE>
SCHEDULE B
SCHEDULE OF REPRESENTATIONS AND WARRANTIES
OF THE SELLER
With respect to each Contract the Seller represents and warrants, as
of the applicable Cut-off Date (unless otherwise indicated), as follows:
(a) [subject to revision] [by the Closing Date or the related Transfer
Date (as applicable), the portions of the electronic master record of the Seller
relating to such Contract will have been clearly and unambiguously marked to
show that such Contract constitutes part of the Trust Assets and is owned by the
Trust in accordance with the terms of the Sale and Servicing Agreement];
(b) [subject to revision] [the computer tape prepared by the Seller
and containing information with respect to such Contract that was made available
by the Seller to the Indenture Trustee on the Closing Date or the related
Transfer Date (as applicable) and was used to select such Contract was complete
and accurate in all material respects as of the applicable Cut-off Date];
(c) the information with respect to such Contract listed on the
Schedule of Contracts attached to the Sale and Servicing Agreement is true,
correct and complete in all material respects;
(d) such Contract was originated directly by the Seller or acquired by
the Seller pursuant to a Vendor Program Agreement and has sold and assigned by
the Seller to the Purchaser without any fraud or misrepresentation on the part
of the Seller;
(e) immediately prior to the transfer hereunder of such Contract and
any related Equipment (or security interest therein), such Contract was owned by
the Seller free and clear of any lien, security interest, charge, encumbrance or
other right or claim of any Person (other than the rights of the related Obligor
to use, possess or purchase the related Equipment in accordance with the terms
of such Contract);
(f) no Scheduled Payment in respect of such Contract is (i) as of
Closing Date or the related Transfer Date (as applicable), more than 60 days
delinquent, (ii) a payment as to which the related Equipment has been
repossessed or (iii) a payment as to which the related Equipment has been
charged-off in accordance with the Credit and Collection Policies;
(g) no provision of such Contract has been waived, altered or modified
in any respect except as allowed under the Credit and Collection Policy;
(h) such Contract is a valid and binding payment obligation of the
related Obligor and is enforceable in accordance with its terms (except as may
be limited by applicable bankruptcy, insolvency or other similar laws affecting
the enforceability of creditors' rights generally and the availability of
equitable remedies);
(i) such Contract is not 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 such Contract;
(j) such 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 enforceability or
collectability of such Contract;
(k) such Contract and any related Equipment have not been sold,
transferred, assigned or pledged by the Seller to any other Person and, except
as provided in clause below, such Contract is secured by a fully perfected Lien
of the first priority on the related Equipment (except to the extent such
perfection is not required in accordance with the applicable Obligor UCC Filing
Requirement);
(l) such Contract constitutes chattel paper, an account, or a general
intangible as defined under the UCC and if such Contract constitutes "chattel
paper" for purposes of the UCC, there exists an original counterpart of such
Contract in the Contract File;
(m) all filings and other actions required to be made, taken or
performed by any Person in any jurisdiction to give the Trust a first priority
perfected lien or ownership interest in such Contracts and a first priority
perfected security interest in the Seller's interest in the related Equipment
have been made, taken or performed;
(n) the related Obligor is not, to the Seller's knowledge, the subject
of bankruptcy or other insolvency proceedings;
(o) such Contract is a U.S. dollar-denominated obligation and the
related Obligor's billing address is in the United States;
(p) such Contract does not require the prior written consent of the
related Obligor or contain any other restriction on the transfer or assignment
of such Contract (other than a consent or waiver of such restriction that has
been obtained prior to the Closing Date or applicable Transfer Date (as
applicable);
(q) the obligations of the related Obligor under such Contract are
irrevocable, unconditional and non-cancelable (without the right to set off for
any reason and net of any maintenance or cost per copy charges);
(r) no adverse selection procedure was used in selecting such
Contract;
(s) the related Obligor under such Contract is required to maintain
casualty insurance or to self-insure with respect to the related Equipment;
(t) such Contract is not a "consumer lease" as defined in Section
2A-103(1)(e) of the UCC;
(u) such 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) such Contract provides that (i) the Seller (or its assignees) may
