As filed with the Securities and Exchange Commission on September _9, 1998
Registration No. 333-58909
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
(Issuer)
PROVIDENT LEASE RECEIVABLES CORPORATION
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Delaware 9999 31-1605466
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
1023 West Eighth Street
Cincinnati, Ohio 45203
(513) 579-2867
(Address, including zip code, and telephone number, including area
code, of principal executive offices of Registrant)
Mark Magee
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2867
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Robert F. Hugi, Esq. Stuart M. Litwin, Esq.
Mayer, Brown & Platt Mayer, Brown & Platt
190 South LaSalle Street 190 South LaSalle Street
Chicago, Illinois 60603 Chicago, Illinois 60603
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If 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. / /
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Each Maximum Maximum Amount of
Class of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Unit(1) Price(1) Fee
- ------------------- ---------- ----------- -------- ---
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Class A-1 Lease-Backed Notes $1,000,000 100% $1,000,000 $295
Class A-2 Lease-Backed Notes $1,000,000 100% $1,000,000 $295
Class B Lease-Backed Notes $1,000,000 100% $1,000,000 $295
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act..
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 the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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PROVIDENT EQUIPMENT LEASE TRUST 1998-A
PROVIDENT LEASE RECEIVABLES CORPORATION
Cross Reference Sheet Furnished
Pursuant to Rule 501(b) of Regulation S-K
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Item and Caption in Form S-1 Caption or Location in Prospectus
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1. Forepart of Registration Statement Forepart of Registration Statement; Outside Front Cover
and Outside Cover Page of Prospectus Page of Prospectus
2. Inside Front and Outside Back Cover Inside Front and Outside Back Cover Pages of Prospectus
Pages of Prospectus
3. Summary Information, Risk Factors and Summary; Risk Factors
Ratio of Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders *
8. Plan of Distribution Underwriting
9. Description of Securities to be Summary; The Trust; The Lease Pool; Prepayment and Yield
Registered Considerations; Description of the Notes
10. Interests of Named Experts and Counsel *
11. Information With Respect to the The Trust; The Transferor
Registrant
12. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
* Answer negative or item inapplicable.
2
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchanges Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED [ ], 1998
PROSPECTUS
$[_________]
Provident Equipment Lease Trust 1998-A, Issuer
Provident Lease Receivables Corporation, Transferor
Information Leasing Corporation, Servicer
$[___________] [____]% Class A-1 Lease-Backed Notes
$[___________] [____]% Class A-2 Lease-Backed Notes
$[___________] [____]% Class B Lease-Backed Notes
The Provident Equipment Lease Trust 1998-A (the "Trust") will be formed
pursuant to a Trust Agreement, to be dated as of September 1, 1998, between
Provident Lease Receivables Corporation (the " Transferor") and First Union
Trust Company, National Association, as Trustee (in such capacity, the
"Trustee") and will issue the [___]% Class A-1 Lease-Backed Notes (the "Class
A-1 Notes"), the [___]% Class A-2 Lease-Backed Notes (the "Class A-2 Notes";
together with the Class A-1 Notes, the "Class A Notes"), and the [___]% Class
B Lease-Backed Notes (the "Class B Notes"; and together with the Class A
Notes, the "Notes"). The Notes will be issued pursuant to an Indenture, to be
dated as of September 1, 1998, between the Trust and Norwest Bank Minnesota,
National Association, as Indenture Trustee (in such capacity, the "Indenture
Trustee"). The Trust will also issue $________ [___]% Lease-Backed
Certificates (the "Certificates"; and together with the Notes, the
"Securities"), but the Certificates are not offered hereby.
The Notes will represent secured obligations of the Trust. The assets of
the Trust will include a pool of equipment leases and all of the Trust's
interest in the equipment underlying the leases (which includes computer,
medical equipment, office equipment, food service equipment, industrial
equipment and service station equipment). The leases and the related interests
in the equipment were originated or acquired by Information Leasing
Corporation ("ILC"), an Ohio corporation that is a wholly-owned subsidiary of
The Provident Bank, as described herein and will be transferred by ILC to
Provident Lease Receivables Corporation (the "Transferor"), a special purpose
bankruptcy remote subsidiary of ILC under a purchase agreement (the "Purchase
Agreement") by and between ILC and the Transferor, and will in turn be
transferred by the Transferor to the Trust pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") to be entered into
among the Trust, the Transferor and the Servicer.
(Cover continued on next page)
------------------------------------
Prospective investors should consider the "Risk Factors" commencing on
page [__] for a discussion of certain factors that should be considered
in connection with an investment in the Notes.
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE TRANSFEROR, THE SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES. NONE OF THE NOTES OR THE LEASES ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY.
------------------------------------
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Initial Public Proceeds to
Offering Price Underwriting Discount Transferor(2)
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Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Class B Note % % %
Total $ $ $
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(1) Before deducting expenses estimated to be $[_______].
The Notes are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter' right to reject any order
in whole or in part and to withdraw, cancel, or modify any order without
notice. It is expected that delivery of the Notes will be made in book-entry
form through the facilities of The Depository Trust Company on or about
[____________], 1998.
------------------------------------
LEHMAN BROTHERS
The date of this Prospectus is [ ], 1998.
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(cover page continued)
Payments of principal and interest to the holders of record (the "Holders") of
the Class A Notes (the "Class A Noteholders") will have the benefit of limited
credit support consisting of the subordination of the Class B Notes and the
Certificates, funds on deposit in the Reserve Account, Residual Realizations
and the Overcollateralization Amount. The Holders of the Class B Notes (the
"Class B Noteholders"; and together with the Class A Noteholders, the
"Noteholders") will have the benefit of limited credit support in the form of
the subordination of the Certificates, funds on deposit in the Reserve
Account, Residual Realizations and the Overcollateralization Amount.
Capitalized terms used herein will have the meanings ascribed to such terms
herein. The pages on which terms are defined are set forth on the Index of
Terms contained herein.
Interest on the Notes will be payable monthly in arrears on the 25th day
of each month (or if such date is not a business day, the next succeeding
business day) beginning on November 25, 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 Issuance Date) to the
day prior to such current Payment Date. Principal payments with respect to the
Notes will be payable on each Payment Date beginning on November 25, 1998. The
stated maturity date with respect to the Class A-1 Notes is the Payment Date
in [month/year], the stated maturity date with respect to the Class A-2 Notes
and the Class B Notes is the Payment Date in [month/year]. However, if all
payments on the leases are made as scheduled, final payment with respect to
the Notes would occur prior to stated maturity and it is expected that the
Notes will mature prior to stated maturity. See "Prospectus Summary--Expected
Maturity; Stated Maturity". In addition, if Early Lease Terminations or
Casualties (each, as described herein) occur, or if an Event of Default
occurs, repayment of principal on the Notes may be earlier than would
otherwise be the case.
The Servicer will have the option, subject to certain conditions, to
repurchase the Leases and cause the Trust to redeem all, but not less than
all, of the Notes and thereby cause early repayment of the Notes as of any
Payment Date on which the Discounted Present Value of the Performing Leases
(after giving effect to the payment of principal on such Payment Date) is less
than or equal to 5% of the Discounted Present Value of the Leases as of the
Cut-Off Date . The Discounted Present Value of the Leases at any time will be
determined by discounting the remaining amounts payable under the Leases. See
"Description of the Transfer and Servicing Agreements--Servicing Procedures"
for a description of the limited circumstances in which such amounts may be
adjusted. The Trust will give notice of such redemption to each Noteholder and
the Indenture Trustee at least 30 days before the Payment Date fixed for such
prepayment. Upon deposit of funds necessary to effect such redemption, the
Indenture Trustee will pay the remaining unpaid principal amount on the Notes
and all accrued and unpaid interest as of the Payment Date fixed for
redemption. See "Description of the Notes--Redemption".
The Notes offered hereby are being offered pursuant to this Prospectus.
Sales of the Notes may not be consummated unless the purchaser has received
this Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF
THE NOTES OFFERED HEREBY, INCLUDING PURCHASES OF NOTES TO STABILIZE THE MARKET
PRICE AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES SEE "UNDERWRITING" HEREIN.
AVAILABLE INFORMATION
The Transferor, 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 Web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
REPORTS TO NOTEHOLDERS
During such time as the Notes remain in book-entry form, monthly
unaudited reports containing information concerning the Notes and the Leases
will be prepared by the Servicer and will be sent on behalf of the Trust to
Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC"), as
the registered holder of the Notes. Such reports will be made available
by DTC, and its participants to holders of interests in the Notes (the "Note
Owners") in accordance with the rules, regulations and procedures creating and
affecting DTC. See "Certain Information Regarding the Notes--Book Entry
Registration". However, such reports will not be sent directly to any
beneficial owner while the Notes are in book-entry form. Upon the issuance of
fully registered, certificated Notes, such reports will be sent directly to
each Note Owner. Such reports will not constitute financial statements
prepared in accordance with generally accepted accounting principles. The
Transferor, as originator of the Trust, will file with the Commission such
periodic reports with respect to the Trust as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations of the Commission thereunder.
4
<PAGE>
PROSPECTUS SUMMARY
This summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. A listing of
pages on which terms are defined can be found in the "Index of Terms" herein.
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Trust............................ Provident Equipment Lease Trust 1998-A (the "Trust"), a
trust to be formed under the laws of the State of New York
pursuant to the Trust Agreement, to be dated as of September 1,
1998 (the "Trust Agreement") between the Transferor and the
Trustee. The activities of the Trust will be limited by the
terms of the Trust Agreement to acquiring and managing
the Leases, issuing and making payments on the Notes and the
Certificates, and other activities related to the foregoing.
The Trust will have no significant assets other than the
Trust Property and no officers, directors or employees.
Transferor........................ Provident Lease Receivables Corporation (the "Transferor"),
a Delaware corporation. The Transferor's offices are
located at 1023 West Eighth Street, Cincinnati, Ohio 45203,
and its phone number is (513) 579-2861. The Transferor will be
established as a wholly-owned bankruptcy remote subsidiary of ILC
and is intended to be a limited-purpose corporation.
Accordingly, the Transferor's operations have been restricted
to (a) limit its ability to engage in business with, or incur
liabilities to, any other entity which may bring bankruptcy
proceedings against the Transferor; and (b) decrease the risk
that it would be consolidated into the bankruptcy proceedings
of any other entity.
Servicer......................... ILC (the "Servicer"), an Ohio corporation that is a wholly-owned
subsidiary of The Provident Bank. ILC will enter into a purchase
agreement (the "Purchase Agreement") to be dated September 1, 1998,
with the Transferor to transfer its interest in the Equipment to
the Transferor, and will also enter into a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), to be dated
September 1, 1998, with the Transferor and the Trust pursuant to
which the Transferor will transfer the Leases and its interest in
the Equipment to the Trust and the Servicer will agree to service
the Leases included in the Lease Pool and make Servicer Advances.
Indenture Trustee................ Norwest Bank Minnesota, National Association, as indenture trustee
(the "Indenture Trustee") under the Indenture, to be dated as of
September 1, 1998 (the "Indenture") between the Trust and the
Indenture Trustee.
Trustee.......................... First Union Trust Company, National Association, as trustee under
the Trust Agreement (the "Trustee").
The Notes........................ $[__________] aggregate principal amount (the "Class A-1 Initial
Principal Amount") of [____]% Class A-1 Lease-Backed Notes (the
"Class A-1 Notes"), $[__________] aggregate principal amount
(the "Class A-2 Initial Principal Amount", together with the Class
A-1 Initial Principal Amount, the "Class A Initial Amount") of
[____]% Class A-2 Lease-Backed Notes (the "Class A-2 Notes";
together with the Class A-1 Notes, the "Class A Notes"), and
$[__________] aggregate principal amount (the "Class B Initial
Principal Amount", together with the Class A Initial Principal
Amount, the "Initial Principal Amount") of [____]% Class B
Lease-Backed Notes (the "Class B Notes"; together with the
Class A Notes, the "Notes").
The Notes will be issued pursuant to the Indenture and will be
secured by the assets of the Trust pursuant to the Indenture.
The Class B Notes will be subordinated to the Class A Notes to the
extent provided in the Indenture as described herein. See
"--Application of Payments" and "Description of the Notes".
Discounted Present Value
of the Leases ................. The Initial Principal Amounts of the Class A Notes and the Class B
Notes set forth in "--The Notes" above in this preliminary prospectus
are based upon the Discounted Present Value of the Leases as of the
close of business on August 31, 1998 (the "Cut-Off Date") calculated
at a rate equal to [____]% (the
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5
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Statistical Discount Rate"). Certain information concerning the Leases
has been calculated based on the Discounted Present Value of the
Leases as of the Cut-Off Date calculated at the Statistical Discount
Rate. The actual Initial Principal Amount of the Notes and the
Certificates will be calculated using the actual Discount Rate and
will be set out in the final prospectus for the Notes. See "--Initial
Principal Amounts".
The "Discounted Present Value of the Leases" at any given time, shall
equal the future remaining scheduled payments (including Payaheads but
excluding delinquent amounts and Third Party Amounts) from the Leases
(including Non-Performing Leases), discounted at a rate equal to
[____]% (the "Discount Rate"), which rate is equal to the sum of (a)
the weighted average Interest Rate of the Class A Notes (utilizing the
Class A-2 Interest Rate), the Class B Notes and Certificates on the
Issuance Date and (b) the Servicing Fee Rate of 0.75% per annum. The
"Discounted Present Value of the Performing Leases" equals the
Discounted Present Value of the Leases reduced by the Discounted
Present Value of the Non-Performing Leases. See "Description of the
Transfer and Servicing Agreements--Distributions". Each of the
Indenture and the Pooling and Servicing Agreement will provide that
any calculation of future remaining scheduled payments made on a
Determination Date or with respect to a Payment Date will be
calculated as of the related Determination Date after giving effect to
any payments received prior to the Record Date for the related Due
Period to the extent such payments relate to scheduled payments due
and payable by the Lessees with respect to the related Due Period and
all prior Due Periods. "Statistical Discounted Present Value of the
Leases" means an amount equal to the future remaining scheduled
payments (including Payaheads but excluding delinquent amounts and
Third Party Amounts), from the Leases as of the Cut- Off Date,
discounted at the Statistical Discount Rate . The Statistical
Discounted Present Value of the Leases as of the Cut-Off Date is
$[________] and will not vary more than 10% from the Discounted
Present Value of the Leases as of the Cut-Off Date. See "The Lease
Pool--The Equipment". The aggregate Discounted Present Value of the
Leases as of the Cut-Off Date, calculated at the Discount Rate is
$[_________].
"Non-Performing Leases" are (a) Leases that the Servicer has
determined to be more than 90 days delinquent or (b) Leases that have
been accelerated by the Servicer or Leases that the Servicer has
determined to be uncollectible in accordance with its customary
practices. See "The Lease Pool--The Leases". The Transferor will
represent in the Pooling and Servicing Agreement that as of the
Cut-Off Date, no Lease was a Non-Performing Lease.
Subordination.................... So long as no Event of Default has occurred and the Notes have not been
accelerated, distributions of interest and principal on the Notes will
be payable as follows. On each Payment Date, interest will be paid
first, to the Class A Noteholders, second to the Class B Noteholders
and finally to the Holders of the Certificates. See "--Terms of the
Notes; Interest Payments". No payment of principal will be made on
Class A-2 Notes, the Class B Notes or the Certificates until the Class
A-1 Notes have been paid in full. Thereafter, on each Payment Date,
principal will be paid first on the Class A-2 Notes, in the amount of
the Class A Principal Payment, then on the Class B Notes, in the
amount of the Class B Principal Payment, and finally, on the
Certificates, in the amount of the Certificate Principal Payment. See
"--Terms of the Notes; Principal Payments". After making payments of
principal set forth in the preceding sentence on each Payment Date,
Additional Principal, if any, will be paid to the most senior class of
Notes then outstanding. Payments of interest and principal will be
made on each Payment Date only to the extent of Available Funds
available therefor in accordance with the Priority of Payments . Upon
the occurrence of an Event of Default and the acceleration of the
Notes and until such Event of Default has been rescinded,
distributions will be made in the priority described in "Description
of the Transfer and Servicing Agreement--Distributions". See also
"--Application of Payments" and "Description of the Notes".
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Terms of the Notes
A. Interest Payments......... Interest will accrue on the Class A-1 Notes at the rate of [____]%
per annum (the "Class A-1 Interest Rate") and will be calculated on
the basis of a year of 360 days and the actual number of days in each
Interest Accrual Period. Interest will accrue on the Class A-2 Notes
at the rate of [____]% per annum (the "Class A-2 Interest Rate") and
on the Class B Notes at the rate of [____]% per annum (the "Class B
Interest Rate"), in each case calculated on the basis of a year of 360
days comprised of twelve 30-day months. With respect to any
particular class of Notes, the "Interest Rate" refers to the applicable
rate indicated in the immediately preceding sentence.
On each Payment Date, the interest due with respect to each of the
Class A-1 Notes, the Class A-2 Notes and the Class B Notes will be the
interest that has accrued on such class of Notes since the immediately
preceding Payment Date, or in the case of the first Payment Date,
since the Issuance Date (each such period, an "Interest Accrual
Period") at the applicable Interest Rate applied to the unpaid
principal amount (the "Outstanding Principal Amount") of such class of
Notes, in each case calculated as of the immediately preceding Payment
Date after giving effect to all payments of principal on such class of
Notes made on such preceding Payment Date. See "Description of the
Notes--Interest Payments" and "Description of the Transfer and
Servicing Agreements--Distributions".
B. Principal Payments........ On each Payment Date, to the extent funds are available therefor in
accordance with the Priority of Payments, the principal payments
will be paid to the Noteholders in the following priority: (a) (i) to
the Class A-1 Noteholders only, until the Outstanding Principal Amount
on the Class A-1 Notes has been reduced to zero, the Class A Principal
Payment, then (ii) to the Class A-2 Noteholders only, until the
Outstanding Principal Amount on the Class A-2 Notes has been reduced
to zero, the Class A Principal Payment, (b) to the Class B
Noteholders, the Class B Principal Payment, (c) to the
Certificateholders, the Certificate Principal Payment, and (d) to the
extent that the Class B Floor exceeds the Class B Target Investor
Principal Amount and/or the Certificate Floor exceeds the Certificate
Target Investor Principal Amount, Additional Principal shall be
distributed, sequentially, as an additional principal payment on the
Class A-1 Notes, Class A-2 Notes and the Class B Notes until the
Outstanding Principal Amount of each class has been reduced to zero.
"Additional Principal" with respect to each Payment Date is an amount
equal to (a) the difference between (i) the Discounted Present Value
of the Performing Leases as of the Determination Date for the
preceding Payment Date and (ii) the Discounted Present Value of the
Performing Leases as of the related Determination Date, less (b) the
Class A Principal Payment, the Class B Principal Payment and the
Certificate Principal Payment to be paid on such Payment Date.
The "Certificate Floor" with respect to each Payment Date means (a)
[_______]% of the initial Discounted Present Value of the Leases as of
the Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to
such Payment Date, minus (c) the sum of the Overcollateralization
Amount as of such Payment Date plus the amount on deposit in the
Reserve Account after giving effect to withdrawals to be made on such
Payment Date.
The "Certificate Principal Payment" means (a) while the Class A-1
Notes are outstanding, zero and (b) after the Outstanding Principal
Amount on the Class A-1 Notes has been reduced to zero, the amount
necessary to reduce the Certificate Balance to the greater of the
Certificate Target Investor Principal Amount and the Certificate
Floor.
The "Certificate Target Investor Principal Amount" with respect to
each Payment Date is an amount equal to the product of (a) [___]% (the
"Certificate Percentage") and (b) the Discounted Present Value of the
Performing Leases as of the related Determination Date.
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7
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The "Class A Principal Payment" means (a) while the Class A-1 Notes
are outstanding, (i) on all Payment Dates prior to the [month/year]
Payment Date, the lesser of (1) the amount necessary to reduce the
Outstanding Principal Amount on the Class A-1 Notes to zero and (2)
the difference between (A) the Discounted Present Value of the
Performing Leases as of the Determination Date for the preceding
Payment Date, and (B) the Discounted Present Value of the Performing
Leases as of the related Determination Date, and (ii) on the
[month/year] Payment Date and thereafter until the Class A-1 Notes
have been paid in full, the entire Outstanding Principal Amount on the
Class A-1 Notes and (b) after the Class A-1 Notes have been paid in
full, the amount necessary to reduce the aggregate Outstanding
Principal Amount on the Class A Notes to the Class A Target Investor
Principal Amount.
The "Class A Target Investor Principal Amount" with respect to each
Payment Date is an amount equal to the product of (a) [___]% (the
"Class A Percentage") and (b) the Discounted Present Value of the
Performing Leases as of the related Determination Date.
The "Class B Principal Payment" means (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount
on the Class A-1 Notes has been reduced to zero, the amount necessary
to reduce the Outstanding Principal Amount of the Class B Notes to the
greater of the Class B Target Investor Principal Amount and the Class
B Floor.
The "Class B Floor" with respect to each Payment Date (the "subject
Payment Date") means (a) [_____]% of the initial Discounted Present
Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative
Loss Amount with respect to the subject Payment Date, minus (c) the
sum of the Certificate Balance as of the preceding Payment Date after
giving effect to all payments made on such Payment Date plus the
Overcollateralization Amount as of the subject Payment Date plus the
amount on deposit in the Reserve Account after giving effect to
withdrawals to be made on the subject Payment Date.
The "Class B Target Investor Principal Amount" with respect to each
Payment Date is an amount equal to the product of (a) [____]% (the
"Class B Percentage") and (b) the Discounted Present Value of the
Performing Leases as of the related Determination Date.
The "Cumulative Loss Amount" with respect to each Payment Date (the
"subject Payment Date") is an amount equal to the excess, if any, of
(a) the difference of (i) the sum of the Outstanding Principal Amount
of the Notes and the Certificate Balance as of the immediately
preceding Payment Date after giving effect to all payments made on
such Payment Date, minus (ii) the lesser of (A) the Discounted Present
Value of the Performing Leases as of the Determination Date relating
to the immediately preceding Payment Date minus the Discounted Present
Value of the Performing Leases as of the Determination Date related to
the subject Payment Date and (B) Available Funds remaining after the
payment of amounts owing to the Servicer and in respect of interest on
the Securities on the subject Payment Date over (b) the Discounted
Present Value of Performing Leases as of the Determination Date
related to the subject Payment Date.
The "Overcollateralization Amount" with respect to each Payment Date
is an amount equal to (a) the Discounted Present Value of the
Performing Leases as of the related Determination Date minus (b) the
Outstanding Principal Amount of the Notes and the Certificate Balance
(after giving effect to payments of principal (other than Additional
Principal) on such Payment Date); provided, that such amount will
never be less than zero.
C. Redemption............... The Servicer will have the option, subject to certain conditions, to
repurchase the Leases and cause the Trust to redeem all, but not less
than all, of the Notes and thereby cause early repayment of the Notes
as of any Payment Date on which the Discounted Present Value of
the Performing Leases is less than or equal to 5% of the Discounted
Present Value of the Leases as of the Cut-Off Date. Upon the
Payment Date fixed for such prepayment, the remaining unpaid
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principal amount on the Notes and all accrued and unpaid interest
thereon shall become due and payable. See "Description of the
Notes--Redemption".
The Certificates................. $[__________] aggregate principal of [____]% Lease-Backed
Certificates (the "Certificates"; and together with the Notes, the
"Securities"). The Certificates represent fractional undivided
interests in the Trust and will be issued pursuant to the Trust
Agreement. Distributions of interest and principal on the
Certificates will be subordinated in priority of payment to interest
and principal on the Notes to the extent described herein. See "The
Transfer and Servicing Agreements--Distributions on Securities"
herein. The Certificates are not offered hereby.
Issuance Date.................... On or about September __, 1998.
Determination Date............... The third day prior to each Payment Date or, if such day is not a
business day, the preceding business day (each, a "Determination
Date"). On each Determination Date, the Servicer will determine the
amount of payments received on the Leases during the immediately
preceding calendar month or, in the case of the initial Determination
Date, from, but not including, the Cut-Off Date through October 31,
1998 (each such period, a "Due Period") which will be available for
distribution on the related Payment Date. See "Description of the
Transfer and Servicing Agreements--Distributions".
Payment Date..................... Payments on the Notes will be made on the 25th day of each month
(or if such day is not a business day, the next succeeding business
day), commencing on November 25, 1998 (each, a "Payment Date"), to
holders of record ("Holders") of the Notes as of the last day of the
immediately preceding calendar month (each, a "Record Date"). See
"Description of the Transfer and Servicing Agreements--Distributions
on Securities".
Denominations.................... The Notes will be issued in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof, except that one Class
A Note and Class B Note may be issued in another denomination.
Expected Maturity;
Stated Maturity.................. The expected maturity with respect to the Class A-1 Notes, Class
A-2 Notes, and the Class B Notes are the Payment Dates in
[month/year], [month/year] and [month/year], respectively. The stated
maturity date with respect to the Class A-1 Notes will be the Payment
Date in [month/year] and with respect to all other Notes will be the
Payment Date in [month/year]. However, if all payments on the Leases
are made as scheduled, final payment with respect to the Notes will
occur prior to stated maturity.
Trust Property................... The "Trust Property" will consist of a pool (the "Lease Pool") of
equipment leases (the "Lease Contracts"), and all of the Trust's
interest in the equipment (the "Equipment") underlying the leases
(which includes computer, medical equipment, office equipment, food
service equipment, industrial equipment and service station
equipment), including all payments not collected thereunder on or
prior to the Cut-Off Date (the "Lease Receivables"; together with the
Lease Contracts, the "Leases"). In addition, the Trust Property will
include the funds on deposit in the Reserve Account, if any, and to
the limited extent provided in the Pooling and Servicing Agreement,
amounts on deposit in the Residual Account, if any.
The Lease Pool................... On the Issuance Date, the Lease Pool will consist of the Leases
as of the Cut-Off Date and the interest of the Trust in the related
Equipment. Thereafter, the Lease Pool will consist of the Leases as of
the Issuance Date plus any Substitute Leases but excluding any Leases
which have been replaced by one or more Substitute Leases, and the
interest of the Trust in the related Equipment. See "--Substitutions",
"The Lease Pool" and "Certain Legal Matters Affecting a Lessee's
Rights and Obligations".
Less than 2% of the Statistical Discounted Present Value of the Leases
as of the Cut-Off Date relate to Lessees located outside of the United
States.
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ILC will represent and warrant that, as of the Cut-Off Date, all
Leases were current or less than 63 days delinquent and that, as of
the initial Determination Date, all Lessees will have made at least
one lease payment.
Equipment........................ The Equipment is comprised primarily of office equipment, such as
personal computers, copy machines and facsimile machines, medical
and ophthalmic equipment and retail petroleum industry equipment,
such as leak detection systems, fueling dispensers and other in-store
equipment such as coolers and shelving. As of the Cut-Off Date, the
Lease Pool had approximately [____] equipment categories.
Lessees.......................... The Leases are comprised of commercial equipment leases in a
variety of industries with businesses and individual business owners
(each, a "Lessee"; and collectively, the "Lessees"), with no single
Lessee concentration of greater than [___]%. As of the Cut-Off
Date, the Lease Pool included [____] separate Leases and
approximately [____] Lessees.
As of the Cut-Off Date approximately [___]%, [___]%, [___]%, [___]%
and [___]% of the Leases (based on Statistical Discounted Present
Value of the Leases) were located in Ohio, California, Texas,
Minnesota and South Carolina, respectively. No other state accounts
for more than 5% of the Leases. Accordingly, adverse economic
conditions or other factors particularly affecting any of these
regions could adversely affect the performance of the Leases. See "
Risk Factors--Geographic Concentration of Leases".
Certain Lease Terms.............. The Leases are triple-net leases, requiring the Lessee to pay all
taxes, maintenance and insurance associated with the Equipment.
The Leases are non-cancelable by the Lessees. All payments under
the Leases are absolute, unconditional obligations of the Lessees
without right of offset for any reason. Each Lessee entered into its
Lease for specified Equipment designated in schedules incorporated
into the Lease. The schedules, among other things, establish the
payments and the term of the Lease with respect to such Equipment.
The Leases have remaining terms to maturity, calculated as of the
Cut-Off Date, of between approximately [____] and [____] months
and a weighted average term to stated maturity of [____] months.
See "The Lease Pool--The Leases".
Although the Leases will be non-cancelable by the Lessees, ILC has,
from time to time, permitted early termination by Lessees ("Early
Lease Termination") or other modifications of the lease terms in
certain circumstances, including in connection with a full or partial
buy-out or equipment upgrade. If ILC allows an Early Lease Termination
or other modification of the lease term in connection with a partial
buy-out, the amount prepaid by the lessor must be at least equal to
the Discounted Present Value of the terminated Lease (or, in the case
of a partial buy-out, the portion thereof related to such buy-out)
plus any delinquent payments. See "The Lease Pool--The Leases".
Substitutions................ If Transferor or Servicer is required to repurchase any Lease as a
result of a breach of representation, warranty or covenant relating to
such Lease, adjustments made to such Lease by the Servicer or the
early termination of such Lease (each, a "Predecessor Lease"), in lieu
of such repurchase (other than repurchases relating to early
terminations), the Transferor may substitute one or more leases having
similar characteristics (each, a "Substitute Lease") for Leases
subject to repurchase in accordance with the preceding paragraph, so
long as the following conditions are met: (i) after giving effect to
such substitution, the aggregate Booked Residual Value (without
duplication) of all Substitute Leases will not be less than 90% of the
aggregate Booked Residual Value of all Predecessor Leases since the
Issuance Date, (ii) after giving effect to such adjustment or
substitution, either the final payment on such Substitute Lease must
be on or prior to [stated maturity month/year] or, to the extent the
final payment is due later, only scheduled payments due on or prior to
such date are included in the Discounted Present Value of such Lease
for the purpose of making any calculation under the Pooling and
Servicing Agreement, (iii) after giving effect to such substitution,
the aggregate amount of Lease Payments through the term of the Leases
will not be more than 5% less than the aggregate scheduled Lease
Payments of the Leases prior to such substitution, and (iv) after
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giving effect to such substitution, the Discounted Present Value of
the Performing Leases is not less than the Discounted Present Value of
the Performing Leases prior to such substitution. See "Description of
the Transfer and Servicing Agreements--Sale and Assignment of Leases"
and "--Servicing Procedures".
No substitutions will be permitted if after giving effect to such
substitution, the aggregate Discounted Present Value of all
Predecessor Leases would exceed 10% of the Discounted Present Value of
the Leases as of the Cut-Off Date. All Substitute Leases will be
originated or acquired using the same credit criteria as the
initial Leases.
Although the limitations set forth above are intended to minimize the
probability that substitutions would result in losses or delays in
payments to the Noteholders, no assurances can be given to this
effect. If and when the aggregate Discounted Present Value of all
Leases for which a Substitute Lease has been substituted equals 10% of
the Discounted Present Value of the Leases as of the Cut-Off Date, the
Servicer, on behalf of the Trust, will file an interim report on Form
8-K updating the distribution tables set forth under "The Lease Pool"
herein.
Payments on Leases............... All payments on Leases will be made by the Lessees to the address
specified by the Servicer. Because the rate of payment of principal on
the Notes will depend, among other things, on the rate of payment on
the Leases, prepayments of leases, payments as a result of
Non-Performing Leases, Casualty Payments, and payments upon repurchase
of Leases by the Transferor or the Servicer could impact the rate of
payment and yield on the Notes. See "Risk Factors--Early Termination
and Related Investment Risk" and "Prepayment and Yield
Considerations".
Unless otherwise permitted to make deposits monthly, the Servicer will
deposit the proceeds of such payments to the Collection Account within
two business days of the receipt thereof. See "Description of Transfer
and Servicing Agreements--Distributions--Deposits to Collection
Account".
Advances by Servicer............. On any Determination Date, the Servicer will be required to advance
(each, a "Servicer Advance") to the Trustee for distribution as
Available Funds on the related Payment Date, an amount sufficient
to cover delinquencies on any scheduled payment under Leases in
the Trust Property due during the related Due Period; provided that
the Servicer will not be required to make any Servicer Advance if it
determines that such Servicer Advance may not ultimately be
recoverable by it from recoveries from the applicable Leases. The
Servicer will be reimbursed for Servicer Advances not recovered from
late payments or proceeds from the sale or release of the Equipment
under a Lease with respect to which the Servicer has made a Servicer
Advance to the extent that funds are available therefor in accordance
with the Priority of Payments on the second Payment Date following the
Determination Date on which the Servicer made such Servicer Advance.
See "Description of the Transfer and Servicing
Agreements--Distributions".
Servicing Fee.................... A Servicing Fee (the "Servicing Fee"), will be paid monthly to the
Servicer on each Payment Date from amounts in the Collection
Account and will be calculated by multiplying one-twelfth of 0.75%
times the lesser of (i) the sum of the aggregate Outstanding Principal
Amount of the Notes and outstanding Certificate Balance, each
calculated as of the preceding Payment Date, after giving effect to
all payments made on such Payment Date and (ii) the Discounted
Present Value of the Performing Leases calculated as of the related
Determination Date.
The Servicing Fee will be paid to the Servicer for servicing the Lease
Pool and to pay certain administrative expenses in connection with the
Notes and the Certificates, including Trustee and Indenture Trustee
fees and expenses and the Management Fee. The Servicing Fee in respect
of a Due Period (together with any portion of the Servicing Fee that
remains unpaid from prior Payment Dates) may be paid at the beginning
of such Due Period out of collections for such
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Due Period. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation."
The Servicer will also collect and retain any late fees, extension
fees, prepayment charges and certain non-sufficient funds charges and
other administrative fees or similar charges (the "Supplemental
Servicing Fee") allowed by applicable law with respect to the Leases.
In addition to the Servicing Fee and the Supplemental Servicing Fee,
the Servicer is also entitled to retain, out of any amounts received
by the Servicer in connection with the sale or release of any
Equipment subject to a Non-Performing Lease upon the early termination
of such Lease or otherwise, (i) the Servicer's actual out-of-pocket
expenses reasonably incurred in connection with such sale or release
and (ii) if the Servicer has made any Servicer Advances with respect
to any Lease which thereafter became a Non-Performing Lease and the
Servicer has not otherwise been fully reimbursed for such Servicer
Advance, the unreimbursed portion thereof.
Available Funds.................. All payments made on or with respect to the Leases with respect to
the immediately preceding Due Period received on or prior to the
Record Date for such Due Period ("Available Funds") will be available
for distribution by the Trustee on a Payment Date and will include:
a) Lease Payments due during the prior Due Period (net of any
Third Party Amounts);
b) Residual Realizations up to the Residual Amount Cap;
c) recoveries from Non-Performing Leases (net of amounts retained by
the Servicer);
d) proceeds from repurchases by Transferor or Servicer of Predecessor
Leases if Transferor has not substituted Substitute Leases for
such Leases;
e) proceeds from investment of funds in the Collection Account (other
than Security Deposit Earnings), the Reserve Account and the
Residual Account, if any;
f) Casualty Payments;
g) Servicer Advances;
h) Termination Payments;
i) funds, if any, on deposit in the Reserve Account; and
j) funds, if any, on deposit in the Residual Account to the limited
extent provided in the Pooling and Servicing Agreement.
Application of
Payments......................... The "Priority of Payments" for the Securities is as follows:
So long as no Event of Default has occurred and the Notes have not
been accelerated, distributions will be made on each Payment Date from
Available Funds in the following priority:
a) to pay the then accrued and unpaid Servicing Fee;
b) to reimburse unreimbursed Servicer Advances in respect of a prior
Payment Date;
c) to make Interest Payments owing on the Class A Notes, pro rata based
on the respective amounts due under this priority, to the Class
A-1 Noteholders and Class A-2 Noteholders;
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d) to make Interest Payments owing on the Class B Notes;
e) to make Interest Payments owing on the Certificates;
f) to make the Class A Principal Payment (i) to the Class A-1
Noteholders only, until the Outstanding Principal Amount on the
Class A-1 Notes is reduced to zero, then (ii) to the Class A-2
Noteholders only, until the Outstanding Principal Amount on
the Class A-2 Notes is reduced to zero;
g) to make the Class B Principal Payment;
h) to make the Certificate Principal Payment;
i) to pay the Additional Principal, if any, to the Class A
Noteholders then receiving the Class A Principal Payment as provided
in clause (f) above until the Outstanding Principal Amount on all of
the Class A Notes has been reduced to zero, then to the Class B
Noteholders until the Outstanding Principal Amount on the Class B
Notes has been reduced to zero and thereafter to the
Certificateholders until the Certificate Balance has been reduced to
zero;
j) to the Reserve Account, an amount equal to the excess of the
Required Reserve Amount over the Available Reserve Amount;
k) following a Residual Event, to the Residual Account an amount equal
to Residual Realizations up to the Residual Amount Cap; and
l) to the Transferor, the balance, if any.
Upon the occurrence of an Event of Default and the acceleration of the
Notes and until such Event of Default has been rescinded,
distributions will be made in the priority described in "Description
of the Transfer and Servicing Agreement--Distributions". For a
description of Events of Default and conditions to the acceleration of
the Notes, see "Description of the Notes--the Indenture".
Residual Realizations............ Following the Issuance Date, Residual Realizations will be deposited
into the Collection Account until the aggregate Residual Realizations
used (without duplication) to cover amounts owing the Noteholders and
Holders of the Certificates (collectively, the "Securityholders") and
the Servicer, deposited into the Reserve Account, on deposit in the
Residual Account, or withdrawn from the Residual Account as a result
of an Available Funds Shortfall, equals $[________], which represents
[___]% of the Discounted Present Value of the Leases as of the Cut-Off
Date (the "Residual Amount Cap"), and will provide additional credit
support to the Notes and the Certificates. Actual Residual
Realizations may be more or less than the residual value of the
Equipment recorded on the books of the Transferor based on amounts
estimated by management utilizing past experience, market data and
judgment (the "Booked Residual Value"). Upon the occurrence of a
Residual Event, the Residual Realizations not distributed to
Securityholders, paid to the Servicer or deposited into the Reserve
Account will be deposited in the Residual Account. Funds on deposit in
the Residual Account will be available to cover shortfalls in the
amount available to pay the amounts owing the Servicer and to make
interest and principal payments on the Notes and the Certificates.
Following the termination of a Residual Event, amounts on deposit in
the Residual Account will be deposited into the Reserve Account to the
extent that the amount on deposit in the Reserve Account is less than
the required Reserve Amount and thereafter will be disbursed to the
Transferor.
"Residual Realizations" mean net cash flows realized by and allocable
to ILC from the sale or lease of the Equipment following the scheduled
expiration dates of the Leases; provided that such cash flows relating
to Non-Performing Leases will only be included as "Residual
Realizations to the extent such amounts exceed the Discounted Present
Value of such Lease as of the Payment Date
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immediately following the first Determination Date on which such Lease
was a Non-Performing Lease.
A "Residual Event" means the occurrence of one or more of the
following: (a) ILC is no longer the Servicer, (b) with respect to the
[month/year] Due Period and each Due Period thereafter, the
Three-Month Servicer Realization Percentage calculated on any
Determination Date is less than [___]%; or (c) with respect to the
[month/year] Due Period and each Due Period thereafter, the
Three-Month Delinquency Percentage is greater than [__]%; provided,
that the Residual Event referred to in clause (b) may be cured if the
Three-Month Servicer Realization Percentage is greater than or equal
to [___]% for three consecutive months thereafter and the Residual
Event referenced in clause (c) may be cured if the Three-Month
Delinquency Percentage for any Due Period thereafter is less than or
equal to [___]%. For a description of the Three-Month Servicer
Realization Percentage and the Three-Month Delinquency Percentage, see
"Description of the Transfer and Servicing Agreements--Residual
Account."
The aggregate Booked Residual Value of the Leases as of the Cut-Off
Date equals $[----------].
Reserve Account.................. The Securityholders will have the benefit of funds on deposit in an
account (the "Reserve Account") to the extent that there is a
shortfall in the amount available to pay amounts owing the Servicer
and to make interest and principal payments on the Notes and the
Certificates, on any Payment Date. The Reserve Account will be funded
by an initial deposit of 1% of the Discounted Present Value of the
Leases as of the Cut-Off Date. Thereafter, on any Payment Date to the
extent funds are available therefor in accordance with the Priority of
Payments (and, on any Payment Date following the termination of a
Residual Event, from the Residual Account), additional deposits will
be made to the Reserve Account to the extent that the amount on
deposit in the Reserve Account (the "Available Reserve Amount") is
less than the Required Reserve Amount. The "Required Reserve Amount"
equals the lesser of (a) 1% of the Discounted Present Value of the
Performing Leases as of the Cut-Off Date and (b) the Outstanding
Principal Amount of the Notes and the Certificate Balance. Amounts on
deposit in the Reserve Account in excess of the Required Reserve
Amount will be disbursed to the Trust in accordance with the
provisions of the Indenture.
Federal Income Tax
Considerations................... In the opinion of Mayer, Brown & Platt, special federal tax counsel for
the Trust, for federal income tax purposes the Notes will be
characterized as debt, and the Trust will not be characterized as an
association (or a publicly traded partnership) taxable as a
corporation. Each Noteholder, by the acceptance of a Note, will agree
to treat the Notes as indebtedness. See " U.S. Federal Income Tax
Considerations".
Ohio State Tax
Considerations................... In the opinion of Keating, Muething and Klekamp, P.L.L., special Ohio
tax counsel, unless the Noteholders are Ohio residents or are
otherwise subject to the Ohio personal income tax, the Ohio corporate
franchise tax or the Ohio tax on dealers in intangibles, the
Noteholders will not be subject to the foregoing taxes solely as a
result of purchasing and owning the Notes.
ERISA Considerations............. The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code place certain restrictions
on those pension and other employee benefits plans to which they
apply. Pursuant to regulations issued by the United States
Department of Labor defining "plan assets", if the Notes are
considered to be indebtedness under local law without substantial
equity features, the assets of the Trust will not be considered assets
of any ERISA plan holding the Notes, thereby generally avoiding
potential application of the prohibited transaction rules under ERISA
and the Code to transactions entered into by the Trust. However,
regardless of whether the Notes constitute an equity interest in the
Trust, the prohibited transaction rules would be applicable to a
plan's purchase and holding of the Notes. Certain exemptions from
the prohibited transaction rules could be applicable, however, with
respect to the acquisition and holding of the Notes. Accordingly, the
Notes may be acquired by ERISA plans, subject to certain
restrictions. Before
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purchasing any of the Notes, fiduciaries of such plans should
determine whether an investment in the Notes is appropriate under
ERISA. By its acquisition of a Note, each purchaser shall be deemed to
represent and warrant that its purchase and holding of the Note will
not result in a nonexempt prohibited transaction under ERISA or the
Code. See "ERISA Considerations".
Legal Investment................. The Class A-1 Notes will be an "eligible security" within the
meaning of Rule 2a-7 promulgated under the Investment Company
Act of 1940, as amended.
Rating........................... It is a condition to the issuance of any of the Notes that the Class
A-1 Notes be rated at least ["___"] or its equivalent, that the Class
A-2 Notes be rated at least ["___"] or its equivalent, and that the
Class B Notes be rated at least ["___"] or its equivalent, in each
case by at least two nationally recognized rating agencies (the rating
agencies rating the Notes being the "Rating Agencies"). The ratings
assess the likelihood of timely payment of interest and the ultimate
payment of principal to the Noteholders by the Stated Maturity date.
There is no assurance that any rating will not be lowered or withdrawn
if, in the judgement of any Rating Agency, circumstances in the future
so warrant. See "Rating of the Notes".
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RISK FACTORS
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.
Early Termination and Related Reinvestment Risk. Because the rate of
payment of principal on the Notes will depend, among other things, on the rate
of payment on the Leases, such rate of payments of principal on the Notes
cannot be predicted. Payments on the Leases will include scheduled payments as
well as prepayments permitted by ILC, payments as a result of Non-Performing
Leases, Casualty Payments, and payments upon repurchases by the Transferor and
Servicer on account of a breach of certain representations, warranties or
covenants in the Pooling and Servicing Agreement or the Purchase Agreement (to
the extent not replaced by Substitute Leases) (any such voluntary or
involuntary prepayment, a "Lease Prepayment"). The rate of early terminations
of Leases due to Lease Prepayments and defaults may be influenced by a variety
of economic and other factors. For example, adverse economic conditions and
certain natural disasters such as floods, hurricanes, earthquakes and
tornadoes may affect Lease Prepayments. Lease Prepayments will affect the
weighted average life of each Class of Notes. This will in turn have an impact
on the effective yield on each Class of Notes, since interest accrues on the
outstanding principal balance of the Notes. See "Prepayment and Yield
Considerations".
Security Interests in the Equipment; Certain Security Interests Not
Perfected. The Leases will consist of either finance leases (where
substantially all of the value of the Equipment is financed by the lease
payments) or operating leases (where substantially less than all of the value
of the Equipment is recovered through the lease payments). See "The Lease
Pool--The Leases". Finance leases include Leases ("Nominal Buy-Out Leases")
which contain a nominal purchase option upon expiration or other terms which
may be deemed effectively to vest equitable ownership of the Equipment in the
Lessee. Prior to the Cut-Off Date, ILC will have filed Uniform Commercial Code
("UCC") financing statements in its favor against Lessees in respect of
Equipment, including Equipment subject to Nominal-Buy-Out Leases, with an
original Equipment cost in excess of $10,000, which make up approximately
[____]% of the Statistical Discounted Present Value of the Leases . Consistent
with ILC's policies with respect to all Leases originated or acquired by it,
no action will be taken to perfect the interest of ILC in any Equipment to the
extent the original Equipment cost of the related Equipment is less than
$10,0000. As a result, ILC does not have a perfected security interest in
Equipment with an original Equipment cost of less than or equal to $10,000,
which represents less than 10% of the Statistical Present Value of the Leases.
In addition, the Pooling and Servicing Agreement, the Trust Agreement and the
Indenture will require UCC financing statements covering the Equipment to be
filed in favor of the Transferor, the Trust and the Indenture Trustee,
respectively, in states in which as of the Closing Date (i) Equipment relating
to not less than 75% of the Discounted Present Value of the Leases as of the
Cut-Off Date is located and (ii) Equipment relating to not less than 75% of
the Booked Residual Value of such Equipment as of the Cut-Off Date is located
(the "Filing Locations"). To the extent UCC financing statements evidencing
ILC's security interest in the Equipment have not been filed against the
Lessee (i.e., with respect to those Leases relating to Equipment with an
original cost of less than $10,000) and to the extent the Equipment is located
in the states other than the Filing Locations, any such security interests in
the Equipment will not be perfected in favor of ILC, the Transferor, the Trust
nor the Indenture Trustee, respectively, and another party (such as other
creditors of ILC) may acquire rights in ILC's interest in the Equipment
superior to those of the Transferor, the Trust and the Indenture Trustee. See
"Certain Legal Matters Affecting a Lessee's Rights and Obligations". The lack
of a perfected security interest in certain Equipment will result in claims
against Lessees being unsecured and may adversely affect the ability of the
Trust to realize on such Equipment.
Restrictions on Recoveries. State laws impose requirements and
restrictions relating to foreclosure sales and obtaining deficiency judgments
following such sales. If the Trust must rely on repossession and disposition
of Equipment to cover losses on Non-Performing Leases, the Trust may not
realize the full amount due because of the application of those requirements
and restrictions. Other factors that may affect the ability of the Trust to
realize the full amount due on a Lease include the failure to file financing
statements to perfect the Trust's security interest in the Equipment against a
Lessee, 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. See "Certain Legal Matters Affecting a Lessee's Rights and
Obligations".
Recharacterization of Sale Treatment. ILC will represent and warrant
that each transfer of the Leases to the Transferor is an absolute and
unconditional sale or assignment. However, in the event of an insolvency of
ILC, a creditor or trustee in bankruptcy, or ILC as debtor in possession,
could attempt to recharacterize the sale of the related Leases by ILC to the
Transferor as a loan to ILC from the Transferor, secured by a pledge of such
Leases or a court could allow the trustee in bankruptcy to repudiate the
Leases that are operating leases and all obligations thereunder. Moreover, in
the event of an insolvency of ILC, a creditor or trustee in bankruptcy, or ILC
as debtor in possession, could attempt to consolidate the assets of the
Transferor with those of ILC. Either attempt, even if unsuccessful, could
result in delays in payments of the Notes. If such attempts were successful,
the Notes would be accelerated, and the Indenture Trustee's recovery on behalf
of the Noteholders could be limited to the then current
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value of the Leases or the underlying Equipment. Thus, the Noteholders could
lose the right to future payments and might incur reinvestment losses on
amounts recovered. For tax purposes the Leases will be treated as assets of ILC
on the tax return for its consolidated group, which might increase the risk of
recharacterization of the transfer to the Trust as a financing. See "Certain
Legal Matters Affecting a Lessee's Rights and Obligations".
Bankruptcy of a Lessee. In the case of operating leases, the
Bankruptcy Code grants to the bankruptcy trustee or the debtor-in-possession a
right to elect to assume or reject any executory contract or unexpired lease.
Any rejection of such a lease or contract constitutes a breach of such lease
or contract, entitling the nonbreaching party to a claim for damages for
breach of contract. The net proceeds from any resulting judgment would be
deposited by the Servicer into the Collection Account and allocated to the
Noteholders as more fully described herein. Upon the bankruptcy of a Lessee,
if the bankruptcy trustee or debtor-in-possession elected to reject a Lease,
the flow of scheduled payments to Noteholders would cease. If, as a result of
the bankruptcy of a Lessee, the Servicer is prevented from collecting
scheduled payments with respect to Leases and such Leases become
Non-Performing Leases, no recourse would be available against ILC (except for
misrepresentation or breach of warranty or covenant) and the Noteholders could
suffer a loss with respect to the Notes. Similarly, upon the bankruptcy of the
Transferor, if the bankruptcy trustee or debtor-in-possession elected to
reject a Lease, the flow of Lease payments to the Trust and the Noteholders
would cease. As noted above, however, the Transferor has been structured so
that the filing of a bankruptcy petition with respect to it is unlikely. See
"The Transferor".
These bankruptcy provisions, in addition to the possible decrease in
value of a repossessed item of Equipment, may limit the amount realized on the
sale of Equipment to less than the amount due on the related Lease.
Limited Credit Enhancement . Credit enhancement with respect to the
Notes will be provided by the subordination of the Certificates, funds on
deposit in the Reserve Account, the Overcollateralization Amount and, to the
limited extent provided in the Indenture, the Residual Account. In addition,
the Class A Notes have the benefit of the subordination of the Class B Notes.
However, on any Payment Date the amount available to Noteholders is limited to
the extent of funds on deposit in the Collection Account (including Residual
Realizations up to the Residual Cap Amount), the Reserve Account and, to the
limited extent provided in the Indenture, the Residual Account. Therefore, if
a Lease becomes a Non-Performing Lease at a time when total losses on the
Leases are in excess of the outstanding principal amount of any subordinated
class and, the amounts, if any, available to be withdrawn from the Reserve
Account and the Residual Account are reduced to zero, the holders of Notes of
any senior class may be forced to rely solely on the amount of Residual
Realizations on the Equipment for ultimate payment of principal and interest
on such class of Notes. The aggregate amount of Residual Realizations
available to Noteholders to pay (without duplication) the amounts owing the
Servicer, to be deposited in the Reserve Account, on deposit in the Residual
Account or withdrawn from the Residual Account as the result of an Available
Funds Shortfall after the Issuance Date will not exceed the Residual Amount
Cap.
Non-Recourse Obligations. The Notes represent debt obligations of the
Trust and do not represent interests in or recourse obligations of the
Transferor, ILC or any of their respective affiliates. The Trust is not
expected to have any significant assets other than the Trust Property.
Consequently, the Noteholders must rely solely upon the Leases, the Equipment
and funds in the Reserve Account and the Residual Account, if any, for payment
of principal of and interest on the Notes. If no funds are on deposit in the
Reserve Account or the Residual Account and the payments made on the Leases 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. The Notes offered hereby initially will be
represented by one or more certificates 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 Trust, the Indenture Trustee
or the Trustee as Noteholders, as that term is used in the Indenture and the
Trust Agreement. Hence, until such time, beneficial owners will only be able
to exercise the rights of Noteholders indirectly, through DTC, and its
participating organizations, and will receive reports and other information
provided for under the Indenture and the Trust Agreement only if, when and to
the extent provided by DTC and its participating organizations. See "Certain
Information Regarding the Notes--Book-Entry Registration".
Geographic Concentration of Leases. As of the Cut-Off Date
approximately [___]%, [___]%, [___]%, [___]% and [___]% of the Leases (based
on Statistical Discounted Present Value of the Leases) were located in Ohio,
California, Texas, Minnesota and South Carolina, respectively. No other state
accounts for more than 5% of the Leases. See "The Lease Pool". Accordingly,
adverse economic conditions or other factors particularly affecting any of
these regions could adversely affect the performance on the Leases. The
Transferor is not aware of any existing adverse economic conditions, or other
factors particularly affecting any of these regions which are material to
Noteholders, but no assurance can be given that materially adverse factors
will not develop in the future.
Risk of Delayed Payment Due to Commingling of Funds. Under the
Pooling and Servicing Agreement, the Servicer is required to deposit all Lease
Payments, Casualty Payments and Termination Payments received after the
Cut-Off Date, and all Payahead relating to payments due after the Cut-Off
Date, into the Collection Account,
17
<PAGE>
in each case within two business days of receipt thereof; however, under
certain circumstances, the Servicer will only be required to make such deposits
monthly. See "Description of the Transfer and Servicing
Agreements--Distributions--Deposits to Collection Account". If bankruptcy or
reorganization proceedings were commenced with respect to the Servicer, those
funds held by the Servicer prior to deposit in the Collection Account may be
subject to an automatic stay resulting in a delay in the transfer of such funds
to the Trust Property.
Insolvency of Lessees. To the extent Lessees default on the Leases,
including through insolvency, Lease Payments deposited into the Collection
Account will decrease and accordingly Available Funds will be reduced.
USE OF PROCEEDS
The Trust will use the net proceeds from the sale of the Notes to
acquire the Leases from the Transferor and to make the initial deposit into
the Reserve Account and, if applicable, the Residual Account. The Transferor
will use the net proceeds paid to the Transferor by the Trust to purchase the
Leases from ILC.
THE TRUST
General. The Trust will be formed under the laws of the State of New
York pursuant to the Trust Agreement. After its formation, the Trust will not
engage in any activity other than acquiring and managing the Leases, issuing
and making payments on the Notes and the Certificates and other activities
related to the foregoing. The Trust will have no officers, directors or
employees.
The "Trust Property" will consist of a pool (the "Lease Pool") of
equipment leases (the "Lease Contracts"), and all of the Trust's interest in
the equipment (the "Equipment") underlying the leases (which includes
computer, medical equipment, office equipment , food service equipment,
industrial equipment and service station equipment), including all payments
not collected thereunder on or prior to the Cut-Off Date (the "Lease
Receivables"; together with the Lease Contracts, the "Leases") . In addition,
the Trust Property will include the funds on deposit in the Reserve Account, if
any, and to the limited extent provided in the Pooling and Servicing Agreement,
amounts on deposit in the Residual Account, if any.
The Servicer will continue to service the Leases and will receive
fees for such services. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation". To facilitate the servicing of the
Leases, the Transferor, the Trustee and the Indenture Trustee will authorize
the Servicer to retain physical possession of the Leases and other documents
relating thereto as custodian for the Trust.
If the protection provided to the Noteholders by the subordination of
the Certificates (and in the case of the Class A Notes, the Class B Notes),
the Overcollateralization Amount and by the availability of amounts on deposit
in the Reserve Account and under limited circumstances, the Residual Account,
is insufficient, such Noteholders would have to look principally to the
Lessees on the Lease Contracts, the proceeds from the repossession and sale of
the Equipment which relate to defaulted Lease Receivables for payment on such
Notes. In such event, certain factors, such as ILC, the Transferor, the Trust
or the Indenture Trustee not having a first priority perfected ownership or
security interest, as applicable, in the Equipment may affect the Servicer's
ability to repossess and sell the Equipment subject to the Leases, and thus
may reduce the proceeds to be distributed to the holders of the Notes. See
"Risk Factors--Security Interests in the Equipment; Certain Security Interests
Not Perfected".
The Trust's principal offices are in [_______________], in care of
First Union Trust Company, National Association, as Trustee, at the address
listed below under "--The Trustee".
Capitalization of the Trust. The following table illustrates the
capitalization of the Trust as of the Cut-Off Date, as if the issuance and
sale of the Notes and the Certificates had taken place on such date:
<TABLE>
<S> <C>
Class A-1 _____% Lease-Backed Notes................................................ $__________
Class A-2 _____% Lease-Backed Notes................................................ __________
Class B _____% Lease-Backed Notes.................................................. __________
_____% Lease-Backed Certificates...................................................
Total......................................................................... $__________
</TABLE>
The Trustee. First Union Trust Company, National Association, will be
the Trustee under the Trust Agreement. First Union Trust Company, National
Association, is a [Delaware] banking corporation and its principal offices are
located at [ ______________________]. In the ordinary course of its business,
the Trustee and its affiliates have engaged and may in the future engage in
commercial banking or financial advisory transactions with Information Leasing
and its affiliates.
The Trustee's liability in connection with the issuance and sale of
the Notes is limited solely to the express obligations of such Trustee set
forth in the Trust Agreement and the Pooling and Servicing Agreement. The
Trustee
18
<PAGE>
may resign at any time, in which event the Servicer must appoint a
successor trustee. The Servicer may also remove the Trustee if the Trustee
ceases to be eligible to continue as Trustee under the related Trust Agreement
or if the Trustee becomes insolvent. In such circumstances, the Servicer must
appoint a successor trustee. Any resignation or removal of the Trustee and
appointment of a successor trustee will not become effective until acceptance
of the appointment by the successor trustee.
THE TRANSFEROR
The Transferor is a wholly-owned bankruptcy remote subsidiary of ILC
and is intended to be a limited-purpose corporation. Accordingly, the
Transferor's operations have been restricted to (a) limit its ability to
engage in business with, or incur liabilities to, any other entity which may
bring bankruptcy proceedings against the Transferor; and (b) diminish the risk
that it will be consolidated into the bankruptcy proceedings of any other
entity. The Transferor's offices are located at 1023 West Eighth Street,
Cincinnati, Ohio 45203 and its phone number is (513) 579-2861.
As of the date of this Prospectus, the Transferor has had no
operating history. The net proceeds of the sale of the Notes will be used to
purchase the Leases. See "Use of Proceeds". The Transferor is prohibited by
its Certificate of Incorporation from engaging in business other than (i) the
purchase of equipment leases and lease receivables (including equipment) from
ILC and its affiliates, (ii) the transfer of such assets to the Trust and
(iii) engaging in acts incidental, necessary or convenient to the foregoing
and permitted under Delaware law. The Transferor's ability to incur, assume or
guaranty indebtedness for borrowed money is also restricted by its Certificate
of Incorporation. As of the date of this Prospectus, the Transferor is not the
subject of any legal proceedings.
THE SERVICER
General
Information Leasing Corporation ("ILC"), an Ohio corporation, was
incorporated in September 1984. ILC is a wholly-owned subsidiary of The
Provident Bank ("Provident"), which acquired ILC in December 1996. ILC's
primary business consists of originating and servicing leases to businesses
and business owners in the United States. ILC has 15 sales offices located
throughout the United States and is headquartered at 1023 West Eighth Street,
Cincinnati, Ohio 45203 and its phone number is (513) 421-9191. As of June 30,
1998, ILC had total assets of approximately $_______________.
ILC's parent company, Provident is the principal banking subsidiary
of Provident Financial Group, Inc., a Cincinnati based commercial banking and
financial services holding company registered under the Bank Holding Company
Act. Provident Financial Group, Inc. operates throughout Ohio, northern
Kentucky, southeastern Indiana and Florida. As of March 31, 1998, Provident
Financial Group, Inc. had total assets of $7.7 billion, net loans and leases
of $5.2 billion, deposits of $5.0 billion and total shareholders' equity of
$672 million. Provident Financial Group, Inc.'s tier 1 and total risked-based
capital ratios were 9.80% and 13.06%, respectively. For the three-months ended
March 31, 1998, Provident Financial Group, Inc. had net earnings of $30.4
million. Provident represents approximately 92% of Provident Financial Group,
Inc.'s assets.
ILC is a full service equipment leasing company that focuses on
establishing strategic relationships with high volume, quality equipment
vendors and customers. ILC establishes customized financing programs for its
customers as well as for the end-user customers of equipment vendors and
select financial intermediaries that focus on customers who meet ILC's general
customer profiles.
ILC currently consists of four groups: Major Accounts group, Vendor
Programs group, Brokerage Services and Capital Lending Services.
Major Accounts group focuses on developing creative financing
solutions for its customers. Its customer base ranges from middle market to
Fortune 100 entities. This group generates its business primarily by
establishing master lease agreements with its customers.
Vendor Programs group focuses on establishing formal and informal
programs with equipment vendors including equipment manufacturers, dealers and
distributors to provide point of sale financing for their customers. ILC has
formal and informal programs established with sellers of office equipment such
as personal computers and related peripherals, copy machines, fax machines,
office furniture, telephone and voice mail systems, beverage dispensing
equipment, satellite communication equipment, machine tools and automotive
diagnostic equipment. ILC offers a variety of financing programs including
private label and usage based programs as well as traditional lease financing
programs.
19
<PAGE>
Broker Services focuses on buying transactions originated outside ILC
and establishing strategic relationships with equipment lease brokers.
Generally these relationships are long term and well developed with ILC acting
as the primary and often exclusive funding source for small lessors and
brokers who often have vendor programs of their own. The equipment financed
generally mirrors the rest of the portfolio with special emphasis on medical
and ophthalmic equipment.
Capital Lending Services focuses on providing creative financing
solutions for the retail petroleum industry, primarily at the chain store
level. The Equipment financed typically includes point of sale systems, leak
detection systems, fueling dispensers, and other in-store equipment such as
coolers and shelving.
As of the Cut-Off Date, no more than 10% of the Statistical
Discounted Present Value of the Leases relates to any single vendor, broker or
major account or affiliated group of vendors, brokers or major accounts.
Year 2000 Compliance
Many existing computer programs use only two digits to identify a
year in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous results
by or at the Year 2000.
The Year 2000 issue is being actively addressed by Provident
Financial Group, Inc. ("Provident Financial") and its subsidiaries, including
Transferor and ILC, as it could significantly affect their operations. Many of
the computer systems of Provident Financial and its subsidiaries do not meet
Year 2000 requirements. It is management's estimate that it will cost
approximately $10 million to correct all of the application systems of
Provident Financial and its subsidiaries. As of December 31, 1997, Provident
Financial had expensed $1.5 million for the correction of this problem. The
plan of Provident Financial management calls for all computer programs to be
corrected by the end of the third quarter of 1998, with subsequent testing of
the programs during the fourth quarter of 1998 and all of 1999.
Additionally, Provident Financial is also taking appropriate actions
to receive assurance that its customers, including Lessees, are taking
necessary steps to remedy their Year 2000 issues due to the fact that
noncompliance could adversely effect their ability to repay obligations owing
to Provident Financial and the Transferor.
THE LEASE POOL
The Leases. As of the close of business on August 31, 1998 (the
"Cut-Off Date"), the Notes will be secured with approximately Leases. The
Leases were primarily originated by ILC, although approximately [__%] of the
Statistical Discounted Present Value of the Leases as of the Cut-Off Date were
existing Leases acquired by ILC. The underwriting criteria used in acquiring
these Leases was the same as the underwriting criteria used by ILC in
originating Leases. The weighted average remaining term of the Lease Pool is
months.
The leases are generally in one of two forms: (a) a master lease
agreement containing all of the general terms and conditions of the lease
transaction or transactions, with schedules setting forth the specific terms
of each transaction with that particular Lessee; or (b) a specific lease
agreement form containing all of the terms and conditions of the transaction.
The Leases follow one of several different forms of lease agreement, with
occasional modifications which do not materially affect the basic terms of the
Lease. ILC is willing to finance the full acquisition cost of the related
Equipment under the Leases and generally requires that the first installment
of rent and either the last installment of rent or a security deposit in that
amount be paid at the time a Lease is generated.
The leases are triple-net leases which impose no affirmative
obligations on the lessor, and are non-cancelable by the Lessees. None of the
leases permit the prepayment or early termination of the Lease. Under certain
conditions, however, ILC may consent to the prepayment of the Leases.
Generally, ILC will consent to a prepayment of a Lease where the Lessee is
upgrading the Equipment. All payments under the Leases are absolute,
unconditional obligations of the Lessees without right of offset for any
reason and are required to be made regardless of the condition or suitability
of the related Equipment. Such payments will be made by the Lessees to the
address specified by the Servicer.
Lessees covenant to maintain the Equipment and install it at a place
of business agreed upon with ILC. Lessees may not move the equipment without
the prior consent of ILC. The Leases require the Lessees to assume the
responsibility for payment of all expenses of the related Equipment including,
without limitation, any expenses in connection with the maintenance and repair
of the related Equipment, the payment of any and all premiums for casualty and
liability insurance and the payment of all taxes relating to the equipment.
The Leases also require that the Lessees bear responsibility for any loss,
theft or destruction to the Equipment from any cause whatsoever.
Lessees are required to carry insurance against risks of loss and
damage from any cause in an amount not less than the unpaid balance of the
lease plus the then current fair market value of the Equipment. The Lessees
must name ILC as a loss payee and an additional insured. Lessees are provided
with written information concerning the types of
20
<PAGE>
insurance required under the Lease. In some cases, should the Lessee not
provide satisfactory evidence of its own insurance coverage, ILC is entitled
under the related Lease Contract to receive a risk charge of 0.25% of the
original cost of the Equipment. Such payments will be made by the Lessees to
the Servicer for the account of the Trust.
The Leases permit the assignment thereof by ILC without consent of
the Lessee. The Leases do not permit the assignment, sale, transfer or
sublease of the Equipment or of the Lessee's interest in the Lease without
prior consent of ILC.
Any defaults under a Lease permit a declaration as immediately due
and payable all remaining Lease payments under the Lease and the immediate
return of the Equipment. Generally, any payments received six days after the
scheduled payment date are subject to late charges.
At end of the Lease term, the Lessee must, at its expense, deliver
the equipment to ILC in as good condition as when the lessee received it,
except for normal wear and tear, to any place in the United States so
designated by ILC.
Pursuant to terms of the Lease, the Lessee is required to advise ILC
at least 90 days prior to the end of the initial term of the Lease of its
intent to return or purchase the Equipment. In most cases, failure to provide
such notification results in an automatic renewal of the Lease for a specified
period time until Lessee delivers the Equipment to ILC or exercises one if its
end of lease options.
The Equipment. The Equipment subject to the Leases is purchased by
ILC under direct specifications and instructions from the Lessees. The
Equipment is comprised primarily of office equipment, such as personal
computers, copy machines and facsimile machines, medical and ophthalmic
equipment and retail petroleum industry equipment, such as leak detection
systems, fueling dispensers and other in-store equipment such as coolers and
shelving. As of the Cut-Off Date, the Lease Pool had approximately [__]
equipment types. See "--Distribution of Leases by Equipment Type" for a
listing of the types of Equipment subject to the Leases.
Certain Information with respect to the Leases and Lessees. The
following tables summarize certain information with respect to the Leases and
the Lessees as of the Cut-Off Date.