accelerate all remaining Scheduled Payments if the related Obligor is in default
under any of its obligations under such Contract and (ii) the related Obligor
may not elect to utilize its security deposit to offset any remaining Scheduled
Payment;
(w) the related Obligor is required to maintain the related Equipment
in good working order and bear all costs of operating the related Equipment
(including the payment of Taxes);
(x) no provision of such Contract provides for a Prepayment in full as
calculated under the terms of such Contract less than the amount calculated in
accordance with the definition of Prepayment Amount;
(y) such Contract has not been terminated as a result of a Casualty
Loss to the related Equipment or for any other reason;
(z) the Discounted Contract Balance of such Contract does not include
the amount of any security deposit held by the Servicer or the Seller;
(aa) such Contract provides that in the event of a Casualty Loss, the
related Obligor is required to repair or replace the related Equipment or pay an
amount not less than the present value of all remaining Scheduled Payments
discounted at the Discount Rate plus any past due amounts as of the date of
determination;
(bb) the related Obligor has represented to the Seller that such
Obligor has accepted the related Equipment and has had a reasonable opportunity
to inspect and test such Equipment and the Seller has not been notified of any
defects therein;
(cc) all payments in respect of such Contract will be made free and
clear of, and without deduction or withholding for or on account of, any Taxes,
unless such withholding or deduction is required by law;
(dd) the related Obligor is unconditionally obligated to make periodic
lease payments (including taxes) notwithstanding damage to or destruction of the
related Equipment, or any other event in respect of the related Equipment,
including equipment obsolescence;
(ee) such Contract provides for periodic payments, which are
principally due and payable on a monthly or quarterly basis;
(ff) such Contract is not a Defaulted Contract;
(gg) such Contract is "triple net" under which the related Obligor is
responsible for the maintenance of the related Equipment in accordance with
general industry standards applicable to such item of Equipment, which in all
cases shall include the payment of any taxes with respect to such Equipment; and
(hh) such Contract does not have a stated [remaining term to] maturity
of longer then _______ months.
In addition to the representations and warranties made by the Seller
above, the Seller represents and warrants, as of the initial Cut-off Date, as
follows:
(i) the ADCB of all Contracts with a single Obligor as of the initial
Cut-off Date does not exceed ____% of the ADCB of all of the
Contracts as of the initial Cut-off Date;
(ii) the ADCB of all Contracts with the twenty (20) largest Obligors (by
ADCB of Contracts with such Obligors) as of the initial Cut-off Date
does not exceed ____% of the ADCB of all of the Contracts as of the
initial Cut-off Date;
(iii) the ADCB of all Contracts related to a single Vendor as of the
initial Cut-off Date does not exceed ____% of the ADCB of all of the
Contracts as of the initial Cut-off Date;
(iv) the ADCB of all Contracts with Obligors located in a single State of
the United States as of the initial Cut-off Date does not exceed
____% of the ADCB of all of the Contracts as of the initial Cut-off
Date; and
(v) the ADCB of all Contracts with related Equipment of a single type as
of the initial Cut-off Date does not exceed ____% of the ADCB of all
of the Contracts as of the initial Cut-off Date.
Brown & Wood LLP Letterhead
August 10, 1998
Mitsui Vendor Leasing Funding Corp. II
6363 Greenwich Drive, Suite 100
San Diego, California 92122
Re: Mitsui Vendor Leasing Funding Corp. II
Registration Statement on Form S-1
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel for Mitsui Vendor Leasing Funding Corp.
II, a Delaware corporation (the "Depositor"), in connection with the filing by
Depositor of a registration statement on Form S-1 (such registration statement,
together with the exhibits and amendments thereto, the "Registration Statement")
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), for the registration under the
Act of the Receivable-Backed Notes (the "Notes") of Mitsui Vendor Leasing Asset
Trust 1998-1 (the "Trust") formed under the Delaware Business Trust Act (the
"Delaware Act"). As further described in the Registration Statement, the Trust
will be formed by the Depositor pursuant to a Trust Agreement (the "Trust
Agreement") between the Depositor and an Owner Trustee. The Notes will be issued
by the Trust pursuant to an Indenture (the "Indenture") between the Trust and an
Indenture Trustee. The Notes will be sold pursuant to an underwriting agreement
(the "Underwriting Agreement") to be entered into by the Depositor with the
underwriter(s) to be named therein (the "Underwriter(s)").