21
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF LEASES BY STATE
Percentage
of Statistical
Percentage Statistical Discounted Aggregate Percentage
Number of Discounted Present Original of Original
of Number Present Value Value Equipment Equipment
State Leases of Leases of Leases of Leases Cost Cost
----- ------ ---------- ----------- --------------- ---------- -------------
<S> <C> <C> <C> <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.............. [______] 100.00% $[_________] 100.00% $[__________] 100.00%
=======================================================================================================================
</TABLE>
22
<PAGE>
DISTRIBUTION OF LEASES BY LEASE BALANCE
<TABLE>
<CAPTION>
Percentage
of Statistical Percentage
Percentage Statistical Discounted Aggregate of
Statistical Discounted Number of Discounted Present Original Original
Present Value of the of Number Present Value Value Equipment Equipment
Leases Leases of Leases of Leases of Leases Cost Cost
----------------------- ------ ---------- ------------- --------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
$0.01 - 5,000.00
5,000.01 - 10,000.00
10,000.01 - 15,000.00
15,000.01 - 20,000.00
20,000.01 - 25,000.00
25,000.01 - 30,000.00
30,000.01 - 35,000.00
35,000.01 - 40,000.00
40,000.01 - 45,000.00
45,000.01 - 50,000.00
50,000.01 - 60,000.00
60,000.01 - 70,000.00
70,000.01 - 80,000.00
80,000.01 - 90,000.00
90,000.01 - 100,000.00
100,000.01 - 125,000.00
125,000.01 - 150,000.00
150,000.01 - 175,000.00
175,000.01 - 200,000.00
200,000.01 - 300,000.00
300,000.01 - 400,000.00
400,000.01 - 500,000.00
500,000.01 - 600,000.00
600,000.01 - 700,000.00
700,000.01 - 800,000.00
800,000.01 - 900,000.00
900,000.01 - 1,000,000.00
1,000,000.01 - 1,500,000.00
1,500,000.01 - 2,000,000.00
greater than $2,000,000.01
- -----------------------------------------------------------------------------------------------------------------------------------
Total...................... [_____] 100.00% $[_________] 100.00% $[__________] 100.00%
</TABLE>
23
<PAGE>
DISTRIBUTION OF LEASES BY
REMAINING MONTHS TO STATED MATURITY
<TABLE>
<CAPTION>
Percentage of
Statistical Statistical Aggregate Percentage
Percentage Discounted Discounted Original of Original
Remaining Number of Number Present Value Present Value Equipment Equipment
Term of Leases of Leases of Leases of Leases Cost Cost
--------- --------- --------- -------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
1-12
13-24
25-36
37-48
49-60
61-72
73-84
Total....... [____] 100.00% $[____________] 100.00% $[__________] 100.00%
</TABLE>
DISTRIBUTION OF LEASES BY CLASSIFICATION TYPE
<TABLE>
<CAPTION>
Percentage
of
Statistical Statistical
Discounted Discounted Aggregate Percentage
Percentage Present Present Original of Original
Number of Number Value Value Equipment Equipment
Lease Type of Leases of Leases of Leases of Leases Cost Cost
- ---------- --------- ----------- ----------- ----------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Finance
Lease
Operating
Lease
Total...... [_____] 100.00% $[_______] 100.00% $[_______] 100.00%
</TABLE>
DISTRIBUTION OF FINANCE LEASES BY PURCHASE OPTION
<TABLE>
<CAPTION>
Percentage
of
Statistical Statistical
Discounted Discounted Aggregate Percentage
Number Percentage Present Present Original of Original
of of Number Value Value Equipment Equipment
Lease Type Leases of Leases of Leases of Leases Cost Cost
---------- ------ ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Nominal
Buyout
Fair Market
Value
Fixed Purchase
Option
Total.......... [_____] 100.00% $[________] 100.00% $[_________] 100.00%
</TABLE>
24
<PAGE>
DISTRIBUTION OF LEASES BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Percentage
of
Statistical Statistical
Discounted Discounted Aggregate Percentage
Number Percentage Present Present Original of Original
of of Number Value Value Equipment Equipment
Equipment Type Leases of Leases of Leases of Leases Cost Cost
- -------------- ------ ----------- ------------ ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Computer
Printers
Office Furniture & Equipment
Multiple Type
Miscellaneous
Telephone
------ ----------- ------------ ------------ ------------ -----------
Total......................... [_____] 100.00% $[__________] 100.00% $[__________] 100.00%
</TABLE>
Historical Delinquency Information. Telephone contact is normally
initiated once an account is 15 days past due. ILC utilizes a variety of
collection techniques depending on the nature of the delinquency, prior
collection experiences with an account, and the relationship with the vendor
of the Equipment. General delinquency information for equipment leases that are
owned by ILC is set forth below. In late 1997, ILC expanded its collections
department, which expansion has had a favorable impact on the level of
delinquencies.
HISTORICAL DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended June 30, 1998 1997 1996 1995
- -------------------------- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total
Receivables Balance(1) $259,822,008 100% $203,494,406 100% $127,600,911 100% $87,658,275 100%
No. of Delinquent Days
31-60 Days $ 3,254,609 1.25% $8,099,506 3.98% $1,564,823 1.23% $2,938,416 3.35%
61-90 Days 3,298,886 1.27 921,400 0.45 725,769 0.57 0 0.00
91 Days + 3,746,697 1.44 5,652,229 2.78 1,898,759 1.49 2,044,179 2.33
Total Delinquency $10,300,192 3.96% $14,673,135 7.21% $4,189,351 3.29% $4,982,595 5.68%
=========== ==== =========== ==== =========== ===== ========== =====
</TABLE>
- -----------------------------
(1) The Total Receivables Balance and Delinquent Amounts are equal to the
aggregate future rent owing on the leases.
(2) These amounts represent gross lease receivables with the following
adjustments.
(a) Amounts are not considered delinquent if interim rents are not
received.
(b) Amounts are not considered delinquent if the past due amount is less
than 20% of the monthly lease payment.
(c) Amounts are not considered delinquent if the amount is under research
for customer service adjustments.
Historical Default Experience. ILC requires that accounts determined by
it to be 90 days past due are deemed to be "non-earning" and are placed on a
non-accrual status. A write-off is recommended by the collections staff to
senior management of ILC when the collections staff has determined that a
lease is uncollectible. This determination may be made earlier or later than
when the account is determined to be 90 days past due, depending on the
collections staff's assessment of the creditworthiness of the related Lessee.
All write-offs must be approved by the president of ILC. General charge-off
information for leases owned and serviced by ILC is set forth below. Net losses
as a percentage of average receivables outstanding shown below remain at low
levels despite significant net losses under Leases relating to two relationships
totaling approximately $327,870 in 1997 and $441,921 in 1998. Leases generated
under these relationships are not included in the Lease Pool.
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HISTORICAL CHARGE-OFF EXPERIENCE
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
----------------------------------------------------------
June 30, 1998 1997 1996 1995
------------- ------ ------ -----
<S> <C> <C> <C> <C>
Average Receivables Outstanding1........ $215,238,938 $156,363,636 $104,208,522 $64,091,430
Net Losses.............................. $2,066,238 $661,636 $202,878 $92,485
Net Losses as a Percentage of 0.96%2 0.42% 0.19% 0.14%
Average Receivables....................
</TABLE>
- ------------------------------
(1) Equals the arithmetic average of the beginning of the period Receivable
Balance and the end of the period Receivable Balance. The Receivables
Balance is equal to the aggregate future rent owing on the leases.
(2) Annualized
ILC'S UNDERWRITING AND SERVICING PRACTICES
The management of ILC, which includes senior management of Provident,
has established policies, controls, systems and procedures to manage and limit
credit risk. Provident's Audit Group performs reviews to monitor the quality
and consistency of ILC's underwriting practices and to evaluate ILC's systems
of internal controls, adherence to internal controls and management
directives, and the reliability and integrity of financial and management
information systems.
Credit Review. Credit approval limits are established by the board of
directors of ILC. ILC has assigned each credit officer a specific lending
limit based upon experience and seniority. ILC has also assigned credit
approval limits to the president of ILC as well as certain vice presidents and
sales managers. The ILC Loan Committee, which also includes members of senior
management of Provident, must approve all transactions or aggregate exposures
to one customer in excess of $1 million.
Credit data are submitted for credit review in Cincinnati, Ohio.
Credit decisions are based on the credit characteristics of the applicant
including an analysis of the credit reports of the business entity as well as
any guarantor; bank and trade information, the amount, terms and conditions of
the proposed transaction and the type of equipment to be financed. If the
credit request exceeds $75,000 or increases ILC's exposure to a particular
customer to above $75,000, the credit review also includes a review of the
prospect's most recent financial statements. In general, potential lessees
should have been in business for at least two years and have a minimum of two
trade references.
ILC will finance up to the full acquisition cost of Equipment through
a Lease. Lessees are generally required to pay the first installment of rent
and either the last installment of rent or a security deposit in that amount
at the time of origination of the Lease.
Residual Values. ILC has realized residual values which, on average,
have exceeded the residual values booked with respect to such leases. Residual
values are either established or approved by the president or sales managers
of ILC. For leases in which there is a pre-determined buy-out price, the
buy-out price is the residual value recorded on ILC's books. ILC utilizes the
services of its vendors, some of whom are contractually obligated to perform
remarketing services, and other remarketing resources to recover residuals on
returned equipment.
Documentation. Prior to funding a transaction, a complete
documentation package must be completed. Generally, the package includes a
credit application, signed agreement, vendor invoice, initial or advanced
payment, proof of insurance, delivery and acceptance acknowledgments,
certificates of incumbency, appropriate UCC financing statements, and other
documents required as part of the underwriting process. UCC filings are
generally required if the underlying equipment cost exceeds $10,000.
Collections. ILC services all of its leases. Although in a limited
number of cases, it permits a vendor to invoice the Lessee in connection with
vendor programs that entitle a vendor to certain Third Party Amounts, ILC
maintains collection responsibilities. ILC generates invoices approximately 25
days prior to the due date of the payment. A late charge is assessed after the
grace period lapses, typically 6 days after the payment due date. Telephone
contact is normally initiated when an account is 15 days past due. ILC
utilizes a variety of collection techniques depending on the nature of the
delinquency, prior collection experiences with the account, and the
relationship with the vendor of the equipment. All collection activity is
entered into the computerized collection system. Activity notes are input
directly into the collection system in order to facilitate routine collection
activity.
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Charge-off Policy. ILC requires that accounts determined by it to be
90 days past due are deemed "non-earning" and are placed on a non-accrual
status. A write-off is recommended by the collections staff to senior
management of ILC when the collections staff has determined that the lease is
uncollectible. This determination may be made earlier or later than when the
account is determined to be 90 days past due, depending on the collections
staff's assessment of the creditworthiness of the related Lessee. The
rewriting or extension of an account must be approved at a level of management
commensurate with the size of the account. All write-offs must be approved by
the president of ILC.
On-going Credit Review. ILC management monitors the quality and
consistency of its underwriting policies and procedures, evaluates the
inherent risk in the portfolio and monitors the adequacy of credit loss
reserves. ILC's loan committee, reviews all credit exposures in excess of $1
million on an annual basis.
DESCRIPTION OF THE NOTES
The Notes will be issued pursuant to the Indenture (the "Indenture")
between the Trust and Norwest Bank Minnesota, National Association, as
indenture trustee (the "Indenture Trustee"). The following statements with
respect to the Notes summarize the material terms of the Notes and the
Indenture, forms of which are filed as an exhibit to the registration
statement of which this Prospectus forms a part.
General. The Notes represent secured debt obligations of the Trust
and do not represent an interest in or a recourse obligation of the
Transferor, the Servicer or any of their affiliates. The Trust will have no
significant assets other than the Trust Property. Consequently, Noteholders
must rely solely upon the Leases, the interests in the Equipment, and funds on
deposit in the Collection Account, the Reserve Account and the Residual
Account, if any, for payment of principal of and interest on the Notes.
Payments of Interest. Each Note will bear interest from the Issuance
Date at the applicable Interest Rate, calculated on the basis of a year of 360
days comprised of twelve 30-day months, except in the case of the Class A-1
Notes, which interest will be calculated on the basis of a year of 360 days
and the actual number of days in the related Interest Accrual Period, payable
on the 25th day of each month, or if such day is not a business day the next
succeeding business day (each, a "Payment Date"), to the person in whose name
the Note was registered at the close of business on the preceding Record Date.
Principal will be payable as set forth under "Description of Transfer and
Servicing Agreements--Distributions".
Payments of Principal. For each Payment Date, principal payments due
with respect to the Class A Notes and the Class B Notes will be the Class A
Principal Payment (which will be paid sequentially to the Class A-1 Notes and
Class A-2 Notes) and the Class B Principal Payment, respectively. In addition,
to the extent that the Class B Floor exceeds the Class B Target Investor
Principal Amount and/or the Certificate Floor exceeds the Certificate Target
Investor Principal Amount, Additional Principal shall be distributed,
sequentially, as an additional principal payment on the Class A-1 Notes, Class
A-2 Notes and the Class B Notes until the Outstanding Principal Amount of each
Class has been reduced to zero.
Redemption. The Servicer will have the option, subject to certain
conditions, to repurchase the Leases and cause the Trust to redeem all, but not
less than all, of the Notes and thereby cause early repayment of the Notes as of
any Payment Date on which the Discounted Present Value of the Performing Leases
is less than or equal to 5% of the Discounted Present Value of the Leases as of
the Cut-Off Date. Upon the Payment Date fixed for such prepayment, the remaining
unpaid principal amount on the Notes and all accrued and unpaid interest thereon
shall become due and payable.
The Indenture
Modification of Indenture. Without the consent of any Noteholders,
the Trust and the Indenture Trustee may execute a supplemental indenture to
for any of the following purposes: (i) to add to the covenants of the Trust
for the benefit of the Noteholders, or to surrender any right or power
conferred upon the Trust in the Indenture, (ii) to cure any ambiguity, to
correct or supplement any provision of the Indenture that may be inconsistent
with any other provision of the Indenture or (iii) to correct or amplify the
description of any property at any time subject to the security interest
arising under the Indenture, or to better assure, convey and confirm unto the
Indenture Trustee any property subject or required to be subjected to the
security interest under the Indenture; in any case so long as such action will
not adversely affect the interests of the Noteholders in any respect.
Additionally, the Trust and the Indenture Trustee, without the consent of any
Noteholders, may execute a supplemental indenture to conform the Indenture to
the description thereof and of the Securities contained in this Prospectus.
The Indenture also permits the Trust and the Indenture Trustee, with
the consent of Holders of not less than 662/3% in aggregate principal amount
of the Notes then outstanding under the Indenture, to execute a supplemental
indenture for the purpose of adding or changing any provisions of the
Indenture or modifying the rights of the
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Noteholders in any manner; provided, that no such modification may be made which
would (i) change the due date of any installment of principal of or interest on
any Note or reduce the principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto or change any place of
payment where or the coin or currency in which any Note or any interest thereon
is payable; (ii) impair the right to institute suit for the enforcement of
certain provisions of the Indenture regarding payment; (iii) reduce the
percentage of the aggregate amount of the outstanding Notes, the consent of the
Holders of which is required for any such supplemental indenture or the consent
of the Holders of which is required for any waiver of compliance with certain
provisions of the Indenture or of certain defaults thereunder and their
consequences as provided for in such Indenture, or the consent of the Holders of
which is required to take any action under the Indenture or to instruct the
Indenture Trustee to take (or refrain from taking) any action; (iv) modify or
alter the provisions of the Indenture regarding the voting of Notes held by the
Trust, the Transferor, the Servicer or an affiliate of any of them; (v) decrease
the percentage of the aggregate principal amount of the Notes required to amend
the sections of the Indenture which specify the applicable percentage of
aggregate principal amount of the Notes necessary to amend the Indenture or
certain other related agreements; or (vi) permit the creation of any lien
ranking prior to or on a parity with the lien created under the Indenture with
respect to any of the collateral for the Notes or, except as otherwise permitted
or contemplated in such Indenture, terminate the lien of such Indenture on any
such collateral or deprive the Holder of any Note of the security afforded by
the lien of such Indenture.
Events of Default; Rights upon Event of Default. "Events of Default"
under the Indenture will consist of: (i) a default in the payment of any
principal of or interest on any Note when the same becomes due and payable;
(ii) a default in the observance or performance of any covenant or agreement
of the Trust made in the Indenture and the continuation of any such default
for a period of 30 days after notice thereof is given to the Trust by the
Indenture Trustee or to the Trust and the Indenture Trustee by the Holders of
at least 25% in principal amount of the Notes then outstanding; (iii) any
representation or warranty made by the Trust in the Indenture or in any
certificate delivered pursuant thereto or in connection therewith having been
incorrect in a material respect as of the time made, and such breach not
having been cured within 30 days after notice thereof is given to the Trust by
the Indenture Trustee or to the Trust and the Indenture Trustee by the Holders
of at least 25% in principal amount of the Notes then outstanding or (iv)
certain events of bankruptcy, insolvency, receivership or liquidation of the
Trust. However, the amount of principal required to be paid to Noteholders
under the Indenture on any Payment Date prior to the final scheduled Payment
Date of any class of Note will be limited to amounts available therefor in
accordance with the Priority of Payments. Therefore, the failure to pay
principal on a class of Notes will not result in the occurrence of an Event of
Default until the final scheduled Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to
the Notes, the Indenture Trustee may, or at the direction of Holders of 662/3%
of the principal amount of the Notes then outstanding shall, declare the
principal of the Notes to be immediately due and payable. Such declaration may,
under certain circumstances, be rescinded by the Holders of 662/3% of the
principal amount of the Notes then outstanding.
If the Notes have been declared due and payable following an Event of
Default with respect thereto, the Indenture Trustee may institute proceedings
to collect amounts due or foreclose on Trust property, exercise remedies as a
secured party, sell the Lease Receivables or elect to have the Trust maintain
possession of such Lease Receivables and continue to apply collections on such
Lease Receivables as if there had been no declaration of acceleration.
However, the Indenture Trustee is prohibited from selling the Lease
Receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days or more in the payment of any
interest on any Note, unless (i) the Holders of all outstanding Notes consent
to such sale, (ii) the proceeds of such sale are sufficient to pay in full the
principal of and the accrued interest on the outstanding Notes at the date of
such sale or (iii) the Indenture Trustee determines that the proceeds of Lease
Receivables would not be sufficient on an ongoing basis to make all payments
on the Notes as such payments would have become due if such obligations had
not been declared due and payable, and the Indenture Trustee obtains the
consent of the Holders of 662/3% of the aggregate outstanding amount of the
Notes.
Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee, if an Event of Default occurs and is continuing with
respect to the Notes, 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 might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain limitations
contained in the Indenture, the Holders of 662/3% of the outstanding principal
amount of the Notes will have the right to direct the time, method and place
of conducting any proceeding or any remedy available to the Indenture Trustee,
and the Holders of 662/3% of the principal amount of the Notes then
outstanding may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal or interest or a default in
respect of a covenant or provision of the Indenture that cannot be modified
without the waiver or consent of all the Holders of such outstanding Notes.
No Holder of a Note will have the right to institute any proceeding
with respect to the Indenture, unless (i) such Holder previously has given to
the Indenture Trustee written notice of a continuing Event of Default, (ii)
the
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Holders of not less than 25% in principal amount of the outstanding Notes have
made written request to the Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such Holder or Holders have offered the
Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for 60
days failed to institute such proceeding 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 662/3% of the principal amount of the Notes.
In addition, the Indenture Trustee and the Noteholders, by accepting
the Notes, will covenant that they will not at any time institute against the
Trust or the Transferor any bankruptcy, reorganization or other proceeding
under any Federal or state bankruptcy or similar law.
Neither the Trustee nor the Indenture Trustee in its individual
capacity, nor any Holder of a Certificate representing an ownership interest
in such Trust nor any of their respective owners, beneficiaries, agents,
officers, directors, employees, affiliates, successors or assigns will, in the
absence of an express agreement to the contrary, be personally liable for the
payment of the principal of or interest on the Notes or for the agreements of
such Trust contained in the Indenture.
Certain Covenants. The Indenture will provide that the Trust may not
consolidate with or merge into any other entity, unless (i) the entity formed
by or surviving such consolidation or merger is organized under the laws of
the United States or any state, (ii) such entity expressly assumes the Trust's
obligation to make due and punctual payments upon the Notes and the
performance or observance of every agreement and covenant of such Trust under
the Indenture, (iii) no Event of Default shall have occurred and be continuing
immediately after such merger or consolidation, (iv) the Trust has been
advised that the rating of the Notes and the Certificates then in effect would
not be reduced or withdrawn by the Rating Agencies as a result of such merger
or consolidation , (v) any action necessary to maintain the security interest
created under the Indenture shall have been taken and (vi) the Trust has
received an opinion of counsel to the effect that all conditions precedent to
such consolidation or merger required under the Indenture have been satisfied.
The Trust will not, among other things, (i) except as expressly
permitted by the Indenture, the applicable Transfer and Servicing Agreements
or certain related documents with respect to such Trust (collectively, the
"Related Documents"), sell, transfer, exchange or otherwise dispose of any of
the assets of the Trust, (ii) claim any credit on or make any deduction from
the principal and interest payable in respect of the Notes (other than amounts
withheld under the Code or applicable state law) or assert any claim against
any present or former holder of the Notes because of the payment of taxes
levied or assessed upon the Trust, (iii) except as contemplated by the Related
Documents, dissolve or liquidate in whole or in part, (iv) permit the validity
or effectiveness of the Indenture to be impaired or permit any person to be
released from any covenants or obligations with respect to the Notes under the
Indenture except as may be expressly permitted thereby or (v) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance to be
created on or extend to or otherwise arise upon or burden the assets of the
Trust or any part thereof, or any interest therein or the proceeds thereof.
The Trust may not engage in any activity other than as specified
under "Prospectus Summery -- the Trust". The Trust will not incur, assume or
guarantee any indebtedness other than indebtedness incurred pursuant to the
Notes and the Indenture or otherwise in accordance with the Related Documents.
Annual Compliance Statement. The Trust will be required to file
annually with the Indenture Trustee a written statement as to the fulfillment
of its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for the
Trust will be required to mail each year to all related Noteholders a brief
report relating to its eligibility and qualification to continue as Indenture
Trustee under the Indenture, any amounts advanced by it under the Indenture,
the amount, interest rate and maturity date of certain indebtedness owing by
the Trust to the Indenture Trustee in its individual capacity, the property
and funds physically held by the Indenture Trustee as such and any action
taken by it that materially affects the Notes and that has not been previously
reported.
Satisfaction and Discharge of Indenture. The Indenture will be
discharged with respect to the collateral securing the Notes upon the delivery
to the Indenture Trustee for cancellation of all Notes or, with certain
limitations, upon deposit with the Indenture Trustee of funds sufficient for
the payment in full of all Notes.
The Indenture Trustee. Norwest Bank Minnesota, National Association,
will be the Indenture Trustee under the Indenture. Norwest Bank Minnesota,
National Association, is a [_________] banking corporation and its corporate
trust offices are located at [______________]. In the ordinary course of its
business, the Indenture Trustee and its affiliates have engaged and may in the
future engage in commercial banking or financial advisory transactions with
ILC, the Transferor and their affiliates.
The Indenture Trustee may resign at any time, in which event the
Trust will be obligated to appoint a successor indenture trustee. The Trust
may also remove the Indenture Trustee if the Indenture Trustee ceases to be
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eligible to continue as such under the Indenture or if the Indenture Trustee
becomes insolvent. In such circumstances, the Trust, with the consent of the
Holders of at least 66 2/3% of the aggregate principal amount of the Notes,
will be obligated to appoint a successor indenture trustee. The Trust shall
give notice of any resignation or removal of an Indenture Trustee and the
appointment of any successor Indenture Trustee to the Holders. The Indenture
Trustee may also be removed by the written request of the Holders of a
majority of the outstanding principal amount of the Notes delivered to the
Indenture Trustee and the Trust. Any resignation or removal of the Indenture
Trustee and appointment of a successor indenture trustee for the Notes does
not become effective until acceptance of the appointment by the successor
indenture trustee for the Notes.
Pursuant to the Trust Indenture Act of 1939, as amended, the Indenture
Trustee may be deemed to have a conflict of interest and be required to resign
as trustee for either the Class A Notes or the Class B Notes if a default occurs
under the Indenture. The Indenture will provide for a successor trustee to be
appointed for one or both Classes of Notes in these circumstances, so that there
will be separate trustees for the Class A Notes and the Class B Notes. In these
circumstances, the Class A Noteholders and Class B Noteholders will continue to
vote as a single group. So long as any amounts remain unpaid with respect to the
Class A Notes, only the trustee for the Class A Noteholders will have the right
to exercise remedies under the Indenture (but the Class B Noteholders will be
entitled to their share of any proceeds of enforcement, subject to the
subordination of the Class B Notes to the Class A Notes as described herein).
Upon repayment of the Class A Notes in full, all rights to exercise remedies
under the Indenture will transfer to the trustee for the Class B Notes. Any
resignation of the original Indenture Trustee as described above with respect to
any class of Notes will become effective only upon the appointment of a
successor trustee for such class of Notes and such successor's acceptance of
such appointment.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Trust Agreement (the
"Trust Agreement") between the Trust and First Union Trust Company, National
Association, as trustee (the "Trustee"). The Certificates are not offered
hereby and will be offered in a private offering concurrently with the
offering of the Notes. The following statements with respect to the
Certificates summarize the material terms of the Trust Agreement, the form of
which is filed as an exhibit to the registration statement of which this
Prospectus forms a part.
The Certificates represent beneficial interests in the Trust and do
not represent an interest in or recourse obligation of ILC, the Transferor or
any of their respective affiliates. Each Certificate will bear interest from
the Issuance Date at the rate of [____]% per annum (the "Certificate Rate ")
calculated on the basis of a year of 360 days comprised of twelve 30-day
months, payable on each Payment Date. No distributions of principal on the
Certificates will be made until the Class A-1 Notes have been paid in full.
Thereafter on each Payment Date, the Certificateholders will be entitled to
receive payments of principal in an amount equal to the Certificate Principal
Payment after payment of principal on the Notes. Such payment will be made
only to the extent of funds available therefor in accordance with the Priority
of Payments.
CERTAIN INFORMATION REGARDING THE NOTES
Book-Entry Registration. Note Owners may hold their Notes through DTC
if they are participants of such system, or indirectly through organizations
which are participants in such system. Cede, as nominee for DTC, will hold the
global Class A Note or Notes and the global Class B Note or Notes.
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 securities. 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. Note Owners 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, Note Owners will receive all distributions of
principal and interest on the Notes through DTC and its Participants. Under a
book-entry format, Note Owners may receive payments after the related Payment
Date 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
Note Owners. It is anticipated that the only Class A Noteholder and Class B
Noteholder will be Cede, as nominee of DTC, and that Note Owners of the Class
A Notes or Class B Notes, respectively, will only be permitted to exercise the
rights of Class A Noteholders
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or Class B 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 Note Owners 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 Note
Owners 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 that it will take any action permitted to
be taken by a Class A Noteholder or Class B Noteholder under the Indenture
only at the direction of one or more Participants to whose account with DTC
the Class A Notes or Class B Notes, as applicable, are credited. Additionally,
DTC has advised the Trust that it may take conflicting actions with respect to
other undivided interests to the extent that such actions are taken on behalf
of Participants whose holdings include such undivided interests.
Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of Notes among its participants, DTC is under no
obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
Definitive Notes. The Notes will be issued in fully registered,
authenticated form to Note Owners or their nominees ("Definitive Notes"),
rather than to DTC or its nominee, only if (a) the Transferor advises the
Indenture Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as Depository with respect to the
Notes, and the Indenture Trustee or the Transferor is unable to locate a
qualified successor , (b) the Transferor at its option elects to terminate the
book-entry system through DTC or (c) after the occurrence of a Servicer Event
of Default, Note Owners of any class of Notes evidencing not less than a
majority of the outstanding principal amount of such class of Notes advise the
Indenture Trustee and DTC that the continuation of the book-entry system
through DTC with respect to such class of Notes is no longer in the best
interests of the Note Owners of such class of Notes.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Indenture Trustee is required to notify all
applicable Note Owners through DTC of the availability of Definitive Notes for
such class. Upon surrender by DTC of the Definitive Note representing the
Notes and instructions for reregistration, the Indenture Trustee will issue
such Definitive Notes and thereafter the Indenture Trustee will recognize the
holders of such Definitive Notes as Holders under the Indenture. 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 as of each
Payment Date.
Additionally, upon the occurrence of any such event described above
with respect to any class of Notes, distribution of principal of and interest
on such Notes will be made by the Indenture Trustee directly to the related
Holders in accordance with the procedures set forth herein and in the
Indenture. Distributions will be made by wire transfer of federal funds to the
account and number specified in the register under the Indenture on the
related Record Date, or if no such account or number is so specified, then by
check, mailed to the address of such Holder as it appears on the register
under the Indenture. Upon at least 10 days' notice to such Holders, however,
the final payment on any Note (whether the Definitive Notes or the Notes
registered in the name of Cede) 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 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. 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.
List of Noteholders. Three or more Holders of the Notes or one or
more Holders of the Notes evidencing at least 25% of the aggregate outstanding
principal balance of the Notes may, by written request to the Indenture
Trustee, obtain access to the list of all Noteholders maintained by the
Indenture Trustee for the purpose of communicating with other Noteholders with
respect to their rights under the Indenture or under the Notes. The Indenture
Trustee may elect not to afford the requesting Noteholders access to the list
of Noteholders if it agrees to mail the desired communication or proxy, on
behalf of and at the expense of the requesting Noteholders, to all
Noteholders.
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Reports to Noteholders. On or prior to each Payment Date, the
Servicer will prepare and provide to the Indenture Trustee a statement to be
delivered to the Noteholders within five business days of such Payment Date.
Each such statement to be delivered to the Noteholders will include the
following information as to the Notes with respect to such Payment Date or the
period since the previous Payment Date, as applicable:
(i) the amount of the distribution allocable to principal of each class
of Securities;
(ii) the amount of the distribution allocable to interest on or with
respect to each class of Securities;
(iii) the Discounted Present Value of the Performing Leases as of the
close of business on the last day of the preceding Due Period;
(iv) the aggregate outstanding principal balance of each class of Notes
and the Certificate Balance, each after giving effect to all payments
reported under clause (i) above on such date;
(v) the amount of the Servicing Fee paid to the Servicer for the
related Due Period;
(vi) the amount of the aggregate Residual Realizations, if any, for
such Due Period;
(vii) the aggregate purchase amounts for Leases, if any, that were
repurchased in such Due Period; and
(viii) the balance of the Reserve Account (if any) and the Residual
Account (if any) on such Payment Date, after giving effect to changes
therein on such Payment Date.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (vi)
with respect to the Notes or the Certificates will be expressed as a dollar
amount per $1,000 of the initial principal balance of the Notes or the
Certificates, as applicable.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of the Trust, the Trustee will
mail to each person who at any time during such calendar year has been a
Noteholder with respect to the Trust and received any payment thereon, a
statement containing certain information for the purposes of such Noteholder's
preparation of Federal income tax returns. See "U.S. Federal Tax
Considerations".
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes the material terms of the Pooling and
Servicing Agreement, the Purchase Agreement, the Management Agreement, and the
Trust Agreement, collectively, the "Transfer and Servicing Agreements"). Forms
of the Transfer and Servicing Agreements have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part.
Sale and Assignment of Leases
On the Issuance Date, ILC will sell and assign to the Transferor,
without recourse, its entire interest in the Leases, and contribute its
security or ownership interests in the Equipment, pursuant to the Purchase
Agreement. The Transferor will transfer and assign to the Trust, without
recourse, its entire interest in such Leases and security and ownership
interests in the Equipment, pursuant to the Pooling and Servicing Agreement.
The Trustee will, concurrently with such transfer and assignment, execute and
deliver the Notes and Certificates.
In the Purchase Agreement, ILC will represent and warrant to the
Transferor, and pursuant to the Pooling and Servicing Agreement, the Transferor
will represent and warrant to the Trust, among other things, that (i) upon
payment of the applicable consideration, the Transferor, in the case of the
Purchase Agreement, and the Trust, in the case of the Pooling and Servicing
Agreement, (A) will be the legal owner of the Leases (including the right to
receive all payments due or to become due thereunder), (B) will have good title
to each item of Equipment subject to any Lease other than a Nominal Buy-Out
Lease, and (c) will have a perfected security interest in each item of Equipment
with a purchase price in excess of $10,000 subject to a Nominal Buy-Out Lease,
(ii) on the Issuance Date, the Leases and the interest in the Equipment
transferred will be free and clear of all liens other than the rights of each
Lessee under its Lease is a party and other than any lien created by the
Transfer and Servicing Agreements, and there are no delinquent taxes or other
outstanding charges affecting the Equipment which are or may give rise to liens
prior to, or on parity with, the liens created by the Transfer and Servicing
Agreements and (iii) each Lease requires the Lessee thereunder to maintain
insurance on the Equipment subject thereto in an amount at least equal to the
fair market value thereof.
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If (i) any of such representations and warranties made by the
Transferor or ILC proves at any time to have been inaccurate in any material
respect as of the Issuance Date , (ii) certain adjustments or modifications
are made to any Lease by the Servicer or (iii) any Lease is terminated in
whole or in part by a Lessee, or any amounts due with respect to any Lease
shall be reduced or impaired, as a result of any action or inaction by the
Transferor or ILC (other than any such action or inaction of ILC, when acting
as Servicer, in connection with the enforcement of any Lease (other than an
Early Lease Termination) in a manner consistent with the provisions of the
Pooling and Servicing Agreement) or any claim by any Lessee against the
Transferor or ILC and, in any case referred to in (i) or (iii), the event or
condition causing such inaccuracy, termination, reduction, impairment or claim
shall not have been cured or corrected within 30 days after the earlier of the
date on which the Transferor is given notice thereof by the Transferor or the
Trustee or the date on which the Transferor otherwise first has notice
thereof, the Transferor (or the Servicer, in the case of clause (ii)) will
repurchase such Lease (a " Predecessor Lease") and the Equipment subject
thereto by depositing into the Collection Account, not later than the
Determination Date (A) next following the expiration of such 30-day period, in
the case of events referred to in (i) or (iii), and (B) next following the
date of such event with respect to events referred to in (ii), an amount equal
to the Discounted Present Value of such Lease plus any amounts previously due
and unpaid thereon. Any inaccuracy in any representation or warranty with
respect to (i) the priority of the lien of the Indenture with respect to any
Lease or (ii) the amount (if less than represented) of the Lease Payments,
Casualty Payments or Termination Payments under any Lease is deemed to be
material. The obligation of the Transferor to repurchase any Leases under
clause (a) relating to representations and warranties made by ILC in the
Purchase Agreement is subject to ILC's repurchase of such Leases. The
repurchase obligation constitutes the sole remedy available to the
Noteholders, the Indenture Trustee, the Certificateholders and the Trustee in
respect of the Trust for any such uncured breach.
If the Transferor or the Servicer is required to repurchase any
Predecessor Lease under clause (i) or (ii) of the preceding paragraph, in lieu
of such repurchase, the Transferor may substitute one or more leases having
similar characteristics (each, a "Substitute Lease") for Leases subject to
repurchase in accordance with the preceding paragraph, so long as the
following conditions are met: (i) after giving effect to such substitution,
the aggregate Booked Residual Value (without duplication) of all Substitute
Leases will not be less than 90% of the aggregate Booked Residual Value of all
Predecessor Leases since the Issuance Date, (ii) after giving effect to such
adjustment or substitution, either the final payment on such Substitute Lease
must be on or prior to [stated maturity month/year] or, to the extent the
final payment is due later, only scheduled payments due on or prior to such
date are included in the Discounted Present Value of such Lease for the
purpose of making any calculation under the Pooling and Servicing Agreement,
(iii) after giving effect to such substitution, the aggregate amount of Lease
Payments through the term of the Leases will not be more than 5% less than the
aggregate scheduled Lease Payments of the Leases prior to such substitution,
and (iv) after giving effect to such substitution, the Discounted Present
Value of the Performing Leases is not less than the Discounted Present Value
of the Performing Leases prior to such substitution.
No substitutions will be permitted if after giving effect to such
substitution, the aggregate Discounted Present Value of all Predecessor Leases
would exceed 10% of the Discounted Present Value of the Leases as of the
Cut-Off Date. All Substitute Leases will be originated or acquired using the
same credit criteria as the initial Leases.
Although the limitations set forth above are intended to minimize the
probability that substitutions would result in losses or delays in payments to
the Noteholders, no assurances can be given to this effect. If and when the
aggregate Discounted Present Value of all Leases for which a Substitute Lease
has been substituted equals 10% of the Discounted Present Value of the Leases
as of the Cut-Off Date, the Servicer, on behalf of the Trust, will file an
interim report on Form 8-K updating the distribution tables set forth under
"The Lease Pool" herein.
Pursuant to the Pooling and Servicing Agreement, to assure uniform
quality in servicing the Leases and to reduce administrative costs, the
Transferor and the Trust will designate the Servicer as custodian to maintain
possession, as the Trust's agent, of the Leases and any other documents
relating to the Leases. The Servicer's accounting records will reflect the
transfer and assignment of the Leases to the Trust, and Uniform Commercial
Code ("UCC") financing statements reflecting such transfer and assignment will
be filed.
Pursuant to the Pooling and Servicing Agreement, the Servicer will
have the right (but no obligation) to purchase all of the remaining Leases
held by the Trust after the Discounted Present Value of the Performing Leases
is less than or equal to 5% of the Discounted Present Value of the Leases as
of the Cut-Off Date.
Accounts
Collection Account. The Servicer will establish and maintain with the
Indenture Trustee an account, in the name of the Indenture Trustee on behalf
of the Noteholders and Certificateholders, into which all Lease Payments,
Casualty Payments, Termination Payments, Residual Realizations, Payaheads and
recoveries from Non-Performing Leases, net of amounts retained by the
Servicer, in each case on or in respect of each Lease in the Lease Pool
("Trust Collections") will be deposited (the "Collection Account").
"Payaheads" mean early payments by or on behalf of Lessees that do not
constitute scheduled payments, full prepayments or partial prepayments, in any
case in accordance with the Servicer's customary practices. Until such time as
all or a portion of any Payaheads fall due and are released
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from the Collection Account, they will not constitute Available Funds and will
not be available for distribution to the Noteholders. The Servicer will
establish and maintain with the Indenture Trustee an account, in the name of the
Indenture Trustee on behalf of such Noteholders, into which amounts released
from the Collection Account for payment to the Noteholders will be deposited and
from which all distributions to the Noteholders will be made (the "Note
Distribution Account"). The Servicer will establish and maintain with the
Trustee an account, in the name of the Trustee on behalf of the
Certificateholders, into which amounts released from the Collection Account for
distribution to the Certificateholders will be deposited and from which all
distributions to the Certificateholders will be made (the "Certificate
Distribution Account").
On the business day preceding each Payment Date, the Indenture
Trustee will release Payaheads from the Collection Account (x) with respect to
each Lease for which the payments made by or on behalf of the Obligor for the
related Due Period are less than the scheduled payment for the related Due
Period, the amount of Payaheads, if any, made with respect to such Lease
which, when added to the amount of such payments, is equal to the amount of
such scheduled payment, (y) with respect to each Lease for which prepayments
insufficient to prepay the Lease in full have been made by or on behalf of the
Obligor for the related Due Period, the amount of Payaheads, if any, made with
respect to such Lease which, when added to the amount of such prepayments, is
equal to an amount sufficient to prepay such Lease in full, and (z) the amount
of all Payaheads, if any, made with respect to any Lease repurchased by
Transferor or Servicer.
Reserve Account. The Servicer will establish and maintain with the
Indenture Trustee an Eligible Account (the "Reserve Account"). On the Closing
Date, the Trust will make an initial deposit in an amount equal to 1% of the
Discounted Present Value of the Leases as of the Cut-Off Date into the Reserve
Account. If Available Funds (exclusive of amounts on deposit in the Reserve
Account and the Residual Account) are insufficient to pay the amounts owing
the Servicer, Interest Payments on the Notes and the Class A Principal
Payment, the Class B Principal Payment and the Certificate Principal Payment
(such payments, the "Required Payments" and such shortfall, an "Available
Funds Shortfall"), the Indenture Trustee will withdraw from the Reserve
Account an amount equal to the lesser of the funds on deposit in the Reserve
Account (the "Available Reserve Amount") and such deficiency. In addition, on
each Payment Date, Available Funds remaining after the payment of the Required
Payments will be deposited into the Reserve Account to the extent that the
Required Reserve Amount exceeds the Available Reserve Amount. The "Required
Reserve Amount" equals the lesser of (a) 1% of the Discounted Present Value of
the Leases as of the Cut-Off Date and (b) the Outstanding Principal Amount of
the Notes and the Certificate Balance. Any amounts on deposit in the Reserve
Account in excess of the Required Reserve Amount after giving effect to all
other transactions on such Payment Date will be released to the Transferor.
Residual Account. The Servicer will establish and maintain with the
Indenture Trustee an Eligible Account (the "Residual Account"). Upon the
occurrence of a Residual Event, Residual Realizations will be deposited in the
Residual Account up to the Residual Amount Cap in accordance with the
application of funds described herein under "Distributions on the Notes". Funds
on deposit in the Residual Account will be available to cover shortfalls in the
amount available to pay the amounts owing the Servicer and to make interest and
principal payments on the Notes and Certificates. Following the termination of a
Residual Event, amounts on deposit in the Residual Account will be deposited
into the Reserve Account to the extent that the amount on deposit in the Reserve
Account is less than the Required Reserve Amount and thereafter will be
disbursed to the Transferor.
A "Residual Event" means the occurrence of one or more of the
following: (a) ILC is no longer the Servicer, (b) with respect to the
[month/year] Due Period and each Due Period thereafter, the Three-Month
Servicer Realization Percentage calculated on any Determination Date is less
than [___]%; or (c) with respect to the [month/year] Due Period and each Due
Period thereafter, the Three-Month Delinquency Percentage is greater than
[__]%; provided, that the Residual Event referred to in clause (b) may be
cured if the Three-Month Servicer Realization Percentage is greater than or
equal to [___]% for three consecutive months thereafter and the Residual Event
referenced in clause (c) may be cured if the Three-Month Delinquency
Percentage for any Due Period thereafter is less than or equal to [___]%.
A "Delinquent Lease" means, as of any Determination Date, any Lease
(other than a Lease which became a Non-Performing Lease prior to such
Determination Date) with respect to which the Lessee has not paid all Lease
Payments then due.
The "Monthly Delinquency Percentage" means, with respect to any
Payment Date, the percentage equivalent of a fraction (a) the numerator of
which is the Discounted Present Value of the Leases which are Delinquent
Leases determined as of the related Determination Date and (b) the denominator
of which is the Discounted Present Value of the Performing Leases as of the
related Determination Date.
The "Monthly Servicer Realization Percentage" means, with respect to
any Payment Date, the percentage equivalent of a fraction (a) the numerator of
which is the aggregate amount of Servicer Residual Realizations collected
during the related Due Period and (b) the denominator of which is equal to the
aggregate Servicer Booked Residual Values with respect to the Leases for which
Servicer Residual Realizations have been collected in respect of such related
Due Period.
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The "Servicer Residual Realizations" means the aggregate cash flows
realized by ILC from the sale (including pursuant to a Lessee's purchase
option) or releasing of any Equipment following the termination of the related
Lease.
The "Servicer Booked Residual Value" means the estimated residual
value of the Equipment recorded on the books of ILC.
The "Three-Month Delinquency Percentage" means, with respect to any
Payment Date, the percentage equivalent of fraction, (a) the numerator of
which is the sum of the Monthly Delinquency Percentage for such Payment Date
and the two immediately preceding Payment Dates and (b) the denominator of
which is three.
The "Three-Month Servicer Realization Percentage" means, with respect
to any Payment Date, the percentage equivalent of a fraction, (a) the
numerator of which is the sum of the Monthly Servicer Realization Percentage
for such Payment Date and the two immediately preceding Payment Dates and (b)
the denominator of which is three.
Funds in the Collection Account, the Note Distribution Account, the
Certificate Distribution Account, the Reserve Account, the Residual Account
and the Payahead Account (collectively, the "Trust Accounts") will be invested
as provided in the Pooling and Servicing Agreement in Eligible Investments.
"Eligible Investments" are limited to the following types of investments: (a)
direct obligations of, obligations fully guaranteed as to timely payment by,
the United States of America; (b) (i) demand deposits, time deposits or
certificates of deposit of Provident and (ii) demand deposits, time deposits
or certificates of deposit of any depository institution or trust company
incorporated under the laws of the United States of America or any state
thereof (or any domestic branch of a foreign bank) and subject to supervision
and examination by Federal or State banking or depository institution
authorities; provided, however, that in the case of clause (ii) above, at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term senior unsecured debt obligations (other
than such obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) thereof will have a
credit rating from each of the Rating Agencies in the highest investment
category granted thereby; (c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a rating from each of
the Rating Agencies in the highest investment category granted thereby; (d) to
the extent described below, investments in money market funds having a rating
from each of the Rating Agencies in the highest investment category granted
thereby (including funds for which the Indenture Trustee, the Trustee,
Transferor or any of their respective affiliates is investment manager or
advisor); (e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above; (f) repurchase obligations with
respect to any security that is a direct obligation of, or fully guaranteed as
to timely payment 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 (b); and (g) any other investment permitted by each of the Rating
Agencies as set forth in writing delivered to the Indenture Trustee; provided
that in the case of clauses (d) and (g) such investments will be made only so
long as making such investments will not require the Trust to register as an
investment company, in accordance with the Investment Company Act of 1940, as
amended.
Eligible Investments are limited to obligations or securities that
mature on or before the business day preceding the date of the next
distribution. Investment earnings on funds deposited in the Trust Accounts,
net of losses and investment expenses (collectively, "Investment Earnings"),
shall be deposited in the applicable Collection Account on each Payment Date
and shall be treated as collections of interest on the Leases, except that
Investment Earnings attributable to security deposits of Lessees on deposit in
the Collection Account ("Security Deposit Earnings") shall be paid to ILC.
The Trust Accounts will be maintained as Eligible Accounts. "Eligible
Account" means either (a) a segregated account with an Eligible Institution or
any other segregated account the deposit of funds in which has been approved
by the Rating Agencies or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution have a credit rating from
each Rating Agency in one of its generic rating categories which signifies
investment grade. "Eligible Institution" means either (a) Provident, (b) the
corporate trust department of the Indenture Trustee or the Trustee, as
applicable, or (c) 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) which has either (A) a
long-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies or (B) a short-term unsecured debt rating or certificate
of deposit rating acceptable to the Rating Agencies and (ii) whose deposits
are insured by the FDIC.
Servicing Procedures. The Servicer will take, or cause to be taken, all
actions as may be necessary or advisable to service, administer and collect each
Lease from time to time, all in accordance with (i) customary and prudent
servicing procedures for leases of a similar type, (ii) all applicable laws,
rules and regulations, and (iii)
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without limiting the foregoing, no less a standard of care than that which it
applies to leases and equipment of a similar type it services for its own
account.
The Servicer may enter into modifications, waivers and amendment to
the terms of any Lease except for modifications, waivers or amendments that
(i) are inconsistent with the standards set forth above, (ii) would reduce the
amount or extend the time for payment of any Lease Payment, Casualty Payment
or Termination Payment (other than to permit termination of a Lease which does
not otherwise provide for termination by requiring the payment, in lieu of all
future Lease Payments with respect to the Lease or the Equipment subject
thereto, of an amount which is at least equal to the Discounted Present Value
of the Lease as of the next following Payment Date plus any delinquent
amounts) or the Lessee's absolute and unconditional obligation to make payment
of the same, (iii) would reduce or adversely affect the Lessee's obligation to
maintain, service, insure and care for the Equipment or would permit the
alteration of any item of Equipment in any way which could adversely affect is
present or future value or (iv) otherwise, individually or in connection with
all other adjustments and modifications made pursuant to this sentence, could
adversely affect the interests of any of the Transferor, the Trustee, the
Indenture Trustee or the Securityholders.
Notwithstanding the foregoing, the Servicer may , without obtaining
the prior written consent of the Trust, the Indenture Trustee, or any
Noteholder or Certificateholder, enter into and grant modifications waivers or
amendments in addition to those referred to in the preceding paragraph if such
Lease is repurchased by Servicer in accordance with the Pooling and Servicing
Agreement . See "--Sale and Assignment of Notes".
If ILC allows an Early Lease Termination or other modification of the
lease in connection with a partial buy-out, the amount prepaid by the lessor
must be at least equal to the Discounted Present Value of the terminated Lease
(or, in the case of a partial buy-out, the portion thereof related to such
buy-out), plus any delinquent payments. See "The Lease Pool--The Leases".
Substitute Leases will be originated or purchased using the same
credit criteria as the initial Leases. To the extent material, information
with respect to such Substitute Leases will be included in periodic reports
filed with the Commission as are required under the Exchange Act.
Servicing Compensation. The Servicer will be entitled to receive the
"Servicing Fee", which will be paid monthly on the Payment Date solely from
funds available therefor in accordance with the Priority of Payments and which
will be calculated by multiplying one-twelfth of 0.75% times the lesser of (i)
the sum of the aggregate of the Outstanding Principal Amount of the Notes and
the Certificate Balance, each calculated as of the preceding Payment Date
after giving effect to all payments made on such Payment Date and (ii) the
Discounted Present Value of the Performing Leases calculated as of the related
Determination Date. Unless a Trust Acceleration Event has occurred and is
continuing while ILC, the Transferor or one of their affiliates is acting as
Servicer, the Servicing Fee will be paid prior to any payments on the Notes.
The Servicing Fee in respect of a Due Period (together with any portion of the
Servicing Fee that remains unpaid from prior Payment Dates) may be paid at the
beginning of such Due Period out of collections for such Due Period. The
Servicing Fee will be paid to the Servicer for servicing the Lease Pool and
for certain administrative expenses in connection with the Securities,
including Trustee and Indenture Trustee fees and expenses and payment of the
Management Fee.
The Servicer will also collect and retain any late fees, prepayment
charges and certain non-sufficient funds charges and other administrative fees
or similar charges (the "Supplemental Servicing Fee") allowed by applicable
law with respect to the Leases.
In addition to the Servicing Fee and the Supplemental Servicing Fee,
the Servicer is also entitled to retain, out of any amounts received by the
Servicer in connection with the sale or release of any Equipment subject to a
Non-Performing Lease upon the early termination of such Lease or otherwise,
(i) the Servicer's actual out-of-pocket expenses reasonably incurred in
connection with such sale or release and (ii) if the Servicer has made any
Servicer Advances with respect to any Lease which thereafter became a
Non-Performing Lease and the Servicer has not otherwise been fully reimbursed
for such Servicer Advance, the unreimbursed portion thereof.
Distributions
Deposits to Collection Account. The Servicer will, within two
business days of receipt, deposit all Trust Collections received by it into
the Collection Account. However, at any time that and for so long as (i) ILC
is the Servicer, (ii) there exists no Servicer Event of Default and (iii) each
other condition to making deposits less frequently than daily as may be
specified by the Rating Agencies is satisfied, the Servicer will not be
required to deposit such amounts into the Collection Account until on or
before the business day preceding the applicable Payment Date. Pending deposit
into the Collection Account, collections may be invested by the Servicer at
its own risk and for its own benefit and will not be segregated from its own
funds.
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On the business day following the Determination Date, the Servicer
will provide the Indenture Trustee with certain information, including the
total amount of all Lease Payments, Casualty Payments, Termination Payments
and Non-Performing Lease Payments received by the Servicer and deposited in
the Collection Account prior to such Determination Date and on or after the
preceding Determination Date, and the calculation of the amount of Available
Funds for application on the related Payment Date.
With respect to any Payment Date, "Available Funds" means the
following payments and deposits made on or with respect to the Leases with
respect to the immediately preceding Due Period received on or prior to a
Determination Date:(i) Lease Payments due during the prior Due Period (net of
any Third Party Amounts), (ii) Residual Realizations up to the Residual Amount
Cap, (iii) recoveries from Non-Performing Leases (net of amounts retained by
the Servicer), (iv) proceeds from repurchases by Transferor or Servicer of
Predecessor Leases if Transferor has not substituted Substitute Leases for
such Leases, (v) proceeds from investment of funds in the Collection Account
(other than Security Deposit Earnings), the Reserve Account and the Residual
Account, if any, (vi) Casualty Payments, (vii) Servicer Advances, (viii)
Termination Payments, (ix) funds, if any, on deposit in the Reserve Account,
and (x) funds, if any, on deposit in the Residual Account to the limited
extent provided in the Pooling and Servicing Agreement.
A "Casualty Payment" is any payment pursuant to a Lease on account of
the loss, theft, condemnation, governmental taking, destruction, or damage
beyond repair (each, a "Casualty") of any item of Equipment subject thereto
which results, in accordance with the terms of the Lease, in a reduction in
the number or amount of any future Lease Payments due thereunder or in the
termination of the Lessee's obligation to make future Lease Payments
thereunder.
A "Lease Payment" is each periodic installment of rent payable by a
Lessee under a Lease; provided that (a) prepayments of rent required pursuant
to the terms of a Lease, at or before the commencement of the Lease, (b)
payments (other than Payaheads) collected on or before the Cut-Off Date, (c)
Payaheads, until such time as such Payaheads are released from the Collection
Account, (d) any security deposit, unless and until such security deposit is
permitted to be treated as a payment on a Lease in accordance with the terms
of such Lease, and (e) supplemental or additional payments required by the
terms of a Lease with respect to taxes, insurance, maintenance, or other
specific charges, including charges included in an invoice but payable to
vendors (such supplemental or additional payments and special charges ("Third
Party Amounts"), shall not be Lease Payments hereunder.
On any Determination Date, the Servicer will be required to advance
(each, a "Servicer Advance") to the Trustee for distribution as Available
Funds on the related Payment Date, an amount sufficient to cover delinquencies
on any scheduled payment under Leases in the Trust Property due during the
related Due Period; provided that the Servicer will not be required to make
any Servicer Advance if it determines that such Servicer Advance may not
ultimately be recoverable by it from recoveries from the applicable Leases.
The Servicer will be reimbursed for Servicer Advances not recovered from late
payments or proceeds from the sale or release of the Equipment under a Lease
with respect to which the Servicer has made a Servicer Advance to the extent
that funds are available therefor in accordance with the Priority of Payments
on the second Payment Date following the Determination Date on which the
Servicer made such Servicer Advance.
A "Termination Payment" is a payment payable by a Lessee under a
Lease upon the early termination of such lease (but not on account of a
Casualty or a Lease default) which may be agreed upon by the Servicer, acting
in the name of the Trust, and the Lessee.
Net Deposits. As an administrative convenience, unless the Servicer
is required to remit collections daily, the Servicer will be permitted to make
the deposit of collections and purchase price amounts for any Leases purchased
by the Servicer for the Trust for or with respect to the related Due Period
net of distributions to be made to the Servicer for the Trust with respect to
such Due Period. The Servicer, however, will account to the Indenture Trustee,
the Trustee, the Noteholders and the Certificateholders with respect to the
Trust as if all deposits, distributions and transfers were made individually.
Distributions on Securities. Payments on the Notes will commence on
November 25, 1998. So long as no Trust Acceleration Event shall be continuing,
shall be paid out of Available Funds in the following priority:
(a) to pay the then accrued and unpaid Servicing Fee;
(b) to reimburse unreimbursed Servicer Advances in respect of a
prior Payment Date;
(c) to make Interest Payments, owing on the Class A Notes, pro
rata based on the respective amounts due under this
priority, to the Class A-1 Noteholders and Class A-2
Noteholders;
(d) to make Interest Payments owing on the Class B Notes;
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(e) to make Interest Payments owing on the Certificates;
(f) to make the Class A Principal Payment (i) to the Class A-1
Noteholders only, until the Outstanding Principal Amount on
the Class A-1 Notes is reduced to zero, then (ii) to the
Class A-2 Noteholders only, until the Outstanding Principal
Amount on the Class A-2 Notes is reduced to zero;
(g) to make the Class B Principal Payment;
(h) to make the Certificate Principal Payment;
(i) to pay the Additional Principal, if any, to the Class A
Noteholders then receiving the Class A Principal Payment as
provided in clause (f) above until the Outstanding Principal
Amount on all of the Class A Notes has been reduced to zero,
then to the Class B Noteholders until the Outstanding
Principal Amount on the Class B Notes has been reduced to
zero and thereafter to the Certificateholders until the
Certificate Balance on the Certificates has been reduced to
zero;
(j) to the Reserve Account, an amount equal to the excess of the
Required Reserve Amount over the Available Reserve Amount;
(k) following a Residual Event, to the Residual Account an
amount equal to Residual Realizations up to the Residual
Amount Cap; and
(l) to the Transferor, the balance, if any.
Upon the occurrence of an Event of Default and the acceleration of
the Notes (a "Trust Acceleration Event") and until such Trust Acceleration
Event has been rescinded, distributions will be made on each Payment Date from
Available Funds in the following priority:
(a) to pay all costs and expenses of collection incurred by the
Indenture Trustee and the Noteholders (including the
reasonable fees and expenses of counsel to such persons);
(b) if the person then acting as Servicer under the Pooling and
Servicing Agreement is not ILC or an affiliate of ILC, to
pay the Servicing Fee;
(c) first, to pay all accrued and unpaid Interest Payments on
each class of Class A Notes plus (to the extent permitted by
applicable law) interest on any overdue interest and
principal payments on each class of Class A Notes at a rate
per annum equal to the applicable Interest Rate for such
class of Notes concurrently to the Class A-1 Noteholders and
Class A-2 Noteholders, second, to pay all accrued and unpaid
Interest Payments on the Class B Notes plus (to the extent
permitted by applicable law) interest on any overdue interest
and principal payments on the Class B Notes at a rate per
annum equal to the Class B Interest Rate, third, to pay all
accrued and unpaid Interest Payments on the Certificates plus
(to the extent permitted by applicable law) interest on any
overdue interest and principal payments on the Certificates
at a rate per annum equal to the Certificate Rate, fourth, to
the payment of the Outstanding Principal Amount of the Class
A-1 Notes, fifth, to the payment of the Outstanding Principal
Amount of the Class A-2 Notes to the date of payment thereof,
sixth, to the payment of the Outstanding Principal Amount of
the Class B Notes to the date of payment thereof, and
seventh, to the payment of the Certificate Balance; provided,
that the Noteholders may internally allocate such payments
for interest, principal and premium at their own discretion,
except that no such allocation shall affect the allocation of
such amounts pursuant to this priority or future payments
received by any other Noteholder;
(d) to pay amounts then due the Trustee under the Trust
Agreement and the Indenture Trustee under the Indenture;
(e) if ILC or an affiliate of ILC is the Servicer, to pay the
Servicing Fee; and
(f) to the Transferor or any other person legally entitled
thereto, the balance, if any.
"Additional Principal" with respect to each Payment Date is an amount
equal to (a) the difference between (i) the Discounted Present Value of the
Performing Leases as of the previous Determination Date and (ii) the
Discounted Present Value of the Performing Leases as of the related
Determination Date, less (b) the Class A Principal Payment, the Class B
Principal Payment and the Certificate Principal Payment to be paid on such
Payment Date.
38
<PAGE>
The "Certificate Floor" with respect to each Payment Date means (a)
[_______]% of the initial Discounted Present Value of the Leases as of the
Cut-Off Date, plus (b) the Cumulative Loss Amount with respect to such Payment
Date, minus (c) the sum of the Overcollateralization Amount as of such Payment
Date plus the amount on deposit in the Reserve Account after giving effect to
withdrawals to be made on such Payment Date.
The "Certificate Principal Payment" means (a) while the Class A-1
Notes are outstanding, zero and (b) after the Outstanding Principal Amount on
the Class A-1 Notes has been reduced to zero, the amount necessary to reduce
the Certificate Balance to the greater of the Certificate Target Investor
Principal Amount and the Certificate Floor.
The "Certificate Target Investor Principal Amount" with respect to
each Payment Date is an amount equal to the product of (a) the Certificate
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date.
The "Class A Principal Payment" means (a) while the Class A-1 Notes
are outstanding, (i) on all Payment Dates prior to the [month/year] Payment
Date, the lesser of (1) the amount necessary to reduce the Outstanding
Principal Amount on the Class A-1 Notes to zero and (2) the difference between
(A) the Discounted Present Value of the Performing Leases as of the
Determination Date for the preceding Payment Date and (B) the Discounted
Present Value of the Performing Leases as of the related Determination Date,
and (ii) on the [month/year] Payment Date and thereafter until the Class A-1
Notes have been paid in full, the entire Outstanding Principal Amount on the
Class A-1 Notes and (b) after the Class A-1 Notes have been paid in full, the
amount necessary to reduce the aggregate Outstanding Principal Amount on the
Class A Notes to the Class A Target Investor Principal Amount.
The "Class A Target Investor Principal Amount" with respect to each
Payment Date is an amount equal to the product of (a) Class A Percentage and
(b) the Discounted Present Value of the Performing Leases as of the related
Determination Date.
The "Class B Principal Payment" means (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount on the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class B Notes to the greater of the Class
B Target Investor Principal Amount and the Class B Floor.
The "Class B Floor" with respect to each Payment Date (the "subject
Payment Date") means (a) [_____]% of the initial Discounted Present Value of
the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss Amount with
respect to the subject Payment Date, minus (c) the sum of the Certificate
Balance as of the preceding Payment Date after giving effect to all payments
made on such Payment Date plus the Overcollateralization Amount as of the
subject Payment Date plus the amount on deposit in the Reserve Account after
giving effect to withdrawals to be made on the subject Payment Date.
The "Class B Target Investor Principal Amount" with respect to each
Payment Date is an amount equal to the product of (a) the Class B Percentage
and (b) the Discounted Present Value of the Performing Leases as of the
related Determination Date.
The "Cumulative Loss Amount" with respect to each Payment Date (the
"subject Payment Date") is an amount equal to the excess, if any, of (a) the
difference of (i) the sum of the Outstanding Principal Amount of the Notes and
the Certificate Balance as of the immediately preceding Payment Date after
giving effect to all payments made on the subject Payment Date, minus (ii) the
lesser of (A) the Discounted Present Value of the Performing Leases as of the
Determination Date relating to the immediately preceding Payment Date minus
the Discounted Present Value of the Performing Leases as of the Determination
Date related to the subject Payment Date and (B) Available Funds remaining
after the payment of amounts owing to the Servicer and in respect of interest
on the Securities on the subject Payment Date over (b) the Discounted Present
Value of Performing Leases as of the Determination Date related to the subject
Payment Date.
The "Discounted Present Value of the Leases", with respect to the
Trust Property at any given time, means the future remaining scheduled
payments (including Payaheads but excluding delinquent amounts and Third Party
Amounts) from the related Leases (including Non-Performing Leases), discounted
at the Discount Rate. The "Discount Rate" will be equal to the sum of (a) the
weighted average Interest Rate of the Class A Notes (utilizing the Class A-2
Interest Rate), the Class B Notes and the Certificates on the Issuance Date
and (b) the Servicing Fee Rate.
The "Discounted Present Value of the Performing Leases", with respect
to the Trust Property at any given time equals the Discounted Present Value of
the Leases, including any Substitute Leases, reduced by the Discounted Present
Value of the Non-Performing Leases.
"Non-Performing Leases" are (a) Leases that the Servicer has determined
to be more than 90 days delinquent or (b) Leases that have been accelerated by
the Servicer. See "The Lease Pool--The Leases".
39
<PAGE>
The "Overcollateralization Amount" with respect to each Payment Date
is an amount equal to (a) the Discounted Present Value of the Performing
Leases as of the related Determination Date minus (b) the Outstanding
Principal Amount of the Notes and the Certificate Balance (after giving effect
to payments of principal (other than Additional Principal) on such Payment
Date); provided, that such amount will never be less than zero.
Evidence as to Compliance. The Pooling and Servicing Agreement
provides for delivery to the Trust and Indenture Trustee of a certificate
signed by an officer of the Servicer stating that the Servicer has fulfilled
its obligations under the Pooling and Servicing Agreement throughout the
preceding twelve months (or, in the case of the first such certificate, from
the Issuance Date) or, if there has been a default in the fulfillment of any
such obligation, describing each such default. The Servicer will agree to give
the Indenture Trustee and the Trustee notice of certain Servicer Defaults
under the Pooling and Servicing Agreement.
Copies of such certificates may be obtained by Noteholders by written
request addressed to the Indenture Trustee.
Certain Matters Regarding the Servicer. The Pooling and Servicing
Agreement provides that ILC may not resign from its obligations and duties as
Servicer thereunder, except upon determination that ILC's performance of such
duties is no longer permissible under applicable law. No such resignation will
become effective until the Indenture Trustee or a successor servicer has
assumed ILC's servicing obligations and duties under the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement will further provide that neither
the Servicer nor any of its directors, officers, employees and agents will be
under any liability to the Trust or the Noteholders for any action taken or
not taken in good faith pursuant to the Pooling and Servicing Agreement with
respect to any Lease (including any Non-Performing Lease) or the Equipment
subject thereto, except that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance or
nonperformance of the Servicer's duties thereunder nor shall the Servicer nor
any such person be protected against any breach of warranties, representations
or covenants made by it pursuant to the Pooling and Servicing Agreement or any
certificate delivered in conjunction with the issuance of the Notes.
Under the circumstances specified in the Pooling and Servicing
Agreement, any entity into which the Servicer may be merged or consolidated,
or any entity resulting from any merger or consolidation to which the Servicer
is a party, or any entity succeeding to the business of the Servicer, which
corporation or other entity in each of the foregoing cases assumes the
obligations of the Servicer, will be the successor of the Servicer under the
Pooling and Servicing Agreement.
Servicer Events of Default. The following events and conditions shall
be defined in the Pooling and Servicing Agreement as "Servicer Events of
Default": (i) failure on the part of the Servicer to deposit into the
Collection Account or other applicable account within three business days
following the receipt thereof any monies received by the Servicer required to
be remitted to the Indenture Trustee under the Pooling and Servicing
Agreement; (ii) so long as ILC is the Servicer, failure on the part of ILC to
pay to the Trustee on the date when due, any payment required to be made by
ILC pursuant to the Pooling and Servicing Agreement; (iii) default on the part
of either the Servicer in its observance or performance in any material
respect of certain covenants or agreements in the Pooling and Servicing
Agreement which failure continues unremedied for a period of 30 days after the
earlier of (A) the date it first becomes known to any officer of Transferor or
Servicer, as the case may be, and (B) the date on which written notice thereof
requiring the same to be remedied shall have been given to Transferor or
Servicer, as the case may be by Indenture Trustee or Trustee, or to Transferor
or Servicer by any Holder of the Notes or the Certificates; (iv) if any
representation or warranty of ILC made in the Pooling and Servicing Agreement
shall prove to be incorrect in any material respect as of the time made;
provided, that the breach of any representation or warranty made by ILC in
such Pooling and Servicing Agreement will be deemed to be "material" only if
it affects the Noteholders or the Certificateholders, the enforceability of
the Indenture or of the Notes or the enforceability of the Trust Agreement or
the Certificates; and provided, further, that such material breach of any
representation or warranty made by ILC in such Pooling and Servicing Agreement
with respect to any of the Leases or the Equipment subject thereto will not
constitute a Servicer Event of Default if ILC repurchases such Lease and
Equipment in accordance with the Pooling and Servicing Agreement to the extent
provided therein; (v) certain insolvency or bankruptcy events relating to the
Servicer; (vi) the Servicer defaulting in the payment of any debt or other
obligations exceeding $1,000,000, or the occurrence of any event the effect of
which is to cause (or permit one or more persons to cause) such obligations
exceeding $1,000,000, to be accelerated, if the effect of such event is not
waived by the person or persons entitled to performance; and (vii) a final
judgment or judgments for the payment of money aggregating in excess of
$1,000,000 shall have remained unsatisfied and in effect for 60 consecutive
days without a stay of execution.