We have examined and relied upon the Registration Statement and, in each
case as filed as an exhibit to the Registration Statement, the form of Sale and
Servicing Agreement among the Trust, the Depositor, the Seller, the Servicer,
the Indenture Trustee and the Back-up Servicer, the form of Transfer and Sale
Agreement between the Seller and the Depositor, the form of Indenture (including
the forms of Notes included as exhibits thereto) and the form of Trust Agreement
(including the form of Certificate of Trust to be filed pursuant to the Delaware
Act) (collectively, the "Operative Documents"). In addition, we have examined
and considered executed originals or counterparts, or certified or other copies
of such certificates, instruments, documents and other corporate records of the
Depositor and matters of fact and law as we have deemed necessary for the
purposes of the opinion expressed below. Capitalized terms not otherwise defined
herein have the meanings assigned to them in the Registration Statement.
In our examination we have assumed 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 documents. As
to any facts material to the opinions expressed herein which were not
independently established or verified, we have relied upon statements and
representations of officers and other representatives of the Depositor and
others.
Based on and subject to the foregoing, we are of the opinion that when
(i) the Registration Statement becomes effective pursuant to the provisions of
the Act, (ii) the amount, price, interest rate and other principal terms of
such Notes have been duly approved by the Board of Directors of the Depositor,
(iii) the Operative Documents have been duly completed, executed and delivered
by the parties thereto substantially in the form filed as an exhibit to the
Registration Statement reflecting the terms established as described above,
(iv) the Trust has been duly formed pursuant to the Trust Agreement and the
Certificate of Trust has been duly executed by the Owner Trustee and timely
filed with the Secretary of State of the State of Delaware, (v) the Indenture
has been duly qualified under the Trust Indenture Act of 1939, as amended, and
(vi) the Notes have been duly executed, issued and delivered by the Trust and
authenticated by the Indenture Trustee and sold by the Depositor and paid for
by the Underwriter(s), all in accordance with the terms and conditions of the
related Operative Documents and the Underwriting Agreement and in the manner
described in the Registration Statement, the Notes will be legally
issued, fully paid and nonassessable and will be valid and legally binding
obligations of the Trust, subject to bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforceability is sought in a
proceeding in equity or at law).
In rendering the foregoing opinions, we express no opinion as to the laws
of any jurisdiction other than the laws of the State of New York (excluding
choice of law principles therein) and the federal laws of the United States of
America.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm under the heading
"Legal Matters" in the Prospectus forming a part of the Registration
Statement, without implying or admitting that we are "experts" within the
meaning of the Act or the Rules and Regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this exhibit.
Very truly yours,
/s/ Brown & Wood LLP
[Brown & Wood LLP Letterhead]
August 11, 1998
Mitsui Vendor Leasing Funding Corp. II
5353 Greenwich Drive, Suite 100
San Diego, California 92122
Re: Mitsui Vendor Leasing Funding Corp. II
Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as special federal tax counsel for Mitsui Vendor Leasing
Funding Corp. II, a Delaware corporation (the "Registrant"), in connection
with the filing by registrant of a registration statement on Form S-1 (such
registration statement, together with the exhibits and amendments thereto, the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act") for the
registration under the Act of the Receivable-Backed Notes (the "Notes") of
Mitsui Vendor Leasing Asset Trust 1998-1 (the "Trust"). As further described
in the Registration Statement, the Trust will be formed by the Registrant
pursuant to a Trust Agreement between the Registrant and an Owner Trustee. The
Notes will be issued by the Trust pursuant to an Indenture between the Trust
and an Indenture Trustee.
We have advised the Registrant with respect to certain federal income
tax consequences of the proposed issuance of the Notes. This advice is
summarized under the headings "Summary of Terms - Federal Income Tax
Consequences" and "Federal Income Tax Consequences" in the Prospectus forming
a part of the Registration Statement. Such description does not purport to
discuss all possible federal income tax ramifications of the proposed
issuance, but with respect to those federal consequences that are discussed,
in our opinion, the description is accurate in all material respects.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as special federal
tax counsel to the Registrant) under the heading "Federal Income Tax
Consequences" 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/ Brown & Wood LLP