Servicer Termination. So long as a Servicer Event of Default under
the Pooling and Servicing Agreement is continuing, the Indenture Trustee
shall, upon the instructions of the Holders of 66 2/3% in principal amount of
the Notes (or, if no Notes are Outstanding, Holders of Certificates
representing at least 66 2/3% of the Certificate Balance),
40
<PAGE>
by notice in writing to the Servicer terminate all of the rights and
obligations of the Servicer under the Pooling and Servicing Agreement. On the
receipt by the Servicer of such written notice, all authority and power of the
Servicer under the Pooling and Servicing Agreement to take any action with
respect to any Lease or Equipment will cease and the same will pass to and be
vested in the Indenture Trustee pursuant to and under the Pooling and Servicing
Agreement and the Indenture.
Waiver of Past Defaults
The Holders of Notes evidencing at least 66 2/3% of the principal
amount of the then outstanding Notes of the related series (or the Holders of
the Certificates evidencing at least a majority of the outstanding Certificate
Balance, in the case of any Servicer Event of Default that does not adversely
affect the Indenture Trustee or the Noteholders) may, on behalf of all such
Noteholders and Certificateholders, waive any default by the Servicer in the
performance of its obligations under the Pooling and Servicing Agreement and
its consequences, except a default in making any required deposits to or
payments from any of the Trust Accounts in accordance with the Pooling and
Servicing Agreement. Therefore, the Noteholders have the ability, as limited
above, to waive defaults by the Servicer which could materially adversely
affect the Certificateholders. No such waiver will impair such Noteholders'
rights with respect to subsequent defaults.
Amendment
The Transfer and Servicing Agreements may be amended by the parties
thereto, without the consent of the related Noteholders or Certificateholders,
to cure any ambiguity, to correct or supplement any provision of any Transfer
and Servicing Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Transfer
and Servicing Agreements or of modifying in any manner the rights of the
Noteholders or Certificateholders; provided that such action will not, in the
opinion of counsel satisfactory to the Indenture Trustee and the Trustee,
materially and adversely affect the interest of any the Noteholders or
Certificateholders. In addition, the Transfer and Servicing Agreements may be
amended by the parties thereto, without the consent of the Noteholders or
Certificateholders, to substitute or add credit enhancement for any class of
Securities provided the Rating Agencies confirm in writing that such
substitution or addition will not result in a reduction or withdrawal of the
rating of such class of Securities or any other class of Securities of the
related series. The Transfer and Servicing Agreements may also be amended by
the Transferor, the Servicer and the Trustee with the consent of the Indenture
Trustee, the Holders of Notes evidencing at least 66 2/3% of the principal
amount of then outstanding Notes and the Holders of Certificates of such
series evidencing at least 66 2/3% of the Certificate Balance, for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of such Transfer and Servicing Agreements or of modifying in
any manner the rights of the Noteholders or Certificateholders; provided,
however, that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
the related Leases or distributions that are required to be made for the
benefit of the Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the Notes or Certificates of such series that are required to
consent to any such amendment, without the consent of the Holders of all the
outstanding Notes and Certificates.
Termination
The obligations of the Servicer, the Transferor, the Trustee and the
Indenture Trustee pursuant to the Transfer and Servicing Agreements will
terminate upon (i) the maturity or other liquidation of the last related
Leases and the disposition of any amounts received upon liquidation of any
such remaining Leases and (ii) the payment to Noteholders and
Certificateholders of all amounts required to be paid to them pursuant to the
Transfer and Servicing Agreements.
In order to avoid excessive administrative expense, the Servicer will
be permitted at its option to purchase from the Trust, on any Payment Date
after the Payment Date on which the Discounted Present Value of the Performing
Leases is less than or equal 5% of the Discounted Present Value of the Leases
as of the Cut-Off Date, and any outstanding Notes will be redeemed
concurrently therewith.
Management Agreement
ILC, in its capacity as manager (the "Manager"), will enter into an
agreement (as amended and supplemented from time to time, the "Management
Agreement") with the Issuer and the Indenture Trustee pursuant to which the
Manager will agree, to the extent provided in the Management Agreement, to
perform on behalf of the Issuer certain administrative obligations required by
the Indenture. As compensation for the performance of the Manager's obligations
under the Management Agreement and as reimbursement for its expenses related
thereto, the Manager will be entitled to a quarterly management fee in an
amount equal to $500 (the "Management Fee"). The Management Fee shall be paid
to the Manager by the Servicer from the Servicing Fee.
41
<PAGE>
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the Notes, the aggregate amount of
each interest payment on such Notes and the yield to maturity of such Notes
are directly related to the rate of payments on the underlying Leases. The
payments on such Leases may be in the form of scheduled payments, Lease
Prepayments or liquidations due to default, casualty and other events, which
cannot be specified at present. Any such payments may result in distributions
to Noteholders of amounts which would otherwise have been distributed over the
remaining term of the Leases. In general, the rate of such payments may be
influenced by a number of other factors, including general economic
conditions. The rate of Principal Payments with respect to any class may also
be affected by any repurchase of the underlying Leases by ILC pursuant to the
Pooling and Servicing Agreement. In such event, the repurchase price will
decrease the Discounted Present Value of the Performing Leases, causing the
corresponding weighted average life of the Notes to decrease. See "Risk
Factors--Prepayments".
If a Lease becomes a Predecessor Lease, ILC will have the option to
substitute a Substitute Lease for such Predecessor Lease. The Substitute
Leases will have a Discounted Present Value of the Predecessor Leases equal to
or greater than that of the Predecessor Leases being replaced and the monthly
payments on the Substitute Leases will be at least equal to those of the
Predecessor Leases through the term of such Predecessor Leases. In the event
that an Early Lease Termination or other modification of the lease terms in
connection with a partial buy-out is allowed by ILC, the amount prepaid will
be equal to at least the Discounted Present Value of the terminated Lease (or,
in the case of a partial buy-out, the portion thereof related to such
buy-out), plus any delinquent payments.
The effective yield to Holders of the Notes will depend upon, among
other things, the amount of and rate at which principal is paid to such
Noteholders. The after-tax yield to Noteholders may be affected by lags
between the time interest income accrues to Noteholders and the time the
related interest income is received by the Noteholders.
The following chart sets forth the percentage of the Initial
Principal Amount of the Class A and Class B Notes which would be outstanding
on the Payment Dates set forth below assuming a Conditional Payment Rate
("CPR") of [__]% and [__]%, respectively and were calculated using the
Statistical Discount Rate. Such information is hypothetical and is set forth
for illustrative purposes only. The CPR assumes that a fraction of the
outstanding Lease Pool is prepaid on each Distribution Date, which implies
that each Lease in the Lease Pool is equally likely to prepay. This fraction,
expressed as a percentage, is annualized to arrive at the CPR for the Contract
Pool. The CPR measures prepayments based on the outstanding Discounted Present
Value of the Leases, after the payment of all Scheduled Payments on the Leases
during such Due Period. The CPR further assumes that all Leases are the same
size and amortize at the same rate and that each Lease will be either paid as
scheduled or prepaid in full. The amounts set forth below are based upon the
timely receipt of scheduled monthly Lease payments as of the Cut-Off Date,
assumes that the Trust does not exercise its option to redeem the Notes and
assumes the Issuance Date is [September __, 1998] and the first Payment Date
is November 25, 1998.
The information included in the following tables represents
forward-looking statements and involves risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. The actual characteristics and performance of the Leases will
differ from the assumptions used in constructing the following tables. The
assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flows might behave under varying
prepayment scenarios. For example, it is highly unlikely that the Leases will
prepay at a constant CPR until maturity or that all of the Leases will prepay
at the same CPR. Moreover, the diverse terms of the Leases could produce
slower or faster principal distributions than indicated in the table at the
various CPRs specified. Any difference between such assumptions and the actual
characteristics and performance of the Leases, or actual prepayment
experience, will affect the percentages of initial balances outstanding over
time and the weighted average lives of the Notes.
42
<PAGE>
PERCENTAGE OF THE INITIAL CLASS A-1 AND A-2 PRINCIPAL
AMOUNTS AND THE INITIAL CLASS B PRINCIPAL AMOUNT
AT THE RESPECTIVE CPR SET FORTH BELOW
<TABLE>
<CAPTION>
[__]% CPR [__]% CPR
------------------------------------------------------------------------------------------------------
Payment Date Class A-1 Class A-2 Class B Certificates Class A-1 Class A-2 Class B
------------- ------------- ----------- -------------- -------------- ------------- ------------
% % % % % %
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance Date
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
</TABLE>
43
<PAGE>
PERCENTAGE OF THE INITIAL CLASS A-1 AND A-2 PRINCIPAL
AMOUNTS AND THE INITIAL CLASS B PRINCIPAL AMOUNT
AT THE RESPECTIVE CPR SET FORTH BELOW
<TABLE>
<CAPTION>
[__]% CPR [__]% CPR
-------------------------------------------------------------------------------------
Payment Date Class A-1 Class A-2 Class B Class A-1 Class A-2 Class B
------------- ------------- ----------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Issuance Date
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
[Month, Year]
WEIGHTED AVERAGE
LIFE(1)(YEARS)
</TABLE>
(1) The weighted average life of a Class A Note or Class B Note is
determined by (a) multiplying the amount of cash distributions in
reduction of the Outstanding Principal Amount of the respective Note
by the number of years from the Issuance Date to such Payment Date,
(b) adding the results, and (c) dividing the sum by the respective
Initial Principal Amount of such Note.
For the [__]% CPR and [__]% CPR scenarios, if the Trust exercises its
option to redeem the Notes, the average life of the Class A-1 Notes; Class A-2
Notes; and Class B Notes would be [ ] years and [ ] years; [ ] years and [ ]
years; and [ ] years and [ ] years, respectively.
44
<PAGE>
CERTAIN LEGAL MATTERS AFFECTING A LESSEE'S
RIGHTS AND OBLIGATIONS
General. The Leases are triple-net leases, requiring the Lessees to
pay all taxes, maintenance and insurance associated with the Equipment, and are
primarily non-cancelable by the Lessees.
The Leases are "hell or high water" leases, under which the
obligations of the Lessee are absolute and unconditional, regardless of any
defense, setoff or abatement which the Lessee may have against ILC, as
Transferor or Servicer, the Trust, or any other person or entity whatsoever.
Events of default under the Leases are generally the result of
failure to pay amounts when due, failure to observe other covenants in the
Lease, misrepresentations by, or the insolvency, bankruptcy or appointment of
a trustee or receiver for the Lessee under a Lease. The remedies of the lessor
(and the Trust as assignee) following a notice and cure period are generally
to seek to enforce the performance by the Lessee of the terms and covenants of
the Lease (including the Lessee's obligation to make scheduled payments) or
recover damages for the breach thereof, to accelerate the balance of the
remaining scheduled payments paid to terminate the rights of the Lessee under
such Lease. Although the Leases permit the lessor to repossess and dispose of
the related Equipment in the event of a lease default, and to credit such
proceeds against the Lessee's liabilities thereunder, such remedies may be
limited where the Lessee thereunder is subject to bankruptcy, or other
insolvency proceedings.
UCC and Bankruptcy Considerations. Prior to the Cut-Off Date, ILC
will have filed Uniform Commercial Code ("UCC") financing statements in its
favor against Lessees in respect of Equipment, including Equipment subject to
Nominal-Buy-Out Leases, with an original Equipment cost in excess of $10,000,
which make up approximately [____]% of the Statistical Discounted Present
Value of the Leases . Consistent with ILC's policies with respect to all
Leases originated or acquired by it, no action will be taken to perfect the
interest of ILC in any Equipment to the extent the original Equipment cost of
the related Equipment is less than $10,0000. As a result, ILC does not have a
perfected security interest in Equipment with an original Equipment cost of
less than or equal to $10,000, which represents less than 10% of the
Statistical Present Value of the Leases. In addition, the Pooling and
Servicing Agreement, the Trust Agreement and the Indenture will require UCC
financing statements covering the Equipment to be filed in favor of the
Transferor, the Trust and the Indenture Trustee, respectively, in states in
which as of the Closing Date (i) Equipment relating to not less than 75% of
the Discounted Present Value of the Leases as of the Cut-Off Date is located
and (ii) Equipment relating to not less than 75% of the Booked Residual Value
of such Equipment as of the Cut-Off Date is located (the "Filing Locations").
In the event of the repossession and resale of Equipment subject to a superior
lien, the senior lienholder would be entitled to be paid the full amount of
the indebtedness owed to it out of the sale proceeds before such proceeds
could be applied to the payment of claims by the Servicer on behalf of the
Trust. Certain statutory provisions, including federal and state bankruptcy
and insolvency laws, may limit the ability of the Servicer to repossess and
resell collateral or obtain a deficiency judgment in the event of a Lessee
default. In the event of the bankruptcy or reorganization of a Lessee, or ILC,
as Servicer, or the Transferor, various provisions of the Bankruptcy Code of
1978, 11 U.S.C. ss.ss. 101-1330 ( "Bankruptcy Code"), and related laws may
interfere with, delay or eliminate the ability of ILC or the Trust to enforce
its rights under the Leases.
In the case of operating leases, the Bankruptcy Code grants to the
bankruptcy trustee or the debtor-in-possession a right to elect to assume or
reject any executory contract or unexpired lease. Any rejection of such a
lease or contract constitutes a breach of such lease or contract, entitling
the nonbreaching party to a claim for damages for breach of contract. The net
proceeds from any resulting judgment would be deposited by the Servicer into
the Collection Account and allocated to the Noteholders as more fully
described herein. Upon the bankruptcy of a Lessee, if the bankruptcy trustee
or debtor-in-possession elected to reject a Lease, the flow of scheduled
payments to Noteholders would cease. If, as a result of the bankruptcy of a
Lessee, the Servicer is prevented from collecting scheduled payments with
respect to Leases and such Leases become Non-Performing Leases, no recourse
would be available against ILC (except for misrepresentation or breach of
warranty or covenant) and the Noteholders could suffer a loss with respect to
the Notes. Similarly, upon the bankruptcy of the Transferor, if the bankruptcy
trustee or debtor-in-possession elected to reject a Lease, the flow of Lease
payments to the Trust and the Noteholders would cease. As noted above, however,
the Transferor has been structured so that the filing of a bankruptcy petition
with respect to it is unlikely. See "The Transferor".
These UCC and bankruptcy provisions, in addition to the possible
decrease in value of a repossessed item of Equipment, may limit the amount
realized on the sale of Equipment to less than the amount due on the related
Lease.
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion, summarizing the material Federal income tax
consequences of the purchase, ownership and disposition of the Notes, is based
upon the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), proposed, temporary and final Treasury regulations thereunder, and
published rulings and
45
<PAGE>
court decisions in effect as of the date hereof, all of
which are subject to change, possibly retroactively. Mayer, Brown & Platt,
special federal tax counsel ("Federal Tax Counsel") for the Trust, has
prepared or reviewed the statements in the following discussion, and is of the
opinion that such statements are a fair and accurate summary of the material
Federal tax consequences of the purchase, ownership and disposition of the
Notes. This discussion does not address every aspect of the Federal income tax
laws that may be relevant to Noteholders in light of their personal investment
circumstances or their special treatment under the Federal income tax laws
(for example, banks and life insurance companies ). Prospective investors are
urged to consult their own tax advisers in determining the Federal, state,
local, foreign and any other tax consequences to them of the purchase,
ownership and disposition of the Notes.
An opinion of Federal Tax Counsel regarding the Federal income tax
matters discussed below has been filed as an exhibit to the registration
statement relating to the Notes. An opinion of Federal Tax Counsel, however,
is not binding on the Internal Revenue Service (the "IRS") or the courts.
Moreover, there are no cases or IRS rulings on similar transactions involving
debt issued by a trust with terms similar to those of the Notes . As a result,
the IRS may disagree with all or a part of the discussion below. No ruling on
any of the issues discussed below will be sought from the IRS.
In the opinion of Federal Tax Counsel:
Tax Characterization of the Trust
In the opinion of Federal Tax Counsel , the Trust will not be an
association (or publicly traded partnership) taxable as a corporation for
Federal income tax purposes. This opinion is based upon the assumption of
compliance by all parties with the terms of the Trust Agreement and related
documents.
If the Trust were taxable as a corporation for Federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the Leases,
possibly reduced by its interest expense on the Notes. Any such corporate
income tax could materially reduce cash available to make payments on the
Notes.
Tax Consequences to Holders of the Notes
Treatment of the Notes as Indebtedness. The Transferor will agree,
and the Noteholders will agree by the purchase of Notes, to treat the Notes as
debt for Federal, State and local income and franchise tax purposes. In the
opinion of Federal Tax Counsel , the Notes will be classified as debt for
Federal income tax purposes.
The discussion below assumes this characterization of the Notes is
correct. Moreover, the discussion assumes that the interest formula for the
Notes meets the requirements for "qualified stated interest " under Treasury
regulations (the "OID Regulations") relating to any original issue discount
("OID"), and that any OID on the Notes (i.e., any excess of the principal
amount of the Notes over their issue price) is a de minimis amount (i.e., less
than 1/4% of their principal amount multiplied by the number of full years
included in their term), all within the meaning of the OID Regulations.
Interest Income on the Notes. Based upon the above assumptions,
except as discussed below, the Notes will not be considered issued with OID.
The stated interest thereon will be taxable to a Noteholder as ordinary
interest income when received or accrued in accordance with such Noteholder's
method of tax accounting. Under the OID Regulations, a holder of a Note issued
with a de minimis amount of OID must include such OID in income, on a pro rata
basis, as principal payments are made on the Note. A purchaser who buys a Note
for more or less than its principal amount will generally be subject,
respectively, to the premium amortization or market discount rules of the
Code.
A holder of a Note that has a fixed maturity date of not more than
one year from the issue date of such Note (a "Short-Term Note") may be subject
to special rules. Under the OID Regulations, all stated interest will be
treated as OID. An accrual basis holder of a Short-Term Note (and certain cash
basis holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest
income as OID accrues on a straight-line basis over the term of each interest
period. Other cash basis holders of a Short-Term Note would, in general, be
required to report interest income as interest is paid (or, if earlier, upon
the taxable disposition of the Short-Term Note). However, a cash basis holder
of a Short-Term Note reporting interest income as it is paid may be required
to defer a portion of any interest expense otherwise deductible on
indebtedness incurred to purchase or carry the Short-Term Note until the
taxable disposition of the Short-Term Note. A cash basis taxpayer may elect
under Section 1281 of the Code to accrue interest income on all nongovernment
debt obligations with a term of one year or less, in which case the taxpayer
would include OID on the Short-Term Note in income as it accrues, but would
not be subject to the interest expense deferral rule referred to in the
preceding sentence. Certain special rules apply if a Short-Term Note is
purchased for more or less than its principal amount.
46
<PAGE>
Sale or Other Disposition. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note.
The adjusted tax basis of a Note to a particular Noteholder will equal the
holder's cost for the Note, increased by any market discount, OID and gain
previously included by such Noteholder in income with respect to the Note and
decreased by the amount of premium (if any) previously amortized and by the
amount of principal payments previously received by such Noteholder with
respect to such Note. Any such gain or loss will be capital gain or loss,
except for gain representing accrued interest and accrued market discount not
previously included in income. Capital losses 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. In the case
of an individual taxpayer, any capital gain on the sale of a Note will be
taxed at a maximum rate of 39.6% if the Note is held for not more than 12
months and at 20% if the Note is held for more than 12 months.
Foreign Holders. Interest paid (or accrued) to a Noteholder who is a
nonresident alien, foreign corporation or other non-United States person (a
"foreign person") generally will be considered "portfolio interest," and
generally will not be subject to United States Federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent
shareholder" of the Trust or the Transferor (including a holder of 10% of the
outstanding Certificates) or a "controlled foreign corporation" with respect
to which the Trust or the Transferor is a "related person" within the meaning
of the Code and (ii) satisfies the statement requirement set forth in section
871(h) and section 881(c) of the Code and the regulations thereunder. To
satisfy this requirement, the foreign person, or a financial institution
holding the Note on behalf of such foreign person, must provide, in accordance
with specified procedures, a paying agent of the Trust with a statement to the
effect that the foreign person is not a United States person. Currently these
requirements will be met if (x) the foreign person provides his name and
address, and certifies, under penalties of perjury, that he is not a United
States person (which certification may be made on an IRS Form W-8) or (y) a
financial institution holding the Note on behalf of the foreign person
certifies, under penalties of perjury, that such statement has been received by
it and furnishes a paying agent with a copy thereof. On October 14, 1997, final
Treasury Regulations (the "1997 Final Regulations") were issued regarding the
withholding and information reporting rules discussed above. In general, the
1997 Final Regulations do not significantly alter the substantive withholding
and information reporting requirements but unify current certification
procedures and forms and clarify reliance standards. Special rules apply which
permit the shifting of primary responsibility for withholding to certain
financial intermediaries acting on behalf of beneficial owners. The 1997 Final
Regulations are generally effective for payments made after December 31, 1999,
regardless of the issue date of the instrument with respect to which such
payments are made and subject to certain transition rules. Foreign persons are
urged to consult their own tax advisors with respect to 1997 Final Regulations.
If such interest is not "portfolio interest," then it will be subject
to a 30% withholding tax unless the foreign person provides the Trust or its
paying agent, as the case may be, with a properly executed (i) IRS Form 1001
(or successor form) claiming an exemption from withholding tax or a reduction
in withholding tax under the benefit of a tax treaty or (ii) IRS Form 4224 (or
successor form) stating that interest paid on the Note is not subject to
withholding tax because it is effectively connected with the foreign person's
conduct of a trade or business in the United States. Under the Final
Regulations, a foreign person will generally be required to provide IRS Form
W-8 in lieu of IRS Form 1001 and IRS Form 4224, although alternative
documentation may be applicable in certain situations.
If a foreign person is engaged in a trade or business and interest on
the Note is effectively connected with the conduct of such trade or business
in the United States, the foreign person, although exempt from the withholding
tax discussed above, will be subject to United States federal income tax on
such interest on a net income basis in the same manner as if it were a United
States person. In addition, if such foreign person is a foreign corporation,
it may be subject to a branch profits tax equal to 30% (or lower treaty rate)
of its effectively connected earnings and profits for the taxable year,
subject to adjustments.
Any capital gain realized on the sale, redemption, retirement or
other taxable disposition of a Note by a foreign person will be exempt from
United States Federal income and withholding tax; provided that (i) such gain
is not effectively connected with the conduct of a trade or business in the
United States by the foreign person and (ii) in the case of an individual
foreign person, the foreign person is not present in the United States for 183
days or more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt
holder such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate 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 nonexempt
Noteholder fail to provide the required certification, the Trust will be
required to withhold 31% of the amount otherwise payable to the holder, and
remit the withheld amount to the IRS as a credit against the holder's Federal
income tax liability. The Final Regulations make certain
47
<PAGE>
modifications to the backup withholding and information reporting rules.
Prospective investors are urged to consult their own tax advisors regarding the
Final Regulations.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or more
of the Notes did not represent debt for Federal income tax purposes, the Notes
might be treated as equity interests in the Trust. In such a case, the Trust
would be treated as a publicly traded partnership taxable as a corporation for
Federal income tax purposes, and would be subject to corporate income tax on
its taxable income. Any such corporate income tax could materially reduce cash
available to make payments on the Notes.
OHIO STATE TAX CONSIDERATIONS
The following is a summary of the material Ohio tax consequences of
the purchase, ownership and disposition of the Notes. This discussion does not
address every aspect of the Ohio tax laws that may be relevant to Noteholders
in light of their personal investment circumstances or their special treatment
under the Ohio tax laws (for example, banks and life insurance companies).
The following summary is based upon existing provisions of the Ohio
Revised Code pertaining to Ohio taxation, the administrative rules promulgated
thereunder, and relevant judicial rulings and administrative decisions and
pronouncements, all of which are subject to change, which change may be
retroactive. There are no Ohio authorities addressing similar transactions or
involving a trust that issues interests with terms similar to those of the
Notes, and no ruling addressing the matters discussed herein will be sought
from Ohio tax officials. Accordingly, there can be no assurance that such
officials will agree with this summary.
In the opinion of Keating, Muething and Klekamp, P.L.L., Special Ohio
Tax Counsel ("Ohio Tax Counsel"), unless the Noteholders are Ohio residents or
are otherwise subject to the Ohio personal income tax, the Ohio corporate
franchise tax or the Ohio tax on dealers in intangibles, the Noteholders will
not be subject to the foregoing taxes solely as a result of purchasing and
owning the Notes.
For purposes of determining Ohio taxable income, Ohio has adopted the
federal Code and the regulations thereunder. Therefore, the Ohio tax
consequences to the Noteholders who are Ohio residents or otherwise subject to
the Ohio personal income tax, corporate franchise tax or tax on dealers in
intangibles will be the same as the tax consequences to the Noteholders for
federal income tax purposes. Accordingly, the stated interest on the Notes
will be taxable as ordinary interest income and the gain or loss on the sale
or disposition of the Notes will be capital gain or loss. See "U.S. Federal
Income Tax Consequences."
Effective generally for tax years beginning on or after January 1,
1998, an Ohio tax may be levied on a "qualifying investor's" distributive
share of the Ohio apportioned income of a "qualifying pass-through entity."
Ohio Tax Counsel believes the Trust may be considered a qualifying
pass-through entity for purposes of this tax. However, because Federal Tax
Counsel will opine that the Notes constitute debt instruments for federal
income tax purposes, payments on the Notes represent interest payments on debt
rather than a distributive share of the income of the Trust. Therefore, the
Noteholders should not be subject to this tax since they are not receiving a
distributive share of the Trust's income.
LEGAL INVESTMENT
The Class A-1 Notes will be an "eligible security" within the meaning
of Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended.
ERISA CONSIDERATIONS
Subject to the following discussion the Notes may be acquired by
pension, profit-sharing or other employee benefit plans, as well as individual
retirement accounts and Keogh plans (each a "Benefit Plan"). Section 406 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
Section 4975 of the Code prohibit a Benefit Plan from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax
or other penalties and liabilities under ERISA and the Code for such persons
or the fiduciaries of the Benefit Plan. In addition, Title I of ERISA also
requires fiduciaries of a Benefit Plan subject to ERISA to make investments
that are prudent, diversified and in accordance with the governing plan
documents.
Certain transactions involving the Trust might be deemed to
constitute prohibited transactions under ERISA and the Code with respect to a
Benefit Plan that purchased Notes if assets of the Trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "Regulation"), the assets
48
<PAGE>
of the Trust would be treated as plan assets of a Benefit Plan for the purposes
of ERISA and the Code only if the Benefit Plan acquired an "equity interest" in
the Trust and none of the exceptions to plan assets contained in the Regulation
was applicable. An equity interest is defined under the Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. Although
there is little guidance on the subject, assuming the Notes are treated as debt
for local law purposes, the Transferor believes that, at the time of their
issuance, the Notes should not be treated as an equity interest in the Trust
for purposes of the Regulation. This determination is based in part upon the
traditional debt features of the Notes, including the reasonable expectation of
purchasers of Notes that the Notes will be repaid when due, as well as the
absence of conversion rights, warrants and other typical equity features. The
debt treatment of the Notes for ERISA purposes could change if the Trust
incurred losses. This risk of recharacterization is enhanced for Notes that are
subordinated to other securities.
However, without regard to whether the Notes are treated as an equity
interest for purposes of the Regulation, the acquisition or holding of Notes
by or on behalf of a Benefit Plan could be considered to give rise to a
prohibited transaction if the Trust, the Transferor, the Indenture Trustee or
the Trustee is or becomes a party in interest or a disqualified person with
respect to such Benefit Plan. Certain exemptions from the prohibited
transaction rules could be applicable to the purchase and holding of Notes by
a Benefit Plan depending on the type and circumstances of the plan fiduciary
making the decision to acquire such Notes. Included among these exemptions
are: Prohibited Transaction Class Exemption ("PTCE") 96-23, regarding
transactions effected by "in-house asset managers"; PTCE 95-60, regarding
investments by insurance company general accounts; PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 90-1, regarding
investments by insurance company pooled separate accounts; and PTCE 84-14,
regarding transactions effected by "qualified professional asset managers." By
acquiring a Note, each purchaser will be deemed to represent that either (i)
it is not acquiring the Notes with the assets of a Benefit Plan; or (ii) the
acquisition and holding of the Notes will not give rise to a nonexempt
prohibited transaction under Section 406(a) of ERISA or Section 4975 of the
Code.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to ERISA requirements, however governmental plans
may be subject to comparable state law restrictions.
A plan fiduciary considering the purchase of Notes should consult its
legal advisors regarding whether the assets of the Trust would be considered
plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
UNDERWRITING
Under the terms and subject to the conditions set forth in the
underwriting agreement (the "Underwriting Agreement") for the sale of the
Notes, the Trust has agreed to sell and Lehman Brothers Inc. (the
"Underwriter") have agreed to purchase the principal amount of the Notes set
forth opposite their names:
Underwriter of the Class A Notes Principal Amount of Principal Amount of
- -------------------------------- Class A-1 Notes Class A-2 Notes
--------------- ---------------
Lehman Brothers Inc.
Underwriter of the Class B Notes Principal Amount of Class B Notes
- -------------------------------- ---------------------------------
Lehman Brothers Inc.
The Trust has been advised by the Underwriter that the Underwriter
proposes initially to offer the Notes to the public at the respective public
offering prices set forth on the cover page of this Prospectus, and to certain
dealers at such price, less a concession not in excess of [___]% per Class A-1
Note, [___]% per Class A-2 Note and [___]% per Class B Note. The Underwriter
may allow and such dealers may reallow to other dealers a discount not in
excess of [___]% per Class A-1 Note, [___]% per Class A-2 Note and [___]% per
Class B Note. After the initial public offering, the public offering price may
be changed.
The Transferor and ILC have agreed to indemnify the Underwriter against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
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<PAGE>
The Trust has been advised by the Underwriter that the Underwriter
presently intends to make a market in the Notes, as permitted by applicable
laws and regulations. The Underwriter is not obligated, however, to make a
market in the Notes and any such market making may be discontinued at any time
at the sole discretion of the Underwriter. Accordingly, no assurance can be
given as to the liquidity of, or trading markets for, the Notes.
In connection with the offering of the Notes, the Underwriter and
selling group members and their respective affiliates may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the Notes. Such transactions may include stabilization transactions effected
in accordance with Rule 104 of Regulation M, pursuant to which such person may
bid for or purchase the Notes for the purpose of stabilizing its market price.
[ In addition, Lehman Brothers, on behalf of the Underwriters, may impose
"penalty bids" under contractual arrangements with the Underwriters whereby it
may reclaim from an Underwriter (or dealer participating in the offering) for
the account of the other Underwriters, the selling concession with respect to
the Notes that it distributed in the offering but subsequently purchased for
the account of the Underwriters in the open market.] Any of the transactions
described in this paragraph may result in the maintenance of the price of the
Notes at a level above that which might otherwise prevail in the open market.
None of the transactions described in this paragraph is required, and, if they
are taken, may be discontinued at any time without notice.
RATING OF THE NOTES
It is a condition to the issuance of any of the Notes that the Class
A-1 Notes be rated at least ["___"] or its equivalent, that the Class A-2
Notes be rated at least ["___"] or its equivalent, and that the Class B Notes
be rated at least ["___"] or its equivalent in each case by at least two
nationally recognized rating agencies (the rating agencies rating the Notes
being the "Rating Agencies"). The ratings assess the likelihood of timely
payment of interest and the ultimate payment of principal to the Noteholders
by the Stated Maturity date. There is no assurance that any rating will not be
lowered or withdrawn if, in the judgement of any Rating Agency, circumstances
in the future so warrant.
Such rating will reflect only the views of each Rating Agency and
will be based primarily on the amount of subordination, the availability of
funds on deposit in the Reserve Account and the value of the Leases and
Equipment. The ratings are not a recommendation to purchase, hold or sell the
related Notes, inasmuch as such ratings do not comment as to market price or
suitability for a particular investor. 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 a Rating Agency if, in its judgment, circumstances so
warrant. A revision or withdrawal of such rating may have an adverse affect on
the market price of the Notes. The rating of the Notes addresses the
likelihood of the timely payment of interest and the ultimate payment of
principal on the Notes by the Stated Maturity date. The rating does not
address the rate of Lease Prepayments that may be experienced on the Leases
and, therefore, does not address the effect of the rate of Lease Prepayments on
the return of principal to the Noteholders.
LEGAL OPINIONS
Certain legal matters relating to the Notes and certain federal
income tax and other matters will be passed upon for the Trust by Mayer, Brown
& Platt, Chicago, Illinois and certain Ohio tax matters will be passed upon by
Keating, Muething and Klekamp, P.L.L. Each of Keating, Muething and Klekamp,
P.L.L and Mayer, Brown & Platt may from time to time render legal services to
the Transferor, the Servicer and their affiliates. Certain legal matters will
be passed upon for the Underwriter by Mayer, Brown & Platt, Chicago, Illinois.
50
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
Term(s) Page(s)
- ------- -------
<S> <C>
Additional Principal......................................................................................6, 38, 47
Available Funds..............................................................................................11, 36
Available Funds Shortfall........................................................................................33
Available Reserve Amount.....................................................................................13, 33
Bankruptcy Code..................................................................................................45
Booked Residual Value............................................................................................13
Casualty.........................................................................................................36
Casualty Payment.................................................................................................36
Cede..............................................................................................................2
Certificate Distribution Account.................................................................................33
Certificate Floor.............................................................................................6, 38
Certificate Percentage............................................................................................7
Certificate Principal Payment.................................................................................6, 38
Certificate Rate.................................................................................................29
Certificate Target Investor Principal Amount..................................................................7, 38
Certificates...................................................................................................1, 8
Class A Noteholders...............................................................................................2
Class A Notes.....................................................................................................1
Class A Percentage................................................................................................7
Class A Principal Payment.....................................................................................7, 38
Class A Target Investor Principal Amount......................................................................7, 38
Class A-1 Initial Principal Amount................................................................................4
Class A-1 Interest Rate...........................................................................................6
Class A-1 Notes................................................................................................1, 4
Class A-2 Initial Principal Amount................................................................................4
Class A-2 Interest Rate...........................................................................................6
Class A-2 Notes................................................................................................1, 4
Class B Floor.................................................................................................7, 38
Class B Initial Principal Amount..................................................................................4
Class B Interest Rate.............................................................................................6
Class B Noteholders...............................................................................................2
Class B Notes..................................................................................................1, 4
Class B Percentage................................................................................................7
Class B Principal Payment.....................................................................................7, 38
Class B Target Investor Principal Amount......................................................................7, 39
Code.............................................................................................................46
Collection Account...............................................................................................32
Commission........................................................................................................2
CPR..............................................................................................................41
Cumulative Loss Amount........................................................................................7, 39
Cut-Off Date......................................................................................................5
Definitive Notes.................................................................................................30
Delinquent Lease.................................................................................................33
Determination Date................................................................................................8
Discount Rate.................................................................................................5, 39
Discounted Present Value of the Leases........................................................................5, 39
Discounted Present Value of the Performing Leases.............................................................5, 39
DTC...............................................................................................................2
Due Period........................................................................................................8
Early Lease Termination...........................................................................................9
Eligible Account.................................................................................................35
Eligible Institution.............................................................................................35
Eligible Investments.............................................................................................34
Equipment.....................................................................................................8, 17
ERISA............................................................................................................14
Events of Default................................................................................................27
Exchange Act......................................................................................................3
Federal Tax Counsel..............................................................................................46
Filing Locations.............................................................................................15, 45
Holders........................................................................................................2, 8
ILC...............................................................................................................1
</TABLE>
51
<PAGE>
<TABLE>
<S> <C>
Indenture.....................................................................................................4, 26
Indenture Trustee .........................................................................................1, 4, 26
Indirect Participants............................................................................................29
Information Leasing...............................................................................................4
Initial Principal Amount..........................................................................................4
Interest Accrual Period...........................................................................................6
Interest Rate.....................................................................................................6
Investment Earnings..............................................................................................35
IRS..............................................................................................................46
Lease Contracts...............................................................................................8, 17
Lease Payment....................................................................................................36
Lease Pool....................................................................................................8, 17
Lease Prepayment.................................................................................................15
Lease Receivables.............................................................................................8, 17
Leases........................................................................................................8, 17
Lessee............................................................................................................9
Lessees...........................................................................................................9
Management Agreement.............................................................................................41
Management Fee...................................................................................................41
Manager..........................................................................................................41
Monthly Delinquency Percentage...................................................................................34
Monthly Servicer Realization Percentage..........................................................................34
Nominal Buy-Out Leases...........................................................................................15
Non-Performing Leases.........................................................................................5, 39
Note Distribution Account........................................................................................33
Note Owners.......................................................................................................2
Noteholders.......................................................................................................2
Notes..........................................................................................................1, 4
OID..............................................................................................................46
OID Regulations..................................................................................................46
Outstanding Principal Amount......................................................................................6
Overcollateralization Amount......................................................................................7
Participants.....................................................................................................29
Payaheads........................................................................................................32
Payment Date...............................................................................................2, 8, 26
Predecessor Lease.............................................................................................9, 32
Priority of Payments.............................................................................................12
Provident........................................................................................................18
Provident Financial..............................................................................................19
Purchase Agreement.............................................................................................1, 4
Record Date.......................................................................................................8
Registration Statement............................................................................................2
Related Documents................................................................................................28
Required Payments................................................................................................33
Required Reserve Amount......................................................................................13, 33
Reserve Account..............................................................................................13, 33
Residual Account.................................................................................................33
Residual Amount Cap..............................................................................................12
Residual Event...............................................................................................13, 33
Residual Realizations............................................................................................13
Sales and Servicing Agreement..................................................................................1, 4
Securities.....................................................................................................1, 8
Securities Act....................................................................................................2
Security Deposit Earnings........................................................................................35
Securityholders..................................................................................................12
Seller.........................................................................................................1, 4
Servicer..........................................................................................................4
Servicer Advance.............................................................................................10, 37
Servicer Booked Residual Value...................................................................................34
Servicer Events of Default.......................................................................................40
Servicer Residual Realizations...................................................................................34
Servicing Fee................................................................................................10, 35
Short-Term Note..................................................................................................47
Subject Payment Date..............................................................................................7
Substitute Lease..........................................................................................9, 32, 41
</TABLE>
52
<PAGE>
<TABLE>
<S> <C>
Termination Payment..............................................................................................37
Third Party Amounts..............................................................................................36
Three-Month Delinquency Percentage...............................................................................34
Three-Month Servicer Realization Percentage......................................................................34
Transfer and Servicing Agreements................................................................................31
Trust..........................................................................................................1, 4
Trust Acceleration Event.........................................................................................37
Trust Accounts...................................................................................................34
Trust Agreement...............................................................................................4, 29
Trust Collections................................................................................................32
Trust Property................................................................................................8, 17
Trustee....................................................................................................1, 4, 29
UCC......................................................................................................15, 32, 45
Underwriters.....................................................................................................49
Underwriting Agreement...........................................................................................49
</TABLE>
53
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given
or made, such information or representations must not be relied upon. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the
affairs of the Transferor or the Trust or any affiliate thereof or the Leases
since the date hereof. This Prospectus does not constitute an offer or
solicitation by anyone in any state in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so to anyone to whom it is unlawful to make such offer or
solicitation.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information..................................................
Reports to Noteholders.................................................
Prospectus Summary.....................................................
Risk Factors...........................................................
Use of Proceeds........................................................
The Trust..............................................................
The Transferor........................................................
The Servicer...........................................................
The Lease Pool.........................................................
ILC's Underwriting and Servicing Practices.............................
Description of the Notes...............................................
Description of the Certificates........................................
Certain Information Regarding the Notes................................
Description of the Transfer and Servicing
Agreements............................................................
Prepayment and Yield Considerations ...................................
Certain Legal Matters Affecting a Lessee's Rights
and Obligations......................................................
U.S. Federal Tax Considerations........................................
Legal Investment.......................................................
ERISA Considerations...................................................
Underwriting...........................................................
Rating of the Notes....................................................
Index of Terms.........................................................
</TABLE>
Until [_______________] (90 days after the date of this Prospectus), all
dealers effecting transactions in the Notes, whether or not participating in
this distribution, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$[_____________________]
$[__________] [___]% Class A-1
Lease-Backed Notes
$[__________] [___]% Class A-2
Lease-Backed Notes
$[__________] [___]% Class B
Lease-Backed Notes
----------
PROSPECTUS
----------
LEHMAN BROTHERS
[OTHERS]
Dated [____________], 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
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 herein are estimated as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $885
Legal fees and expenses
Accounting fees and expenses
Blue sky fees and expenses
Rating agency fees
Trustee fees and expenses
Printing
Miscellaneous ----
-------------
Total $
====
</TABLE>
Item 14. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware provides as follows:
145. Indemnification of officers, directors, employees
and agents; insurance
(a) A corporation may 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 proceeding,
whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation)
by reason of the fact that he 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 attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him
in connection with such 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, 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 which he reasonably believed
to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) A corporation may 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 attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such
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 and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such
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, such person is fairly and
reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer,
employee or agent of a corporation has been successful on
the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and
(b) of this section (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 subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority
vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (2)
if there are no
<PAGE>
such directors, or if such directors so direct, by
independent legal counsel in a written opinion,
or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred
by an officer or director in defending a civil, criminal,
administrative or investigative action, suit or proceeding
may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other subsections
of this section shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement
of expenses 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 such office.
(g) A corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to
indemnify him against such liability under this section.
(h) For purposes of this section, references to
"the corporation" shall include, in addition to the
resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify
its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving
at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect
to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to
"other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the
corporation" shall include any service as a director,
officer, employee, or agent of the corporation which imposes
duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan,
its participants or beneficiaries; and a person who acted in
good faith and in a manner he reasonably believed to be in
the interest of the participants and beneficiaries of an
employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses
provided by, or granted pursuant to, this section shall,
unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with
exclusive jurisdiction to hear and determine all actions for
advancement of expenses or indemnification brought under
this section or under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The
Court of Chancery may summarily determine a corporation's
obligation to advance expenses (including attorneys' fees).
Article XI of the Bylaws of Provident Lease Receivables Corporation (referred
to as the "Corporation" therein) provides as follows:
Section 1. Coverage. Each person who was or is made a party
or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal,
administrative or investigative ("proceeding"), by reason of the fact
that he or she is or was a director, officer or agent of the
Corporation (which term shall include any predecessor corporation of
the Corporation) or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plan
("indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer,
employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to
such amendment), against all expenses, liability and loss
<PAGE>
(including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to be
a director, officer, employee or agent and shall inure to the benefit
of the indemnitee's heirs, executors and administrators; provided,
however, that, except as provided in Section 2 of this Article XI with
respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the Board of Directors.
The right to indemnification conferred in this Article XI shall be a
contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the
Delaware General Corporation Law requires, the payment of such expenses
incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is
rendered by such indemnitee, including, without limitation, service to
an employee benefit plan) shall be made in advance of the final
disposition of a proceeding only upon delivery to the Corporation of an
undertaking, by or on behalf of such indemnitee, to repay all amounts
so advanced if it ultimately be determined by final judicial decision
from which there is no further right to appeal that such indemnitee is
not entitled to be indemnified for such expenses under this Article XI
or otherwise. Expenses incurred by agents in defending in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative may be paid by the Corporation upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 2. Claims. If a claim under Section 1 of this
Article XI is not paid in full by the Corporation within sixty (60)
days after a written claim has been received by the Corporation,
except in the case of a claim for expenses incurred in defending a
proceeding in advance of its final disposition, in which case the
applicable period shall be thirty (30) days, the indemnitee may at
any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim. If successful in whole or in part in any
such suit or in a suit brought by the Corporation to recover payments
by the Corporation or expenses incurred by an indemnitee in defending
in his or her capacity as a director or officer, a proceeding in
advance of its final disposition, the indemnitee shall be entitled to
be paid also for the expense of prosecuting or defending such claim.
In any action brought by the indemnitee to enforce a right to
indemnification hereunder (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any, has
been tendered to the Corporation) or by the Corporation to recover
payments by the Corporation of expenses incurred by an indemnitee in
defending, in his or her capacity as a director or officer, a
proceeding in advance of its final disposition, the burden of proving
that the indemnitee is not entitled to be indemnified under this
Article XI or otherwise shall be on the Corporation. Neither the
failure of the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including the Board of Directors,
independent legal counsel or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall be a
presumption that the indemnitee has not met the applicable standard
of conduct, or in the case of such an action brought by the
indemnitee, be a defense to the action.
Section 3. Rights Not Exclusive. The rights conferred on
any person by Sections 1 and 2 of this Article XI shall not be
exclusive of any other right which such person may have or hereafter
acquire under any statute, the Certificate of Incorporation of the
Corporation, these By-laws, any agreement, a vote of stockholders or
disinterested directors or otherwise.
Section 4. Employees. Persons who are not included as
indemnities under Section 1 of this Article XI but are employees of
the Corporation or any subsidiary may be indemnified to the extent
authorized at any time or from time to time by the Board of
Directors.
Article XII of the Certificate of Incorporation of Provident Lease Receivables
Corporation (referred to as the "Corporation" therein provides as follows:
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as it now exists or may hereafter be amended, no director of
the Company shall be personally liable to the Company or its stockholders for
monetary damages arising from a breach of fiduciary duty owed to the Company
or its stockholders, except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) pursuant to section 174 of the General Corporation Law
of Delaware; or (iv) for any transaction from which the director derived an
improper personal benefit.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Company shall not adversely affect any right or protection
of a director of the Company existing at the time of such repeal or
modification.
Item 15. Recent Sales of Unregistered Securities.
Not applicable.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
a. A list of exhibits filed herewith is contained in the Exhibit Index, which
is incorporated herein by reference.
b. Financial Statement Schedules:
Not applicable.
Item 17. Undertakings.
The undersigned registrants hereby undertake as follows:
(a) Insofar as indemnification for liabilities arising under 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 a registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(b) 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 shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 1 to Registration Statement on
Form S-1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati and State of Ohio, on the 9th day of
September, 1998.
PROVIDENT LEASE RECEIVABLES CORPORATION,
By: /s/ John R. Farrenkopf
------------------------------------
Name: John R. Farrenkopf
Title: Treasurer
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert L. Hoverson, John R. Farrenkopf
and Mark E. Magee and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities (including his capacity as a
director and/or officer of Provident Lease Receivables Corporation), to sign
and file any and all amendments (including post-effective amendments) to this
registration statement or any registration statement relating to this offering
that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters as he might or could
do in person and hereby ratifying and confirming all that each of such
attorneys-in-fact and agents or their or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on Form S-1 has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------- ----- ----
<S> <C> <C>
/s/ Robert L. Hoverson Director and Principal September 9, 1998
- ---------------------- Executive Officer
Robert L. Hoverson
/s/ John R. Farrenkopf Director September 9, 1998
- ----------------------
John R. Farrenkopf
/s/ Mark E. Magee Director September 9, 1998
- ----------------------
Mark E. Magee
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C> <C>
1.1 -- Form of Underwriting Agreement
3.1 -- Certificate of Incorporation of Provident Lease Receivables Corporation
3.2 -- Bylaws of Provident Lease Receivables Corporation
4.1 -- Form of Indenture between Provident Equipment Lease Trust 1998-A and the Indenture Trustee
4.2 -- Form of Class A-1 Lease-Backed Note (included in Exhibit 4.1)
4.3 -- Form of Class A-2 Lease-Backed Note (included in Exhibit 4.1)
4.4 -- Form of Class B Lease-Backed Note (included in Exhibit 4.1)
5.1 -- Opinion of Mayer, Brown & Platt with respect to the validity of the securities
being offered
8.1 -- Opinion of Mayer, Brown & Platt with respect to federal income tax matters
8.2 -- Opinion of Ohio tax counsel with respect to certain Ohio tax matters
10.1 -- Form of Trust Agreement between Provident Lease
Receivables Corporation and the Trustee
10.2 -- Form of Pooling and Servicing Agreement between Provident Equipment Lease Trust 1998-A,
Provident Lease Receivables Corporation and Information Leasing Corporation
10.3 -- Form of Receivables Purchase Agreement between Information Leasing Corporation and Provident Lease
Receivables Corporation
10.4 -- Form of Management Agreement among Provident Equipment Lease Trust 1998-A,
The Indenture Trustee and the Trustee
23.1 -- Consent of Mayer, Brown & Platt (included in Exhibit 5.1)
23.2 -- Consent of Ohio tax counsel (included in Exhibit 8.2)
24 -- Powers of attorney (contained on the signature page to Amendment No. 1 to
this Registration Statement)
25 -- Form T-1 Statement of eligibility and qualification of Indenture Trustee
</TABLE>
<PAGE>
EXHIBIT 1.1
FORM OF
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
[______]% CLASS A-1 LEASE-BACKED NOTES
[______]% CLASS A-2 LEASE-BACKED NOTES
[______]% CLASS B LEASE-BACKED NOTES
UNDERWRITING AGREEMENT
----------------------
September __, 1998
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Provident Lease Receivables Corporation, a Delaware corporation (the
"Transferor"), as originator of the Provident Equipment Lease Trust 1998-A,
(the "Issuer"), and Information Leasing Corporation, an Ohio corporation
("ILC"), hereby agree with you as follows:
Section 1. Issuance and Sale of Notes. Transferor proposes to cause
Issuer to issue and sell $[___________] (the "Class A-1 Initial Principal
Amount") of [_____]% Class A-1 Lease- Backed Notes (the "Class A-1 Notes");
$[__________] (the "Class A-2 Initial Principal Amount") of [____]% Class A-2
Lease-Backed Notes (the "Class A-2 Notes"); $[__________] (the "Class B
Initial Principal Amount"; together with the Class A-1 Initial Principal
Amount and the Class A-2 Initial Principal Amount, the "Initial Principal
Amount") of [____]% Class B Lease-Backed Notes (the "Class B Notes"; together
with the Class A-1 Notes and the Class A-2 Notes, the "Notes") and
$[__________] of [_____]% Lease-Backed Certificates (the "Certificates";
together with the Notes, the "Securities"). The Notes will be issued pursuant
to an Indenture, dated as of September 1, 1998 (the "Indenture"), between
Issuer and [Name of Indenture Trustee] (the "Indenture Trustee"). The Notes
are more fully described in the Final Prospectus (as defined below), a copy of
which Transferor is furnishing to you. The Notes will evidence secured
obligations of Issuer. The assets of Issuer will include a pool of Leases and
certain interests in the underlying Equipment.
The Notes will be sold by Transferor to you as underwriter (the
"Underwriter").
<PAGE>
Simultaneously with the issuance and sale of the Notes as
contemplated in this Agreement, Transferor will sell the Certificates pursuant
to a placement agreement dated as of the date hereof (the "Certificate
Placement Agreement") among Transferor, ILC and you.
The terms which follow, when used in this Agreement, shall have the
meanings indicated:
"Effective Date" means each date that the Registration
Statement and any post-effective amendment or amendments thereto
became or become effective under the Securities Act.
"Execution Time" means the date and time that this Agreement
is executed and delivered by the parties hereto.
"Final Prospectus" means any prospectus delivered to
purchasers of the Notes at or before the time of confirmation of
their purchases.
"Preliminary Prospectus" means any preliminary prospectus
included in the Registration Statement, and which, as of the
Effective Date, omits Rule 430A Information.
"Registration Statement" means the registration statement
(Registration Number 333- ), including amendments, incorporated
documents, exhibits and financial statements, in the form in which it
has or shall become effective and, if any post-effective amendment
thereto becomes effective prior to the Issuance Date, shall also mean
such registration statement as so amended. Such term shall include
Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A.
"Rule 424" and "Rule 430A" refers to such rules under the
Securities Act.
"Rule 430A Information" means information with respect to
the Notes and the offering thereof permitted, pursuant to Rule 430A,
to be omitted from the Registration Statement when it becomes
effective.
"Underwriting Information" has the meaning given to such
term in Section 8(b).
Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in Appendix X to the Indenture.
Section 2. Purchase and Sale of Notes.
---------------------------
(a) Subject to the terms and conditions and in reliance upon the
covenants, representations and warranties set forth herein, Underwriter agrees
to purchase from Transferor the Initial Principal Amount of the Notes pursuant
to the terms of this Agreement on the
2
<PAGE>
Issuance Date at the purchase price (the "Purchase Price") set forth on
Schedule A attached hereto.
(b) The rights of Transferor, ILC and Underwriter shall be as set
forth in Section 13.
(c) It is understood that Underwriter proposes to offer the Notes for
sale to the public in the manner set forth in the Final Prospectus.
Section 3. Delivery and Payment. (a) Delivery of and payment for the
Notes by Underwriter shall be made at the offices of Mayer, Brown & Platt, New
York, New York, at 10:00 a.m., New York time, on September ___, 1998, or such
other place and time as the parties hereto agree (the "Issuance Date").
Delivery of the Notes shall be made against payment of the purchase price in
immediately available funds drawn to the order Transferor. The Notes to be so
delivered will be initially represented by one or more Notes registered in the
name of Cede & Co., the nominee of DTC. The interests of beneficial owners of
the Notes will be represented by book entries on the records of DTC and
participating members thereof. Definitive Notes will be available only under
limited circumstances described in the Pooling and Servicing Agreement.
Transferor and ILC agree to have the Notes available for inspection
by Underwriters in New York, New York, not later than 1:00 p.m., New York City
time, on the Business Day prior to the Issuance Date.
Section 4. Representations and Warranties of Transferor. (a)
Transferor hereby represents and warrants to, and agrees with, Underwriter as
follows:
(i) Transferor meets the requirements for use of Form S-1
under the Securities Act of 1933 (the "Securities Act") and has filed
with the Securities and Exchange Commission (the "Commission") a
registration statement (Registration No. 333-[_____]) on such form,
including the Preliminary Prospectus relating to the Notes, on such
Form S-1 for the registration under the Securities Act of the Notes.
Transferor may have filed one or more amendments thereto, including
the related Preliminary Prospectus, each of which has previously been
furnished to you. Transferor will file with the Commission either,
(A) prior to the effectiveness of such Registration Statement, a
further amendment thereto (including the form of Final Prospectus) or
(B) after effectiveness of such Registration Statement, a Final
Prospectus in accordance with Rules 430A and 424(b)(1) or (4). In the
case of clause (B), Transferor will include in such Registration
Statement, as amended at the Effective Date, all information (other
than Rule 430A Information) required by the Securities Act and the
rules thereunder to be included with respect to the Notes and the
offering thereof. As filed, such amendment and form of Final
Prospectus, or such Final Prospectus, shall include all Rule 430A
Information and, except to the extent you shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other
3
<PAGE>
changes (beyond that contained in the latest Preliminary Prospectus
which has previously been furnished to you) as Transferor has advised
you, prior to the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did
or will comply in all material respects with the applicable
requirements of the Securities Act and the rules thereunder; on the
Effective Date and when the Final Prospectus is first filed (if
required) in accordance with Rule 424(b) and on the Issuance Date,
the Final Prospectus will comply in all material respects with the
applicable requirements of the Securities Act and the rules
thereunder; on the Effective Date, the Registration Statement did not
or will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and the Final
Prospectus, as of its date and on the Issuance Date, did not or will
not include any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, that Transferor makes no representations or
warranties as to the Underwriting Information.
(iii) This Agreement has been duly authorized, executed and
delivered by Transferor and constitutes a legal, valid and binding
agreement of Transferor enforceable in accordance with its terms,
except that the provisions hereof relating to indemnification of
Underwriter may be subject to limitations of public policy.
(iv) Each of the Basic Documents to which Transferor is a
party have been duly authorized by Transferor and, when executed and
delivered by Transferor, will constitute the legal, valid and binding
obligation of Issuer, enforceable in accordance with its terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(v) The direction by Transferor to Indenture Trustee to
authenticate the Notes has been duly authorized by Transferor and,
when duly and validly executed by Trustee, authenticated by Indenture
Trustee and delivered in accordance with the Indenture and this
Agreement, will be the legal, valid and binding obligations of
Issuer, enforceable in accordance with their terms, and entitled to
the benefits of the Indenture, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought.
(vi) The sale of the Notes and the performance of this
Agreement and the Basic Documents to which Transferor is a party by
Transferor will (A) not conflict with or result in a breach of, and
will not constitute a default under any of the provisions of, its
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certificate of incorporation or any law, governmental rule or
regulation, or any judgment, decree or order binding on Transferor or
its properties, or any of the provisions of any indenture, mortgage,
deed of trust, contract or other agreement or instrument to which
Transferor is a party or by which it is bound or (B) not result in
the creation or imposition of any adverse claim and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for
the sale of the Notes or the consummation by Transferor of the
transactions contemplated by this Agreement, except such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Securities Act and under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Notes by Underwriter.
(vii) Neither Transferor nor Issuer is, and will not, as of
the Issuance Date, be an "investment company" under the Investment
Company Act of 1940 (the "1940 Act").
(viii) Transferor hereby makes and repeats each of the
representations and warranties set forth in Section 3.1 of the
Pooling and Servicing Agreement. Such representations and warranties
are incorporated by reference in this Section 4(a) and Underwriter
may rely thereon as if such representations and warranties were fully
set forth herein.
(b) ILC hereby represents and warrants to and agrees with Underwriter
as follows:
(i) This Agreement has been duly authorized, executed and
delivered, each of the Basic Documents to which ILC is a party has
been duly authorized, and this Agreement constitutes, and when
executed and delivered, each of such Basic Documents will constitute
the legal, valid and binding obligations of ILC, enforceable in
accordance with their respective terms, except that (A) the
enforcement thereof may be subject to (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (2) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought, and (B) the provisions hereof
relating to indemnification of Underwriters may be subject to
limitations of public policy.
(ii) The performance of each of this Agreement and the Basic
Documents to which ILC is a party by ILC, and the consummation of ILC
of the transactions herein and therein contemplated, will (A) not
conflict with or result in a breach of, and will not constitute a
default under any of the provisions of its certificate of
incorporation or by-laws or any law, governmental rule or regulation,
or any judgment, decree or order binding on ILC or its properties, or
any of the provisions of any indenture, mortgage, deed of trust,
contract or other agreement or instrument to which ILC is a party or
by which it is bound or (B) not result in the creation or imposition
of any adverse claim and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the consummation by ILC of the
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transactions contemplated by this Agreement or the Basic Documents,
except such consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Act and under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Notes by Underwriter.
(iii) ILC hereby makes and repeats the representations and
warranties set forth in Articles III and V of the Purchase Agreement.
Such representations and warranties are incorporated by reference in
this Section 4(b), and Underwriter may rely thereon as if such
representations and warranties were fully set forth herein.
(iv) ILC represents and warrants it has delivered to
Underwriter complete and correct copies of balance sheet and
statements of income and retained earnings reported by The Provident
Bank, of which ILC is a wholly-owned subsidiary for the fiscal year
ended December 31, 1997. Except as set forth in or contemplated in
the Registration Statement and the Final Prospectus, there has been
no material adverse change in the condition (financial or otherwise)
of The Provident Bank, ILC or any other consolidated subsidiary of
the Provident Bank since December 31, 1997.
(v) Any taxes, fees and other governmental charges arising
from the execution and delivery of this Agreement and the Basic
Documents and in connection with the execution, delivery and issuance
of the Notes and with the transfer of the Leases and the Equipment,
have been paid or will be paid by ILC or Transferor, as applicable.
(c) Each of Transferor and ILC represents and warrants to you,
jointly and severally, that:
(i) There is no pending or threatened action, suit or
proceeding against or affecting it in any court or tribunal or before
any arbitrator of any kind or before or by any governmental authority
(A) asserting the invalidity of this Agreement, any Basic Document or
the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this
Agreement or the Basic Documents or (C) seeking any determination or
ruling that might materially and adversely affect (x) its performance
or its obligations under this Agreement or the Basic Documents (as
applicable) or (y) the validity or enforceability of this Agreement,
any Basic Document or the Notes.
(ii) Ernst & Young is an independent public accountant with
respect to The Provident Bank, ILC and Transferor within the meaning
of the Securities Act and the rules and regulations promulgated
thereunder.
Section 5. Covenants of Transferor and ILC. Transferor and ILC,
jointly and severally, hereby covenant and agree with you as follows:
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(a) To use best efforts to cause the Registration Statement, and any
amendment thereto, if not effective as of the date hereof, to become
effective. If the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Final Prospectus is otherwise required
under Rule 424(b), Transferor will file the Final Prospectus, properly
completed, pursuant to Rule 424(b) within the time period prescribed and will
provide evidence satisfactory to Underwriter of such timely filing. Transferor
will promptly advise Underwriter (i) when the Registration Statement shall
have become effective, (ii) when any amendment thereof shall have become
effective, (iii) of any request by the Commission for any amendment or
supplement of the Registration Statement or the Final Prospectus or for any
additional information, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose, and (v) of the
receipt by Transferor of any notification with respect to the suspension of
the qualification of the Notes for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose. Transferor will not file
any amendment of the Registration Statement or supplement to the Final
Prospectus to which Underwriter reasonably objects. Transferor and ILC will
use best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a Final Prospectus relating to the Notes is
required to be delivered under the Securities Act, any event occurs as a
result of which the Final Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading or, if it shall be necessary to
supplement such Final Prospectus to comply with the Securities Act or the
rules thereunder, Transferor promptly will prepare and file with the
Commission, subject to paragraph (a) of this Section 5, a supplement which
will correct such statement or omission or an amendment which will effect such
compliance.
(c) As soon as practicable, Transferor will make generally available
to Noteholders and to Underwriter an earnings statement or statements of
Issuer which will satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 under the Securities Act.
(d) Issuer will furnish to Underwriter and counsel for Underwriter,
without charge, signed copies of the Registration Statement (including
exhibits thereto) and, so long as delivery of the prospectus by Underwriter or
any dealer may be required by the Securities Act, as many copies of each Final
Prospectus relating to the Notes and any supplement thereto as Underwriter may
reasonably request.
(e) ILC and Transferor will take all reasonable actions requested by
Underwriter to arrange for the qualification of the Notes for sale under the
laws of such jurisdictions within the United States or as necessary to qualify
for DTC and as Underwriter may designate, will maintain such qualifications in
effect so long as required for the completion of the distribution of the
Notes; provided, in connection therewith Transferor shall not be required to
qualify as a foreign corporation doing business in any jurisdiction.
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(f) For so long as the Notes are outstanding, Transferor and ILC
shall deliver to Underwriter by first-class mail and as soon as practicable a
copy of all reports and notices delivered to Indenture Trustee or the
Noteholders under the Indenture.
(g) For so long as the Notes are outstanding, Transferor and ILC will
furnish to Underwriter as soon as practicable after filing any other
information concerning Transferor or ILC filed with any government or
regulatory authority which is otherwise publicly available.
(h) To the extent, if any, that any rating provided with respect to
the Notes set forth in Section 6(e) is conditional upon the furnishing of
documents reasonably available to Transferor or ILC, Transferor and ILC shall
furnish such documents.
Section 6. Conditions of Underwriters' Obligation. The obligations of
Underwriter to purchase and pay for the Notes on the Issuance Date shall be
subject to the accuracy in all material respects of the representations and
warranties of Transferor and ILC herein, in each of the Basic Documents, to
the performance by Transferor and ILC in all material respects of their
obligations hereunder and to the following additional conditions:
(a) Transferor and ILC shall each have delivered a certificate (an
"Officer's Certificate"), dated the Issuance Date, signed by its [President
and its Chief Financial Officer], to the effect that:
(i) the representations and warranties made by Transferor or
ILC, as applicable, in this Agreement and the Basic Documents (the
"Transaction Documents") are true and correct in all material
respects at and as of the date of such Officer's Certificate as if
made on and as of such date (except to the extent they expressly
relate to an earlier date);
(ii) Transferor or ILC (as the case may be) has complied
with all the agreements and satisfied all the conditions on its part
to be performed or satisfied under the Transaction Documents at or
prior to the date of such Officer's Certificate;
(iii) nothing has come to such officer's attention that
would lead such officer to believe that the Final Prospectus contains
any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and
(iv) such officer is not aware of (A) any request of the
Commission for further amendment of the Registration Statement or the
Final Prospectus for any additional information, (B) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any
proceeding for that purpose or (C) any notification with respect to
the suspension of the
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<PAGE>
qualification of the Notes for sale in any jurisdiction or the
threatening of any proceeding for that purpose.
(b) Underwriter shall have received from counsel to ILC and
Transferor, favorable opinions (subject to customary and usual
qualifications), dated the Issuance Date and reasonably satisfactory in form
and substance to Underwriter and their counsel with respect to, or to the
effect that, among other things: (i) the due formation and qualification of
each of Transferor and ILC and that Transferor and ILC, as applicable, have
the corporate power and authority to perform the Transaction Documents and the
transactions contemplated herein and therein; (ii) the due authorization,
execution, delivery and enforceability of this Agreement and the other
Transaction Documents as applicable, by Transferor and ILC; (iii) each of this
Agreement and the other Transaction Documents are the legal, valid and binding
obligation of Transferor and ILC, as applicable, enforceable against each of
them in accordance with its terms (subject to customary exceptions relating to
bankruptcy and laws affecting creditors' rights); (iv) the Notes have been
duly authorized, executed and delivered to Transferor and constitute the
legal, valid and binding obligations of Issuer, enforceable in accordance with
their terms (subject to customary exceptions as to bankruptcy and laws
affecting creditors' rights) and are entitled to the benefits of the
Indenture; (v) the issuance of the Notes by Issuer, the sale of the Notes by
Transferor, the performance of this Agreement by Transferor and ILC, the
compliance by Transferor and ILC with the terms of the Transaction Documents,
as applicable, and the consummation of the transactions contemplated herein
and therein will not conflict with the organizational documents of Transferor
or ILC, or to the best of any such counsel's knowledge, any other contracts to
which Transferor or ILC is a party or by which either of them is bound; (vi)
to the best of such counsel's knowledge, there is no legal or governmental
proceeding threatened or pending against Transferor or ILC which would have a
material adverse effect on the issuance of the Notes; (vii) if a court
disregarded the intent of the parties and characterized the transfers as a
pledge of collateral, each of the Purchase Agreement and the Pooling and
Servicing Agreement and accompanying documentation creates a valid security
interest in the Leases and the Equipment (or interests therein) under New York
law; (viii) assuming no prior financing statements covering the Leases are in
effect based on a review of certain UCC searches and that financing statements
covering the Leases and naming (A) Transferor as secured party/purchaser and
ILC as debtor/seller, (B) Transferor as debtor/seller and Issuer as secured
party/purchaser and (c) Issuer as debtor and Indenture Trustee as secured
party, in each case are being filed in the appropriate filing offices of the
State of Ohio, (1) immediately after giving effect to the transfers
contemplated by the Purchase Agreement, Transferor has a first priority
perfected interest in all right, title and interest of ILC in the Leases, (2)
immediately after giving effect to the transfers contemplated by the Pooling
and Servicing Agreement, Issuer has a first priority perfected interest in all
right, title and interest of Transferor in the Leases, and (3) immediately
after giving effect to the grant contemplated by the Indenture, Indenture
Trustee has a first priority perfected security interest in all right, title
and interest of Issuer in the Leases; (ix) the Trust Agreement is not required
to be qualified under Trust Indenture Act and the Trust is not required to be
registered under the 1940 Act, (x) the Indenture has been duly qualified under
the Trust Indenture Act, (xi) neither the Transferor nor Issuer is an
"investment company" or a company "controlled by" an "investment company"
within the meaning of the 1940 Act and
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(xii) on the Issuance Date the Registration Statement is effective, and, that
to the best of such counsel's knowledge no stop order suspending the
effectiveness of the Registration Statement has been issued or is threatened,
and that although such counsel is not passing on the factual accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus, nothing came to such counsel's attention that
leads such counsel to believe that either the Registration Statement or the
Prospectus (as of the Effective Date or the date of the Prospectus) contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made not misleading. In
rendering such opinion, counsel may rely, to the extent deemed proper and as
stated therein, as to matters of fact on certificates of responsible officers
of Transferor and ILC and public officials and as to matters of state law of
jurisdictions other than the jurisdictions in which such counsel is admitted
to practice, on opinions of local counsel satisfactory to Underwriter.
(c) Underwriter shall have received from Mayer, Brown & Platt,
special counsel for Underwriter, such opinion or opinions, dated the Issuance
Date, with respect to the validity of the Notes, the Registration Statement,
the Final Prospectus, true sale, nonconsolidation and other related matters as
Underwriter may require.
(d) At the Execution Time and at the Issuance Date, Ernst & Young
shall have furnished to Underwriter a letter or letters, dated the date of
this Agreement and the Issuance Date, respectively, in form and substance
satisfactory to Underwriter.
(e) The Class A-1 Notes shall have been rated at least [__________]
the Class A-2 notes shall have been rated at least [__________] and the Class
B Notes shall have been rated at least [__________] by at least two nationally
recognized rating agencies, and that the Certificates shall have been rated at
least [__________] by at least two nationally recognized rating agencies,
which ratings shall not have been reduced or withdrawn as evidenced by the
Officer's Certificate referred to in Section 6(a).
(f) Counsel to Indenture Trustee shall have delivered a favorable
opinion (subject to customary and usual exceptions), dated the Issuance Date,
and satisfactory in form and substance to Underwriter and counsel for
Underwriter and to Transferor and ILC and their counsel with respect to, or to
the effect that, among other things: (i) the due incorporation and valid
existence of Indenture Trustee, (ii) the due authorization, execution and
delivery by Indenture Trustee of the Indenture, (iii) the Indenture is the
legal, valid and bending obligation of Indenture Trustee, enforceable against
Indenture Trustee in accordance with its terms (subject to customary and usual
exceptions), (iv) no approvals or filings with any Governmental Authority
required in connection with the execution, delivery or performance by
Indenture Trustee of the Indenture, (v) the execution, delivery and
performance of the Indenture will not cause any default under Indenture
Trustee's organizational documents or other contracts to which it is a party
or by which it is bound and (vi) the Notes have been duly authenticated by
Indenture Trustee in accordance with the terms of the Indenture.
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(g) Counsel to Trustee shall have delivered a favorable opinion
(subject to customary and usual exceptions), dated the Issuance Date, and
satisfactory in form and substance to Underwriter and counsel for Underwriter
and to Transferor and ILC and their counsel with respect to, or to the effect
that: (i) the due incorporation and valid existence of Trustee, (ii) the due
authorization, execution and delivery by Trustee of the Trust Agreement, (iii)
the Trust Agreement is the legal, valid and bending obligation of Trustee,
enforceable against Trustee in accordance with its terms (subject to customary
and usual exceptions), (iv) no approvals or filings with any Governmental
Authority required in connection with the execution, delivery or performance
by Trustee of the Trust Agreement, (v) the execution, delivery and performance
of the Trust Agreement will not cause any default under Trustee's
organizational documents or other contracts to which it is a party or by which
it is bound and (vi) the Trust has been duly formed and is validly existing as
a statutory business trust under the laws of the State of Delaware, with full
power and authority to execute, deliver and perform its obligations under each
of the Basic Documents to which the Trust is a party.
(h) Underwriter shall have received the approval of each of their
respective investment committees with respect to the execution, delivery and
performance of this Agreement.
(i) All conditions precedent to the sale of the Certificates pursuant
to the Certificate Placement Agreement have been fulfilled, and the
Certificates have been sold or will be sold concurrently with the sale of the
Notes.
(j) All proceedings in connection with the transactions contemplated
by this Agreement and all documents incident hereto shall be reasonably
satisfactory in form and substance to you, and you and your special counsel
shall have received such other information, certificates and documents as you
or they may reasonably request.
Section 7. Reimbursement of Expenses. If (x) no closing of the sale
of the Notes occurs by the Issuance Date through no fault of Transferor or ILC
or because the conditions set forth in Sections 6(c),(d), (e), (f), (g) or (h)
have not been met, or (y) Underwriter terminates the engagement pursuant to
Section 10 or because any conditions precedent in Section 6 (other than
Section 6(d)) have not been fulfilled, then Transferor or ILC's liability to
Underwriter shall be limited to the reimbursement of Underwriter's expenses
incurred through the date of termination for its reasonable out-of-pocket and
incidental expenses. In addition, whether or not the Notes are issued or sold:
(a) Transferor or ILC shall pay the reasonable fees and expenses
associated with the transactions contemplated hereby not paid by Underwriter
in accordance with the provisions of Section 7(b) including, without
limitation, the following fees and expenses:
(i) rating agency fees payable with respect to their ratings
of the Notes;
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(ii) fees charged by the firm of independent public
accountants referred to in Section 6(d);
(iii) filing fees in connection with the transactions
contemplated hereby including, but not limited to, the Commission;
(iv) fees and expenses of counsel to Underwriter;
(v) Indenture Trustee's and Trustee's fees and fees of
counsel to Indenture Trustee and Trustee;
(vi) the costs and expenses of printing the Registration
Statement and the Prospectus;
(vii) the costs of printing or reproducing this Agreement,
the Blue Sky Survey and any other documents in connection with the
offer, sale and delivery of the Notes;
(viii) all expenses in connection with the qualification of
the Notes under state securities laws as provided in Section
4(a)(vi), including the fees and disbursements of counsel in
connection with the Blue Sky Survey;
(ix) the cost of preparing the Notes;
(x) the cost or expenses of any transfer agent or registrar;
and
(xi) all other costs and expenses incident to the
performance of their obligations hereunder which are not otherwise
specifically provided for in this Section 7; provided, that neither
ILC nor Transferor waives any rights to reimbursement from
Underwriter if Underwriter fails to perform in accordance with this
Agreement.
(b) It is understood and agreed that, except as provided in Section 8
and 9, Underwriter will pay securities transfer taxes on resale of any of the
Notes by it, and any advertising expenses connected with any offers it may
make.
Section 8. Indemnification and Contribution. (a) Transferor and ILC,
jointly and severally, will indemnify and hold harmless Underwriter against
any losses, claims, damages or liabilities, joint or several, to which
Underwriter may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or acts in respect thereof)
arise out of or are base upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, the Preliminary
Prospectus or the Final Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will promptly reimburse Underwriter for
any legal or other expenses reasonably incurred by Underwriter in connection
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with investigating, preparing to defend or defending, or appearing as a
third-party witness in connection with, any such action or claim; provided,
that Transferor and ILC shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, the Preliminary Prospectus or the
Final Prospectus or any such amendment or supplement, in reliance upon and in
conformity with the Underwriting Information (defined below).
(b) Underwriter agrees to indemnify and hold harmless Transferor and
ILC against any losses, claims, damages or liabilities to which Transferor and
ILC may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or acts in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Final Prospectus,
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made to the
Registration Statement or the Final Prospectus or any such amendment or
supplement, in reliance upon and in conformity with written information
furnished to Transferor or ILC by or on behalf of Underwriter expressly for
use therein; and will reimburse Transferor or ILC for any legal or other
expenses reasonably incurred by Transferor or ILC in connection with the
investigating, preparing to defend or defending, or appearing as a third-party
witness in connection with, any such action or claim. Transferor and ILC
acknowledge that the statements set forth in the last paragraph of the cover
page and under the heading "Underwriting" in the Registration Statement, the
Preliminary Prospectus and the Final Prospectus constitute the only
information furnished in writing by or on behalf of Underwriter for inclusion
in the Registration Statement or the Final Prospectus (the "Underwriting
Information"), and each of you confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) 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; provided, that if the
defendants in any such action include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised by
counsel that representation of such indemnified party and the indemnifying
party may be inappropriate under applicable standards of professional conduct
due to actual or potential differing interests between them, the indemnified
party or parties shall have the right to select separate counsel to defend
such action on behalf of such indemnified party or parties.
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It is understood that the indemnifying party shall, in connection with any
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys together with appropriate local counsel at any time
from all indemnified parties not having actual or potential differing interest
with any other indemnified party. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to appoint counsel to
defend such action and approval by the indemnified party of such counsel, the
indemnifying party will not be liable for any settlement entered into without
its consent and will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall be only in respect of the counsel referred to in such
clause (i) or (iii). Notwithstanding the immediately preceding sentence and
the first sentence of this paragraph, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, the indemnifying party agrees that it shall
be liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 30 days after receipt
by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) in respect of any losses, claims, damages or liabilities
(or actions or proceeding in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by Transferor and ILC on
the one hand and Underwriter on the other from the offering of the Notes. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c), then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of Transferor or ILC on the one hand and Underwriter
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by Transferor or ILC on the one hand and
Underwriter on the other shall be deemed to be in the same proportion that the
total net proceeds from the offering (before deducting expenses) received by
Transferor and ILC bear to the total underwriting discounts and commissions
received by Underwriter, in each case as set forth in the table on the cover
page of the Final Prospectus. The relative fault shall be
14
<PAGE>
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by Transferor or ILC on
the one hand or Underwriter on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Transferor, ILC and Underwriter agree that it would not
be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above in
this subsection (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to above in this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, preparing to defend or
defending, or appearing as a third-party witness in connection with, any such
action or claim. Notwithstanding the provision for this subsection (d),
Underwriter shall not be required to contribute any amount in excess of the
total underwriting discount as set forth on the cover page of the Prospectus.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of Transferor and ILC under this Section 8 shall
be in addition to any liability which Transferor or ILC may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls Underwriter within the meaning of the Securities Act; and the
obligations of Underwriter under this Section 8 shall be in addition to any
liability which Underwriter may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of Transferor and ILC and
to each person, if any, who controls Transferor or ILC within the meaning of
the Securities Act.
Section 9. Survival. The respective representations, warranties and
agreements of Transferor, ILC and Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, notwithstanding any
investigation heretofore or hereafter made by or on behalf of Transferor, ILC
or Underwriter, and such representations, warranties and agreements made by
Transferor and ILC shall survive the delivery and payment for the Notes. The
provisions of Sections 7 and 8 shall survive the termination or cancellation
of this Agreement.
Section 10. Termination. (a) This Agreement may be terminated by you
at any time upon the giving of notice at any time prior to the Issuance Date:
(i) if there has been, since December 31, 1997, any material adverse change in
the condition, financial or otherwise, of ILC or Transferor, or in the
earnings, business affairs or business prospects of ILC or Transferor, whether
or not arising in the ordinary course of business, or (ii) if there has
occurred any outbreak or escalation of hostilities or other calamity or crisis
the effect of which on the financial markets of the United States is such as
to make it, in your reasonable judgment, impracticable to market the Notes or
enforce contracts for the sale of the Notes, or (iii) if trading generally on
either the American Stock Exchange or the New York Stock Exchange has been
suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of said
exchanges or by order of the Commission or any
15
<PAGE>
other governmental authority, or (iv) if a banking moratorium has been
declared by either federal or New York authorities. In the event of any such
termination, no party will have any liability to any other party hereto,
except as otherwise provided in Sections 7 or 8.
(b) This Agreement may not be terminated by Transferor or ILC, except
in accordance with law, without the written consent of Underwriter.
(c) Notwithstanding anything herein to the contrary, if Transferor or
ILC does not perform any obligation under this Agreement or any representation
and warranty hereunder is incomplete or inaccurate in any material respect,
this Agreement and all of Underwriter's obligations hereunder may be
immediately canceled by Underwriter by notice thereof to Transferor or ILC.
Any such cancellation shall be without liability of any party to any other
party except that the provisions of Sections 8 and 9 shall survive any such
cancellation.
Section 11. Notices. All communications provided for or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by certified or registered mail, postage
prepaid, or transmitted by telex or telegraph and confirmed by a similar
mailed writing, if to you, addressed to you, at the addresses first stated in
this Agreement, or to such other address as you may designate in writing to
Transferor or ILC; if to ILC, addressed to ILC at 1023 West Eighth Street,
Cincinnati, Ohio, 45203, facsimile no.: (513) ________; if to Transferor,
addressed to Transferor at 1023 West Eighth Street, Cincinnati, Ohio, 45203
facsimile no: (513) _________; or such other address as Transferor or ILC may
have designated in writing to you.
Section 12. Successors. This Agreement will inure to the benefit of
and be binding upon Transferor and ILC and their successors and assigns and
Underwriter and its successors and assigns.
Section 13. Entire Agreement. This Agreement and the documents
referred to herein and to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties.
Section 14. Governing Law. (a) THIS AGREEMENT IS TO BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF
LAWS PROVISIONS) OF THE STATE OF NEW YORK.
(b) TRANSFEROR AND ILC HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT
LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN
SECTION 11 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
THE
16
<PAGE>
SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. TRANSFEROR
AND ILC HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF TRANSFEROR OR ILC TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT EITHER'S
RIGHT TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF ANY OTHER
JURISDICTION.
(c) TRANSFEROR AND ILC HEREBY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
Section 16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same
instrument.
Section 17. Miscellaneous. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
If you are in agreement with the foregoing, please sign a counterpart
hereof and return the same to Transferor or ILC, whereupon this Agreement
shall become a binding agreement between Underwriter, Transferor and ILC.
17
<PAGE>
Very truly yours,
INFORMATION LEASING CORPORATION
By:
--------------------------------------
Name:
Title:
PROVIDENT LEASE RECEIVABLES CORPORATION
By:
--------------------------------------
Name:
Title:
The foregoing Agreement is
hereby accepted and entered
into as of the date hereof.
LEHMAN BROTHERS INC.
By:
-------------------------
Name:
Title:
18
<PAGE>
SCHEDULE A
Purchase Price
<TABLE>
<CAPTION>
Principal Principal Principal
--------- --------- ---------
Amount of Amount of Amount of
--------- --------- ---------
Underwriter Class A-1 Notes Class A-2 Notes Class B Notes
----------- --------------- --------------- -------------
<S> <C> <C> <C>
Lehman Brothers Inc. $ $ $
</TABLE>
19
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
PROVIDENT LEASE RECEIVABLES CORPORATION
Provident Lease Receivables Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Company"), does hereby certify:
1. The name of the Company is Provident Lease Receivables Corporation.
The Company was originally incorporated under the same name, and the original
Certificate of Incorporation of the Company (the "Original Certificate") was
filed with the Secretary of State of the State of Delaware on July 9, 1998.
2. The Company has not received any payment for any of its stock.
3. The restatement and amendment of the Original Certificate set forth
below was duly adopted in accordance with the provisions of Sections 241 and
245 of the General Corporation Law of the State of Delaware.
4. The text of the Original Certificate is hereby restated and amended to
read in its entirety as follows:
ARTICLE I
---------
NAME
The name of the corporation is Provident Lease Receivables Corporation
(the "Company").
ARTICLE II
----------
REGISTERED OFFICE AND AGENT
The address of the Company's registered office in the State of Delaware
is 1209 Orange Street, Corporation Trust Center, Wilmington, New Castle
County, Delaware 19801. The name of its registered agent at such address is
The Corporation Trust Company.
<PAGE>
ARTICLE III
-----------
CORPORATE PURPOSES
The nature of the business or purposes to be conducted or promoted by the
Company is to engage exclusively in the following business and financial
activities:
(a) to purchase or otherwise acquire from certain direct and indirect
subsidiaries of Information Leasing Corporation and its affiliates
or trusts formed by Information Leasing Corporation or its
affiliates, and to hold, sell, transfer or pledge or otherwise
exercise ownership rights with respect to (i) equipment leases and
lease receivables, whether such equipment leases or lease
receivables constitute accounts, chattel paper, instruments or
general intangibles, and including rights to payment of any
interest, finance charges or fees and any other rights with respect
thereto (the "Lease Receivables"), (ii) the equipment leased under
the equipment leases which equipment gives rise to the Lease
Receivables (the "Leased Equipment") and any accessions thereto;
(iii) the rights to proceeds with respect to the Lease Receivables
and Leased Equipment from claims on certain insurance policies
covering the Leased Equipment and any rights of Information Leasing
Corporation or its affiliates in any rebates of premiums and other
amounts relating to certain insurance policies and other items under
the Lease Receivables; (iv) any rights of Information Leasing
Corporation or its affiliates relating to the Lease Receivables or
Leased Equipment; and (v) any and all proceeds of the foregoing (the
property described in clauses (iii) through (v) above being called
"Related Assets");
(b) to enter into any agreement providing for the sale, transfer or
pledge of the Lease Receivables, Leased Equipment and Related Assets
and to issue and sell one or more series of bonds, notes,
certificates or other securities secured primarily by or evidencing
beneficial ownership interests in the Lease Receivables, Leased
Equipment and Related Assets;
(c) to use the proceeds of the sale of bonds, notes, certificates or
other securities or the proceeds of the sale of the Lease
Receivables, Leased Equipment and Related Assets to acquire Lease
Receivables, Leased Equipment and Related Assets;
(d) to act as settlor or depositor of trusts or other entities (a
"Trust") formed to issue bonds, notes, certificates or other
securities secured by or evidencing beneficial ownership interests
in the Lease Receivables, Leased Equipment and Related Assets;
(e) to acquire, own, hold, transfer, assign, pledge and otherwise deal
with bonds, notes, certificates and other securities issued by a
Trust or pursuant to an indenture or similar agreement to which such
a Trust is a party;
(f) for federal, state or local tax purposes, to serve as general
partner of any Trust;
-2-
<PAGE>
(g) to enter into any agreement relating to any Lease Receivables,
Leased Equipment or Related Assets that provides for the
administration, service and collection of amounts due on such Lease
Receivables, Leased Equipment and Related Assets;
(h) to establish any reserve account, spread account or other credit
enhancement for the benefit of any bond, note, certificate or other
security issued by any Trust or under any related indenture and to
otherwise invest any proceeds from Lease Receivables, Leased
Equipment and Related Assets and any other income as determined by
the Company's board of directors;
(i) to issue capital stock as provided for herein; and
(j) to engage in any lawful act or activity and to exercise any powers
permitted to corporations organized under the General Corporation
Law of the State of Delaware that are incidental to and necessary,
suitable or convenient for the accomplishment of the purposes
specified in clauses (a) through (i) above.
ARTICLE IV
----------
CAPITAL STOCK
(a) The total number of shares of all classes of capital stock that the
Company shall have authority to issue is One Thousand (1,000) shares
of common stock, without par value (the "Common Stock").
(b) Except as otherwise expressly provided by law, all voting rights
shall be vested in the holders of the Common Stock, and at each
meeting of stockholders of the Company, each holder of Common Stock
shall be entitled to one vote for each share on each matter to come
before the meeting.
(c) Dividends may be declared upon and paid to the holders of the Common
Stock as the board of directors of the Company (the "Board of
Directors") shall determine.
(d) In the event of voluntary or involuntary liquidation or dissolution
of the Company, the holders of the Common Stock shall be entitled to
share ratably in all assets of the Company.
ARTICLE V
---------
VOTING REQUIREMENTS
Without (i) the affirmative vote of 100% of the members of the Board of
Directors, including, without limitation, the affirmative vote of each
Independent Director, as defined herein, and (ii) the affirmative vote of the
holders of 100% of the number of shares of the Common Stock outstanding,
-3-
<PAGE>
voting (A) in person or by proxy at a special meeting called for the purpose
or (B) by unanimous written consent of the holders of the Common Stock acting
without such a meeting, as the case may be, the Company shall not amend either
this Article V, Article VII, Article X, Article XI(a) or (c) or Article XV of
this Certificate of Incorporation; provided that if an Independent Director is
not then in office and acting, a vote upon any matter set forth in this
Article V shall not be taken unless and until a successor director, meeting
the requirements of Article VII of this Certificate of Incorporation, shall
have been elected.
ARTICLE VI
----------
INCORPORATOR
The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Sonia Ravin Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
ARTICLE VII
-----------
INDEPENDENT DIRECTORS
---------------------
(a) At any given time, at least two members of the Company's Board of
Directors shall be Independent Directors, as defined below; provided, however,
that if at any time there are not two Independent Directors for any reason,
subject to Articles V and X hereof, any action taken by the Board of Directors
in accordance with this Certificate of Incorporation and the Corporation's
By-Laws (other than actions taken with respect to matters described in such
Articles V and X) shall nonetheless be valid. As used herein, "Independent
Director" means an individual who is not, and never was, (1) a stockholder,
director, officer, employee, affiliate, associate, customer or supplier of, or
any person that has received any benefit (excluding, however, any compensation
received by the director, in such person's capacity as such an independent
director) in any form whatever from, or any person that has provided any
service (excluding, however, any service provided by the director, in such
person's capacity as such a director, required by this Article VII) in any
form whatever to, the Company or any of its affiliates or associates, or (2)
any person owning beneficially, directly or indirectly, any outstanding shares
of common stock of the Company, or stockholder, director, officer, employee,
affiliate, associate, customer or supplier thereof, or any person that has
received any benefit (excluding, however, any compensation received by the
director, in such person's capacity as such an independent director) in any
form whatever from, or any person that has provided any service (excluding,
however, any service provided by the director, in such person's capacity as
such a director, required by this Article VII) in any form whatever to, such
beneficial owner or any of such beneficial owner's affiliates or associates.
No director required by this Article VII shall be a trustee in bankruptcy for
the Company or any affiliate of the Company.
-4-
<PAGE>
(b) With the consent of 100% of the initial stockholders of the Company,
which consent the initial stockholders believe to be in the best interest of
the initial stockholders and the Company, no Independent Director shall, with
regard to any action to be taken under or in connection with Article X, owe a
fiduciary duty or other obligation to the initial stockholders nor to any
successor stockholders (except as may specifically be required by the
statutory law of any applicable jurisdiction), and every stockholder,
including each successor stockholder, shall consent to the foregoing by virtue
of such stockholder's purchase of shares of capital stock of the Company -- no
further act or deed of any stockholder being required to evidence such
consent. Instead, each such director's fiduciary duty and other obligations
with regard to such action under or in connection with Article X shall be owed
to the Company and, with respect to any vote on any matter described in
Article V or Article X of this Certificate of Incorporation, to its senior
creditors and to any purchasers of Lease Receivables, Leased Equipment or
Related Assets, or undivided interests therein, from the Company. In addition,
no Independent Director may be removed unless (i) for cause and (ii) his or
her successor has been elected.
(c) As used in this Certificate of Incorporation, the term "person" means
a natural person, corporation or other entity, government, or political
subdivision, agency, or instrumentality of a government; an "affiliate" of a
person is a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified; and the term "associate," when used to indicate a
relationship with any person, means (1) a corporation or organization of which
such person is an officer, director or partner or is, directly or indirectly,
the beneficial owner of 10 percent or more of any class of equity securities,
(2) any trust or other estate in which such person serves as trustee or in a
similar capacity, and (3) any relative or spouse of such person, or any
relative of such spouse, who has the same home as such person.
ARTICLE VIII
------------
DURATION
The Company is to have perpetual existence.
ARTICLE IX
----------
STOCKHOLDER MEETINGS
Meetings of stockholders shall be held at such place, within or without
the State of Delaware, as may be designated by or in the manner provided in
the By-laws or, if not so designated or provided, at the registered office of
the Company in the State of Delaware. Elections of directors need not be by
ballot unless and except to the extent that the By-laws so provide. The books
of the Company may be kept (subject to any provision contained in any
applicable statute) outside the State of Delaware at such place or places as
may be designated from time to time by the Board of Directors or in the
By-laws of the Company.
-5-
<PAGE>
ARTICLE X
---------
CORPORATE RESTRICTIONS
The Company shall not, without (i) the affirmative vote of 100% of the
members of the Board of Directors, including the affirmative vote of each
Independent Director which vote of each such director shall be in writing and
given prior to such action, and (ii) the affirmative vote of the holders of
100% of the number of shares of Common Stock outstanding voting (A) in person
or by proxy at a special meeting called for the purpose or (B) by unanimous
written consent of the holders of the Common Stock acting without such a
meeting, as the case may be:
(a) make an assignment for the benefit of creditors, file a petition in
bankruptcy, petition or apply to any tribunal for the appointment of
a custodian, receiver or any trustee for it or for a substantial
part of its property, commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereinafter in effect, consent or acquiesce in the filing of any
such petition, application, proceeding or appointment of or taking
possession by the custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or
any substantial part of its property, or admit its inability to pay
its debts generally as they become due or authorize any of the
foregoing to be done or taken on behalf of the Company;
(b) be a party to any merger or consolidation or sell, transfer, assign,
convey or lease any substantial part of the assets of the Company,
or directly or indirectly purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of any
corporation, partnership, joint venture or any other entity; or
(c) dissolve or liquidate, in whole or in part.
provided, however, that if there shall not be two Independent Directors then
in office and acting, a vote upon any matter set forth in this Article X shall
not be taken unless and until two directors meeting the requirements of
Article VII of this Certificate of Incorporation shall have been elected.
ARTICLE XI
----------
POWERS OF BOARD OF DIRECTORS
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
(a) To make, alter, amend or repeal the By-laws of the Company, except
that such By-laws or any alteration, amendment or repeal thereof
shall not in any manner impair, nor impair the intent of, Article
III, Article V, Article VII, Article X, this Article XI(a) or (c),
Article XIV or Article XV of this Certificate of Incorporation.
(b) To determine the use and disposition of any surplus and net profits
of the Company, including the determination of the amount of working
capital required, to set apart out
-6-
<PAGE>
of any of the funds of the Company, whether or not available for
dividends, a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
(c) By a majority of the Board of Directors, to designate one or more
committees, each committee to consist of one or more of the
directors of the Company. The Board of Directors may designate one
or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee. The By-laws may provide that in the absence or
disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting,
whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution
of the Board of Directors, or in the By-laws of the Company, shall
have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the
Company, and may authorize the seal of the Company to be affixed to
all papers which may require it; but no such committee shall have
the power or authority in reference to amending the Certificate of
Incorporation, to authorize or take any action described in Article
V, Article VII, Article X, clauses (a) and (c) of this Article XI or
Article XV, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease, or exchange of all
or substantially all of the Company's property and assets,
recommending to the stockholders a dissolution of the Company or a
revocation of a dissolution, or amending the By-laws of the Company;
and, unless the resolution or By-laws expressly so provide, no such
committee shall have the power or authority to declare a dividend or
to authorize the issuance of stock.
(d) To exercise, in addition to the powers and authorities hereinbefore
or by law conferred upon it, any such power and authorities and do
all such acts and things as may be exercised or done by the Company,
subject, nevertheless, to the provisions of the laws of the State of
Delaware and of this Certificate of Incorporation and of the By-laws
of the Company.
In addition to the foregoing, the Company shall conduct its affairs in
the following manner: (i) the business and affairs of the Company will be
managed by or under the direction of its Board of Directors and the number of
directors of the Company shall be as from time to time fixed by, or in the
manner provided in, the By-Laws of the Company; (ii) the Company's funds and
other assets will be identifiable and will not be commingled with those of any
direct or ultimate parent of the Company or any subsidiary or affiliate of any
such parent (except for incidental commingling in the case of any misdirected
payment of a Receivable, in which case such commingled funds shall be
identified and separated as soon as practicable after the receipt of such
payment) to the extent specifically required by any agreement to which the
Company is a party; (iii) the Company will maintain separate bank accounts,
corporate records and books of accounts from those of any direct or ultimate
parent of the Company or any subsidiary or affiliate of any such parent; and
(iv) the Company will pay from its funds and assets all obligations and
indebtedness incurred by it.
-7-
<PAGE>
ARTICLE XII
-----------
NO DIRECTOR LIABILITY
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as it now exists or may hereafter be amended, no director of
the Company shall be personally liable to the Company or its stockholders for
monetary damages arising from a breach of fiduciary duty owed to the Company
or its stockholders, except for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) pursuant to section 174 of the General Corporation Law
of Delaware; or (iv) for any transaction from which the director derived an
improper personal benefit.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Company shall not adversely affect any right or protection of a
director of the Company existing at the time of such repeal or modification.
ARTICLE XIII
------------
DIRECTOR RELIANCE
A director shall be fully protected in relying in good faith upon the
books of account or other records of the Company or statements prepared by any
of its officers or by independent public accountants or by an appraiser
selected with reasonable care by the Board of Directors as to the value and
amount of the assets, liabilities and/or net profits of the Company, or any
other facts pertinent to the existence and amount of surplus or other funds
from which dividends might properly be declared and paid, or with which the
Company's capital stock might properly be purchased or redeemed.
ARTICLE XIV
-----------
SEPARATE LEGAL ENTITY
The business and affairs of the Company shall be managed by and under the
direction of its Board of Directors. The Company shall take appropriate and
reasonable steps to continue its identity as a separate legal entity and to
make it apparent to third persons that the Company is an entity with assets
and liabilities distinct from those of Information Leasing Corporation or its
affiliates or any other person, and that the Company is not a division of
Information Leasing Corporation or its affiliates or any other person.
-8-
<PAGE>
ARTICLE XV
----------
RESERVATION OF RIGHT TO
AMEND CERTIFICATE OF INCORPORATION
Except as set forth in Article V and Article X, the Company reserves the
right to amend, alter, or repeal any provision contained in this Certificate
of Incorporation in the manner now or hereafter prescribed by statute, and all
rights of stockholders herein are subject to this reservation.
-9-
<PAGE>
IN WITNESS WHEREOF, the undersigned duly authorized officer of the
Company has hereunto set his hand as of this 8th day of September, 1998.
By: /s/ Mark E. Magee
------------------------------------
Name Printed: Mark E. Magee
--------------------------
Title: Secretary
---------------------------------
-10-
<PAGE>
EXHIBIT 3.2
The following Restated By-Laws of Provident Lease Receivables Corporation
were adopted by written action by the Board of Directors of Provident Lease
Receivables Corporation on September 9, 1998 pursuant to the provisions of
Section 109 of the General Corporation Law of the State of Delaware.
RESTATED BY-LAWS
OF
PROVIDENT LEASE RECEIVABLES CORPORATION
ARTICLE I.
----------
Meetings of Stockholders
------------------------
Section 1. Annual Meetings. The annual meeting of the stockholders for
the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held each year at such time, on
such day and at such place, within or without the State of Delaware as shall
be designated by the Board of Directors.
Section 2. Special Meetings. A special meeting of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute, may be called
at any time by the President or the Board of Directors.
Section 3. Time and Place of Meetings. All meetings of the stockholders
shall be held at such times and places, within or without the State of
Delaware, as may from time to time be fixed by the Board of Directors or by
the President with respect to special meetings, or as shall be specified or
fixed in the respective notices or waivers of notice thereof.
Section 4. Notice of Meetings. Except as otherwise expressly required by
law or by the Certificate of Incorporation of Provident Lease Receivables
Corporation (the "Corporation"), notice of each meeting of the stockholders
shall be given, at least fifteen (15) days in the case of an annual meeting,
and ten (10) days in the case of a special meeting, before the day on which
the meeting is to be held, to each stockholder of record entitled to vote at
such meeting by mailing such notice in a postage prepaid envelope addressed to
the stockholder at the stockholder's last post-office address appearing on the
stock records of the Corporation. Except as otherwise expressly required by
law, no publication of any notice of a meeting of the stockholders shall be
required. At special meetings of stockholders, no business other than that
specified in the notice of the meeting or germane thereto shall be transacted
at such meeting. Except as otherwise expressly required by law, notice of any
adjourned meeting of the stockholders need not be given. Notice of any meeting
of stockholders may be waived in writing by a majority of the stockholders
entitled to vote thereat.
<PAGE>
Section 5. Quorum. At each meeting of the stockholders, except as
otherwise expressly required by law, stockholders holding a majority of the
shares of stock of the Corporation, issued and outstanding, and entitled to be
voted thereat, shall be present in person or by proxy to constitute a quorum
for the transaction of business. In the absence of a quorum at any such
meeting or any adjournment or adjournments thereof, a majority in voting
interest of those present in person or by proxy and entitled to vote thereat,
or in the absence therefrom of all the stockholders, any officer entitled to
preside at, or to act as secretary of, such meeting may adjourn such meeting
from time to time until stockholders holding the amount of stock requisite for
a quorum shall be present or represented. At any such adjourned meeting at
which a quorum may be present any business may be transacted which might have
been transacted at the meeting as originally called.
Section 6. Organization. At each meeting of the stockholders, one of the
following shall act as chairman of the meeting and preside thereat, in the
following order of precedence:
(a) the President;
(b) the Vice President designated by the Board of Directors to act as
chairman of said meetings and to preside thereat; or
(c) a stockholder of record of the Corporation who shall be chosen
chairman of such meeting by a majority in voting interest of the
stockholders present in person or by proxy and entitled to vote
thereat.
The Secretary, or, if he or she shall be absent from such meeting, the person
(who shall be an Assistant Secretary, if an Assistant Secretary shall be
present thereat) whom the chairman of such meeting shall appoint, shall act as
secretary of such meeting and keep the minutes thereof.
Section 7. Order of Business. The order of business at each meeting of
the stockholders shall be determined by the chairman of such meeting, but such
order of business at any meeting at which a quorum is present may be changed
by the vote of a majority in voting interest of those present in person or by
proxy at such meeting and entitled to vote thereat, provided that at special
meetings of stockholders no business other than that specified in the notice
of the meeting or germane thereto shall be transacted.
Section 8. Voting. Each stockholder shall, at each meeting of the
stockholders, be entitled to one vote in person or by proxy for each share of
stock of the Corporation held by the stockholder and registered in the
stockholder's name on the books of the Corporation on the date fixed or
determined pursuant to the provisions of Section 5 of Article V of these
By-laws as the record date for the determination of stockholders who shall be
entitled to receive notice of and to vote at such meeting.
Shares of its own stock belonging to the Corporation shall not be voted
directly or indirectly. Any vote on stock of the Corporation may be given at
any meeting of the stockholders by the stockholder entitled thereto in person
or by the stockholder's proxy appointed by an instrument in writing delivered
to the Secretary or an Assistant Secretary of the Corporation or to the
secretary of the meeting. The attendance at any meeting of a stockholder who
may theretofore have given a proxy shall not have the effect of revoking the
same unless the stockholder shall in writing so notify the secretary of the
meeting prior to the voting of the proxy. At all meetings of the stockholders
all matters, except as otherwise
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provided in these By-laws or by law, shall be decided by the vote of a
majority in voting interest of the stockholders present in person or by proxy
and entitled to vote thereat, a quorum being present. Subject to Section 3 of
Article II, the vote at any meeting of the stockholders on any question need
not be by ballot, unless so directed by the chairman of the meeting. On a vote
by ballot each ballot shall be signed by the stockholder voting, or by the
stockholder's proxy, if there be such proxy.
Section 9. List of Stockholders. It shall be the duty of the Secretary or
other officer of the Corporation who shall have charge of its stock ledger to
prepare and make, at least ten (10) days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane
to the meeting, during ordinary business hours, for a period of at least ten
(10) days prior to said meeting either at a place within the city where said
meeting is to be held and which place shall be specified in the notice of said
meeting, or, if not so specified, at the place where said meeting is to be
held, and such list shall be produced and kept at the time and place of said
meeting during the whole time thereof, and may be inspected by any stockholder
who is present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger or such list or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
Section 10. Inspectors or Judges. The Board of Directors, in advance of
any meeting of stockholders, may appoint one or more inspectors or judges to
act at such meeting or any adjournment thereof. If the inspectors or judges
shall not be so appointed, or if any of them shall fail to appear or act, the
chairman of such meeting shall appoint the inspectors or judges, or such
replacement or replacements therefor, as the case may be. Such inspectors or
judges, before entering on the discharge of their duties, shall take and sign
an oath or affirmation faithfully to execute the duties of inspectors or
judges at meetings for which they are appointed. At such meeting, the
inspectors or judges shall receive and take in charge the proxies and ballots
and decide all questions touching the qualification of voters and the validity
of proxies and the acceptance or rejection of votes. An inspector or judge
need not be a stockholder of the Corporation, and any officer of the
Corporation may be an inspector or judge on any question other than a vote for
or against his election to any position with the Corporation.
Section 11. Action Without a Meeting. Except as otherwise provided by law
or by the Certificate of Incorporation of the Corporation, any action which
may be taken at any annual or special meeting of stockholders may be 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
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
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.
ARTICLE II.
-----------
Board of Directors
------------------
Section 1. General Powers. Subject to the provisions of the Certificate
of Incorporation of the Corporation, the business, properties and affairs of
the Corporation shall be managed by the Board of Directors, which, without
limiting the generality of the foregoing, shall have power to elect and
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appoint officers of the Corporation, to appoint and direct agents, to grant
general or limited authority to officers, employees and agents of the
Corporation, to make, execute and deliver contracts and other instruments and
documents in the name and on behalf of the Corporation and over its seal,
without specific authority in each case, and, by resolution adopted by a
majority of the whole Board of Directors, to appoint committees of the Board
of Directors, the membership of which may consist of one or more directors,
and which may, except as limited by the Certificate of Incorporation of the
Corporation, advise the Board of Directors with respect to any matters
relating to the conduct of the Corporation's business. In addition, the Board
of Directors may exercise all the powers of the Corporation and do all lawful
acts and things which are not reserved to the stockholders by law or by the
Certificate of Incorporation of the Corporation or by these By-laws.
Section 2. Number and Time of Holding Office. Subject to the requirements
of the laws of the State of Delaware, the number of directors shall be five.
Subject to Article VII of the Certificate of Incorporation of the Corporation,
each of the directors of the Corporation shall hold office until the
expiration of his or her term and until his or her successor shall be elected
or until their earlier death, resignation, retirement, disqualification or
removal. Directors need not be stockholders.
Section 3. Election of Directors. Subject to the requirements of Articles
V and VII of the Certificate of Incorporation of the Corporation, at each
meeting of the stockholders for the election of directors, at which a quorum
is present, the persons receiving the greatest number of votes, up to the
number of directors to be elected, shall be the directors. Such election shall
be by ballot, provided, however, a nomination shall be accepted and votes cast
for a nominee shall be counted by the inspectors or judges of the election,
only if the Secretary of the Corporation has received at least 24 hours prior
to the meeting a statement over the signature of the nominee that he or she
consents to being a nominee and, if elected, intends to serve as a director.
Section 4. Organization and Order of Business. At each meeting of the
Board, one of the following shall act as chairman of the meeting and preside
thereat, in the following order of precedence:
(a) the President;
(b) any Vice President designated by the Board of Directors; or
(c) any director chosen by a majority of the directors present thereat.
The Secretary, or in case of his or her absence any Assistant Secretary (who
shall be present thereat) or the person (who shall be present thereat) whom
the chairman of such meeting shall appoint, shall act as secretary of such
meeting and keep the minutes thereof. The order of business at each meeting of
the Board of Directors shall be determined by the chairman of such meeting.
Section 5. Resignations. Subject to the requirements of Article VII of
the Certificate of Incorporation of the Corporation, any director may resign
at any time by giving written notice of his or her resignation to the
President or the Secretary of the Corporation. Any such resignation shall take
effect at the time specified therein, or, if the time when it shall become
effective shall not be specified therein, then it shall take effect when
accepted by action of the Board of Directors. Except as aforesaid, the
acceptance of such resignation shall not be necessary to make it effective.
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Section 6. Vacancies, etc. Subject to the requirements of Article VII of
the Certificate of Incorporation of the Corporation, in case of any vacancy on
the Board, a director to fill the vacancy for the unexpired portion of the
term being filled may be elected by the holders of shares of stock of the
Corporation entitled to vote in respect thereof at an annual or special
meeting of said holders or by a majority of the directors of the Corporation
then in office though less than a quorum.
Section 7. Place of Meeting. The Board may hold its meetings at such
place or places within or without the State of Delaware as the Board may from
time to time by resolution determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
Section 8. First Meeting. As soon as practicable after each annual
election of directors, the Board shall meet for the purpose of organization,
the election of officers and the transaction of other business, provided that
a quorum of the whole Board of Directors and the Director elected pursuant to
Article VII of the Certificate of Incorporation of the Corporation shall be
present at such meeting. Such meeting shall be held at the time and place
theretofore fixed by the Board for the next regular meeting of the Board and
no notice thereof need be given; provided, however, that the Board may
determine that such meeting shall be held at a different place and time but
notice thereof shall be given in the manner hereinafter provided for special
meetings of the Board.
Section 9. Regular Meetings. Regular meetings of the Board shall be held
at such times as the Board shall from time to time determine. Notices of
regular meetings need not be given. If any day fixed for a regular meeting
shall be a legal holiday at the place where the meeting is to be held, then
the meeting which would otherwise be held on that day shall be postponed until
the same hour on the same day of the next succeeding week in which such day
shall not be a legal holiday at such place, or at such other time and place as
the Board shall determine in which event notice thereof shall be given.
Section 10. Special Meetings; Notice. Special meetings of the Board shall
be held whenever called by the President or by one of the directors at the
time in office. The secretary shall give notice to each director as
hereinafter in this Section provided of each such special meeting, in which
shall be stated the time and place of such meeting. Notice of each such
meeting shall be mailed to each director, addressed to the director at his or
her residence or usual place of business, at least 10 days before the day on
which such meeting is to be held; or shall be sent addressed to him or her at
such place by Telex, facsimile or other form of recorded communication, or be
delivered personally or by telephone not later than the day before the day on
which such meeting is to be held. Notice of any meeting of the Board need not,
however, be given to any director, if waived by him or her in writing or by
Telex, facsimile or other form of recorded communication, before, during or
after such meeting, or if he or she shall be present at such meeting, and any
meeting of the Board shall be a legal meeting without any notice thereof
having been given if all the directors of the Corporation then in office shall
be present thereat.
Dividends may be declared upon the stock of the Corporation at any
special meeting of the Board of Directors; provided, that the notice of said
special meeting states specifically the fact that dividend action is to be
considered. Any and all other business may be transacted at a special meeting
unless notice of the meeting specifically states that action will be taken
only upon the matters listed in the notice.
Section 11. Quorum and Manner of Acting. Subject to the requirements of
the Certificate of Incorporation of the Corporation, and except as otherwise
provided in these By-laws, the Certificate of Incorporation of the
Corporation, or by law, 50% of the members of the Board of Directors at the
time
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<PAGE>
in office shall be present in person at any meeting of the Board of Directors
in order to constitute a quorum for the transaction of business at such
meeting, and the affirmative vote of a majority of directors present at any
such meeting, at which a quorum is present, shall be necessary for the passage
of any resolution or act of the Board. In the absence of a quorum, a majority
of the Board of Directors 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.
Section 12. Action by Consent. Unless otherwise restricted by the
Certificate of Incorporation, any action required or permitted to be taken at
any meeting of the Board of Directors, or of any committee thereof, may be
taken without a meeting, if prior to such action a written consent thereto is
signed by all members of the Board or of such committee as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
or committee.
Section 13. Committees. The Board of Directors may appoint standing
committees of its members. Unless otherwise restricted by the Certificate of
Incorporation of the Corporation, such committees shall have such powers as
are conferred by the By-laws or authorized by the Board of Directors. The
members of all standing committees shall be appointed annually at the first
meeting of the Board of Directors after the annual meeting of the stockholders
and shall continue as members until their successors are appointed, subject to
the power of the Board to remove any member of a committee at any time and to
appoint a successor.
Section 14. Meeting by Communications Equipment. Members of the Board of
Directors or any committee appointed by the Board of Directors, may
participate in a meeting of the Board of Directors or of such committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such
meeting.
ARTICLE III.
------------
Officers
--------
Section 1. Election, Appointment, Term of Office. The Executive Officers
of the Corporation shall consist of a President, a Treasurer and such number
of Vice Presidents, if any, as the Board of Directors may determine from time
to time. There shall also be a Secretary.
Any number of offices may be held by the same person, unless the
Certificate of Incorporation or these By-laws provide otherwise.
The Board of Directors may also appoint such other officers and agents as
it may deem necessary, who shall have such authority and perform such duties
as may be prescribed by the Board.
All Executive Officers and other officers of the Corporation shall be
regularly elected or appointed by the majority vote of the whole Board of
Directors at its first meeting after the annual meeting of the stockholders
and shall hold office until the first meeting of the Board after the next
annual meeting of the stockholders, and until their successors are elected or
appointed.
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<PAGE>
If additional officers are elected or appointed during the year, they
shall hold office until the next annual meeting of the Board of Directors at
which officers are regularly elected or appointed and until their successors
are elected or appointed.
A vacancy in any office may be filled for the unexpired portion of the
term in the same manner as provided for election or appointment to such
office.
All officers and agents elected or appointed by the Board of Directors
shall be subject to removal at any time by the Board of Directors, either for
or without cause, by an affirmative vote of sixty percent of the whole Board
of Directors, at any regular meeting or at any special meeting.
Section 2. President. The President shall be the chief executive officer
of the Corporation, and shall have the powers and perform the duties incident
to that position. Subject to the Board of Directors, he or she shall be in
general and active charge of the entire business and all the affairs of the
Corporation, and shall be its chief policy-making officer. He or she shall
have the primary responsibility for continuing the separate status of the
Corporation from any affiliated corporation and the proper segregation of
corporate assets from the assets of third parties who may have possession of
assets of the Corporation. He or she shall have general authority to execute
bonds, deeds and contracts in the name and on behalf of the Corporation and
responsibility for the employment or appointment of such employees, agents and
officers (except officers to be elected by the Board of Directors pursuant to
Section 1 of this Article III) as may be required to carry on the operations
of the business, and he or she shall have authority to fix the compensation of
such agents and officers. He or she shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or provided
herein.
Section 3. Vice Presidents. Each Vice President shall have such powers
and duties as shall be prescribed by the Board of Directors at the time of his
or her election and such other powers and duties as may be assigned to him or
her from time to time by the President or the Board of Directors.
Section 4. Treasurer. The Treasurer shall be the chief financial officer
and the principal accounting officer of the Corporation and shall be
responsible for safeguarding the cash and securities of the Corporation and
the formulation and application of the investment, financial and accounting
policies of the Corporation. He or she shall keep a full and accurate account
of all monies received and paid on account of the Corporation and shall render
a statement of his or her accounts whenever the Board of Directors shall
require. He or she shall have such other powers and duties as may be assigned
to him or her by the President or the Board of Directors. In the absence of
the Treasurer, an Assistant Treasurer, if any, or such person as shall be
designated by the President shall perform the duties of the Treasurer.
Section 5. Secretary. The Secretary shall attend to the giving of notice
of all meetings of stockholders and of the Board of Directors and committees
thereof, and as provided in Section 6 of Article I and Section 4 of Article
II, shall keep the minutes of all proceedings at meetings of the stockholders
and of the Board of Directors at which he or she is present, as well as of all
proceedings at all meetings of committees of the Board of Directors on which
he or she has served as secretary and, where some other person has served as
secretary thereto, the Secretary shall maintain custody of the minutes of such
proceedings. He or she shall affix the seal of the Corporation to all deeds,
contracts, bonds or other instruments requiring the corporate seal when the
same have been signed on behalf of the
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Corporation by a duly authorized officer. He or she shall perform such other
duties as may be assigned to him or her from time to time by the President or
the Board of Directors.
ARTICLE IV.
-----------
Contracts, Checks, Drafts, Bank Accounts, Etc.
----------------------------------------------
Section 1. Execution of Documents by Officers. All of the Executive
Officers of the Corporation elected as provided in Section 1 of Article III of
these By-laws, shall have power to execute and deliver any deeds, contracts,
mortgages, bonds, debentures and other documents for and in the name of the
Corporation.
All appointed officers shall have such powers with respect to execution
and delivery of deeds, contracts, mortgages, bonds, debentures and other
documents as may be assigned to them by the Board of Directors.
Section 2. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation or
otherwise as the Board of Directors, the President or the Treasurer shall
direct in such banks, trust companies or other depositories as the Board of
Directors may select or as may be selected by any officer or officers or agent
or agents of the Corporation to whom power in that respect shall have been
delegated by the Board of Directors. For the purpose of deposit and for the
purpose of collection for the account of the Corporation, checks, drafts and
other orders for the payment of money which are payable to the order of the
Corporation may be endorsed, assigned and delivered by any officer or agent of
the Corporation.
Section 3. Proxies in Respect of Stock or Other Securities of Other
Corporations. Unless otherwise provided by resolution adopted by the Board,
each of the Executive Officers of the Corporation elected as provided in
Section 1 of Article III of these By-laws may from time to time appoint an
attorney or attorneys or agent or agents of the Corporation to exercise in the
name and on behalf of the Corporation the powers and rights which the
Corporation may have as the holder of stock or other securities in any other
corporation to vote or consent in respect of such stock or other securities,
may instruct the person or persons so appointed as to the manner of exercising
such powers and rights, and may execute or cause to be executed in the name
and on behalf of the Corporation and under its corporate seal, or otherwise,
all such written proxies, powers of attorney or other instruments as such
Executive Officer may deem necessary or proper in order that the Corporation
may exercise its said powers and rights.
ARTICLE V.
----------
Shares and Their Transfer;
--------------------------
Examination of Books
--------------------
Section 1. Certificates for Stock. Every holder of stock of the
Corporation shall be entitled to have a certificate or certificates, in such
form as the Board shall prescribe, certifying the number of shares of stock of
the Corporation owned by the stockholder. The certificates representing shares
of such stock shall be numbered in the order in which they shall be issued and
shall be signed in the name of the
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Corporation by the person who was at the time of signing the President or a
Vice President and by the person who was at the time of signing the Treasurer
and its seal shall be affixed thereto; provided, however, that the signature
of such Executive Officer of the Corporation and of such Treasurer and the
seal of the Corporation may be facsimile. In case any officer or officers of
the Corporation who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates shall
cease to be such officer or officers, whether because of death, resignation or
otherwise, before such certificate or certificates shall have been delivered
by the Corporation such certificate or certificates may nevertheless be
adopted by the Corporation and be issued and delivered as though the person or
persons who signed such certificate or certificates, or whose facsimile
signature or signatures shall have been used thereon, had not ceased to be
such officer or officers. A record shall be kept of the respective names of
the persons, firms or corporations owning the stock represented by
certificates for stock of the Corporation, the number of shares represented by
such certificates, respectively, and the respective dates thereof, and in case
of cancellation, the respective dates of cancellation. Every certificate
surrendered to the Corporation for exchange or transfer shall be canceled and
a new certificate or certificates shall not be issued in exchange for any
existing certificate until such existing certificate shall have been so
canceled except in cases provided for in Section 4 of this Article V.
Section 2. Transfers of Stock. Transfers of shares of the stock of the
Corporation shall be made only on the books of the Corporation by the
registered holder thereof, or by his or her attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the
Corporation, or with a transfer clerk or a transfer agent appointed as in
Section 3 of this Article V provided, and upon surrender of the certificate or
certificates for such shares properly endorsed and payment of all taxes
thereon. The person in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof for all purposes as regards the
Corporation.
Section 3. Regulations. The Board may make such rules and regulations as
it may deem expedient, not inconsistent with these By-laws, concerning the
issue, transfer and registration of certificates for stock of the Corporation.
The Board may appoint or authorize any officer or officers to appoint one or
more transfer clerks, any of whom may be employees of the Corporation, or one
or more transfer agents and one or more registrars, and may require all
certificates for stock to bear the signature or signatures of any of them;
provided, however, that the signature of any transfer clerk, transfer agent,
or registrar may be facsimile. In case any transfer clerk, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such transfer clerk, transfer agent, or
registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such transfer clerk, transfer
agent, or registrar at the date of issue.
Section 4. Lost, Stolen, Destroyed and Mutilated Certificates. The owner
of any stock of the Corporation shall immediately notify the Corporation of
any loss, theft, destruction or mutilation of the certificate therefor, and
the Corporation may issue a new certificate of stock in the place of any
certificate theretofore issued by the Corporation, which is delivered to the
Corporation, in the case of a mutilated certificate, or alleged to have been
lost, stolen or destroyed, and the Board may, in its discretion, require the
owner of the lost, stolen or destroyed certificate, or his or her legal
representatives, to furnish evidence to the Corporation, which it shall in its
discretion determine is satisfactory, of the loss, theft or destruction of
such certificate and of the ownership thereof, and to give the Corporation a
bond in such sum, limited or unlimited, and in such form and with such surety
or sureties, as the Board shall in its uncontrolled discretion determine, to
indemnify the Corporation against
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any claim that may be made against it on account or the alleged loss or
destruction of any such certificate, or the issuance of such new certificate.
Section 5. Record Date. To determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. If no record
date is fixed by the Board of Directors:
(a) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the date on which notice is given.
(b) the record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting unless the Board of Directors shall
fix a new record date for the adjourned meeting.
Section 6. Examination of Books by Stockholders. The Board may determine,
from time to time, whether and to what extent, at what times and places, and
under what conditions and regulations, the accounts and books of the
Corporation, or any of them, shall be open to the inspection of the
stockholders, and no stockholder shall have any right to inspect any account
or book or document of the Corporation, except as conferred by the laws of the
State of Delaware or as authorized by resolution adopted by the Board or by
the stockholders of the Corporation entitled to vote in respect thereof.
ARTICLE VI.
-----------
Offices, Etc.
-------------
Section 1. Registered Office. The registered office of the Corporation in
the State of Delaware shall be in the City of Wilmington, County of New
Castle, and the name of the resident agent in charge thereof shall be The
Corporation Trust Company.
Section 2. Other Offices. The Corporation also may have an office or
offices other than said office in Section 1 of this Article VI at such place
or places, either within or without the State of Delaware, as provided in
these By-laws or as the Board may from time to time appoint or as the business
of the Corporation may require.
Section 3. Books and Records. Except as otherwise required by law, the
Certificate of Incorporation or these By-laws, the Corporation may keep the
books and records of the Corporation in such place or places within or without
the State of Delaware as the Board may from time to time by resolution
determine or the business of the Corporation may require; provided, however,
the principal accounting books and records of the Corporation, including the
records of meetings of the Board of
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Directors, shall be kept at the chief executive office of the Corporation in
the State of Ohio, unless otherwise determined by resolution of the Board of
Directors.
ARTICLE VII.
------------
Dividends
---------
Subject to the provisions of law, of the Certificate of Incorporation of
the Corporation and of these By-laws, the Board may declare and pay dividends
upon the shares of the stock of the Corporation either (a) out of its net
assets in excess of its capital as computed in accordance with the provisions
of the laws of the State of Delaware or (b) in case there shall be no such
excess, out of its net profits for the fiscal year then current and/or the
preceding fiscal year, whenever and in such amounts as, in the opinion of the
Board, the condition of the affairs of the Corporation shall render it
advisable. Dividends upon the shares of stock of the Corporation may be
declared at any regular meeting of the Board of Directors and also at a
special meeting, if notice of such proposed action is given as provided in
Section 10 of Article II of these By-laws.
ARTICLE VIII.
-------------
Seal
----
The Board shall provide a corporate seal, which shall be in the form of a
circle and shall bear the full name of the Corporation and the words and
figures "Incorporated 1998 Delaware", or words and figures of similar import.
The seal or a facsimile thereof may be impressed or affixed or reproduced or
other use made thereof by the Secretary or any Assistant Secretary or any
other office authorized by the Board.
ARTICLE IX.
-----------
Fiscal Year
-----------
The fiscal year of the Corporation shall end on the 31st day of December
in each year.
ARTICLE X.
----------
Waiver of Notices
-----------------
Whenever any notice whatever is required to be given pursuant to these
By-laws or by the Certificate of Incorporation of the Corporation or by the
General Corporation Law of the State of Delaware, a waiver thereof in writing,
signed by the person or persons entitled to said notice, or by Telex,
facsimile or other form of recorded communication, whether before or after the
time stated therein, or if such person shall attend a meeting, except when
that person attends such meeting for the express purpose of objections at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened, shall be deemed equivalent
thereto. Neither the business to be transacted at, nor the purpose of, any
meeting need be specified in any notice or written notice of waiver unless so
required by the Certificate of Incorporation of the Corporation or by these
By-laws.
-11-
<PAGE>
ARTICLE XI.
-----------
Indemnification
---------------
Section 1. Coverage. Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she is or was a director,
officer or agent of the Corporation (which term shall include any predecessor
corporation of the Corporation) or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plan ("indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as provided in
Section 2 of this Article XI with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of
Directors. The right to indemnification conferred in this Article XI shall be
a contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in
his or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made in advance of
the final disposition of a proceeding only upon delivery to the Corporation of
an undertaking, by or on behalf of such indemnitee, to repay all amounts so
advanced if it ultimately be determined by final judicial decision from which
there is no further right to appeal that such indemnitee is not entitled to be
indemnified for such expenses under this Article XI or otherwise. Expenses
incurred by agents in defending in any action, suit or proceeding, whether
civil, criminal, administrative or investigative may be paid by the
Corporation upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
Section 2. Claims. If a claim under Section 1 of this Article XI is not
paid in full by the Corporation within sixty (60) days after a written claim
has been received by the Corporation, except in the case of a claim for
expenses incurred in defending a proceeding in advance of its final
disposition, in which case the applicable period shall be thirty (30) days,
the indemnitee may at any time thereafter bring suit against the Corporation
to recover the unpaid amount of the claim. If successful in whole or in part
in any such suit or in a suit brought by the Corporation to recover payments
by the Corporation or expenses incurred by an indemnitee in defending in his
or her capacity as a director or officer, a proceeding in advance of its final
disposition, the indemnitee shall be entitled to be paid also for the expense
of prosecuting or defending such claim. In any action brought by the
indemnitee to enforce a
-12-
<PAGE>
right to indemnification hereunder (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any, has been tendered to
the Corporation) or by the Corporation to recover payments by the Corporation
of expenses incurred by an indemnitee in defending, in his or her capacity as
a director or officer, a proceeding in advance of its final disposition, the
burden of proving that the indemnitee is not entitled to be indemnified under
this Article XI or otherwise shall be on the Corporation. Neither the failure
of the Corporation (including the Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the indemnitee is proper
in the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including the Board of Directors,
independent legal counsel or its stockholders) that the indemnitee has not met
such applicable standard of conduct, shall be a presumption that the
indemnitee has not met the applicable standard of conduct, or in the case of
such an action brought by the indemnitee, be a defense to the action.
Section 3. Rights Not Exclusive. The rights conferred on any person by
Sections 1 and 2 of this Article XI shall not be exclusive of any other right
which such person may have or hereafter acquire under any statute, the
Certificate of Incorporation of the Corporation, these By-laws, any agreement,
a vote of stockholders or disinterested directors or otherwise.
Section 4. Employees. Persons who are not included as indemnities under
Section 1 of this Article XI but are employees of the Corporation or any
subsidiary may be indemnified to the extent authorized at any time or from
time to time by the Board of Directors.
ARTICLE XII.
------------
Miscellaneous
-------------
Section 1. Amendments. These By-laws, as they shall be at any time, may
be amended, altered or repealed by the Board of Directors at any regular
meeting of the Board of Directors or at any special meeting if the proposed
amendment, alteration or repeal is stated in the notice of the special
meeting; provided that in no event shall any amendment, alteration or repeal
of any By-law in any manner impair, or impair the intent of, or be
inconsistent with, the Certificate of Incorporation of the Corporation.
Section 2. Amendment of Certain By-Laws. Notwithstanding any other
provision of these By-laws, the affirmative vote of 100% of the members of the
Board of Directors of the Corporation shall be required in order to amend,
modify or delete Sections 2, 3, 5, 6, 11 and 12, of Article II, Article XI or
this Article XII, of these By-laws, or to adopt any by-law which would have
the substantive effect of amending, modifying or deleting Sections 2, 3, 5, 6,
11 and 12, of Article II, Article XI or this Article XII, of these By-laws.
-13-
<PAGE>
EXHIBIT 4.1
==============================================================================
FORM OF
PROVIDENT EQUIPMENT LEASE TRUST 1998-A,
Issuer
AND
[NAME OF INDENTURE TRUSTEE],
Indenture Trustee
INDENTURE
Dated as of September 1, 1998
$[ ] of [ ]% Class A-1 Lease-Backed Notes
$[ ] of [ ]% Class A-2 Lease-Backed Notes
$[ ] of [ ]% Class B Lease-Backed Notes
==============================================================================
<PAGE>
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
Reconciliation and Tie between the Indenture dated as of September 1,
1998 and the Trust Indenture Act of 1939, as amended
Trust Indenture Act Section Indenture Section
- --------------------------- -----------------
310(a)(1) Section 7.8
(a)(2) 7.8
(a)(3) 7.8
(a)(4) Not Applicable
(b) 7.8; 7.9; 6.7; 1.5; 1.6
(c) Not Applicable
311(a) 7.14
(b) 7.14
312(a) 2.11
(b) 11.2
(c) 11.2
313(a) 7.15
(b)(1) 7.15
(b)(2) 7.15
(c) 7.15; 1.6
(d) 7.15
314(a) 8.12; 8.9; 1.6
(b) Not Applicable
(c)(1) 11.3
(c)(2) 11.3
(c)(3) 11.1
(d) 11.1
(e) 11.4
(f) Not Applicable
315(a) 7.1(a)
(b) 7.2; 1.6
(c) 7.1(b)
(d) 7.1(c)
(e) 6.14
316(a)(last sentence) 2.12
(a)(1)(A) 6.12
(a)(1)(B) 6.13
(a)(2) Not Applicable
317(a)(1) 6.3(c)
(a)(2) 6.4
(b) 8.3(b)
318(a) 11.1
(c) 11.1
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions; Interpretive Provisions..........................3
SECTION 1.2. Compliance Certificates and Opinions..........................3
SECTION 1.3. Form of Documents Delivered to Indenture Trustee..............3
SECTION 1.4. Acts of Noteholders, etc......................................5
SECTION 1.5. Notices, etc., to Indenture Trustee, Servicer, Issuer and
Rating Agencies...............................................6
SECTION 1.6. Notice to Noteholders; Waiver.................................6
SECTION 1.7. Effect of Headings and Table of Contents......................7
SECTION 1.8. Successors and Assigns........................................7
SECTION 1.9. GOVERNING LAW.................................................7
SECTION 1.10. Legal Holidays................................................8
SECTION 1.11. Execution in Counterparts.....................................8
SECTION 1.12. Survival of Representations and Warranties....................8
ARTICLE 2.
THE NOTES
SECTION 2.1. General Provisions............................................8
SECTION 2.2. Execution, Authentication, Delivery, and Dating..............10
SECTION 2.3. Transfer and Exchange........................................10
SECTION 2.4. Mutilated, Destroyed, Lost and Stolen Notes..................11
SECTION 2.5. Book-Entry Registration of Class A Notes and Class B
Notes........................................................12
SECTION 2.6. Notice to Clearing Agency....................................13
SECTION 2.7. Definitive Class A Notes and Definitive Class B Notes........14
SECTION 2.8. Payment of Interest and Principal; Rights Preserved..........15
SECTION 2.9. Persons Deemed Owners........................................15
SECTION 2.10. Cancellation.................................................15
SECTION 2.11. Noteholder Lists.............................................16
SECTION 2.12. Treasury Securities..........................................16
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<PAGE>
ARTICLE 3.
ACCOUNTS; INVESTMENT OF MONEYS;
COLLECTION AND APPLICATION OF MONEYS; REPORTS
SECTION 3.1. Trust Accounts; Investments by Indenture Trustee.............17
SECTION 3.2. Collection of Moneys.........................................18
SECTION 3.3. Collection Account; Payments.................................18
SECTION 3.4. Reports by Indenture Trustee; Notices of Certain Payments....19
SECTION 3.5. Indenture Trustee May Rely on Certain Information from
Servicer.....................................................20
ARTICLE 4.
RELEASE OF LEASES AND EQUIPMENT
SECTION 4.1. Release of Equipment.........................................20
SECTION 4.2. Release of Leases Upon Final Lease Payment...................21
SECTION 4.3. Execution of Documents.......................................21
ARTICLE 5.
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.1. Servicer Events of Default...................................21
SECTION 5.2. Substitute Servicer..........................................22
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.1. Events of Default............................................22
SECTION 6.2. Acceleration of Maturity; Rescission and Annulment...........23
SECTION 6.3. Remedies.....................................................24
SECTION 6.4. Indenture Trustee Shall File Proofs of Claim.................25
SECTION 6.5. Indenture Trustee May Enforce Claims Without Possession
of Notes.....................................................26
SECTION 6.6. Application of Money Collected...............................26
SECTION 6.7. Limitation on Suits..........................................28
SECTION 6.8. Unconditional Right of Noteholders to Receive Principal and
Interest.....................................................28
SECTION 6.9. Restoration of Rights and Remedies...........................29
SECTION 6.10. Rights and Remedies Cumulative...............................29
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<PAGE>
SECTION 6.11. Delay or Omission Not Waiver.................................29
SECTION 6.12. Control by Noteholders.......................................29
SECTION 6.13. Waiver of Events of Default..................................30
SECTION 6.14. Undertaking for Costs........................................30
SECTION 6.15. Waiver of Stay or Extension Laws.............................31
SECTION 6.16. Sale of Trust Estate.........................................31
ARTICLE 7.
THE TRUSTEE
SECTION 7.1. Certain Duties and Responsibilities..........................33
SECTION 7.2. Notice of Defaults or Events of Default......................34
SECTION 7.3. Certain Rights of Indenture Trustee..........................34
SECTION 7.4. Not Responsible for Recitals or Issuance of Notes............35
SECTION 7.5. May Hold Notes...............................................35
SECTION 7.6. Money Held in Trust..........................................36
SECTION 7.7. Compensation, Reimbursement, etc.............................36
SECTION 7.8. Corporate Indenture Trustee Required; Eligibility............36
SECTION 7.9. Resignation and Removal; Appointment of Successor............38
SECTION 7.10. Acceptance of Appointment by Successor.......................39
SECTION 7.11. Merger, Conversion, Consolidation or Succession to
Business.....................................................39
SECTION 7.12. Co-trustees and Separate Indenture Trustees..................40
SECTION 7.13. Acceptance by Indenture Trustee..............................41
SECTION 7.14. Preferential Collection of Claims Against Issuer.............41
SECTION 7.15. Reports by Indenture Trustee to Noteholders..................42
SECTION 7.16. No Proceedings...............................................42
ARTICLE 8.
COVENANTS
SECTION 8.1. Payment of Principal and Interest............................42
SECTION 8.2. Maintenance of Office or Agency; Chief Executive
Office.......................................................42
SECTION 8.3. Money for Payments to Noteholders to be Held in Trust........43
SECTION 8.4. Corporate Existence; Merger; Consolidation, etc..............44
SECTION 8.5. Protection of Trust Estate; Further Assurances...............46
SECTION 8.6. [Reserved]...................................................47
SECTION 8.7. Performance of Obligations; Pooling and Servicing
Agreement....................................................47
SECTION 8.8. Negative Covenants...........................................47
SECTION 8.9. Notice of Events of Default..................................49
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<PAGE>
SECTION 8.10. Taxes........................................................49
SECTION 8.11. Indemnification..............................................49
SECTION 8.12. Commission Reports; Reports to Indenture Trustee; Reports
to Noteholders...............................................49
ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of
Noteholders..................................................50
SECTION 9.2. Supplemental Indentures with Consent of Noteholders..........51
SECTION 9.3. Execution of Supplemental Indentures.........................52
SECTION 9.4. Effect of Supplemental Indentures............................52
SECTION 9.5. Reference in Notes to Supplemental Indentures................52
SECTION 9.6. Compliance with Trust Indenture Act..........................53
ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.1. Satisfaction and Discharge of Indenture......................53
SECTION 10.2. Application of Trust Money...................................54
ARTICLE 11.
MISCELLANEOUS
SECTION 11.1. Trust Indenture Act Controls.................................54
SECTION 11.2. Communication by Noteholders with Other Noteholders..........55
SECTION 11.3. Officers' Certificate and Opinion of Counsel as to Conditions
Precedent....................................................55
SECTION 11.4. Statements Required in Certificate or Opinion................55
SECTION 11.5. Nonpetition..................................................56
SCHEDULES
SCHEDULE 1 Leases
EXHIBITS
EXHIBIT A Forms of Notes and Form of Indenture Trustee's Certificate
of Authentication
-iv-
<PAGE>
APPENDIX
APPENDIX X Definitions
-v-
<PAGE>
INDENTURE
This INDENTURE dated as of September 1, 1998, is between PROVIDENT
EQUIPMENT LEASE TRUST 1998-A, a Delaware business trust (herein called the
"Issuer"), and [NAME OF INDENTURE TRUSTEE], a [___________________], as
indenture trustee (the "Indenture Trustee").
RECITALS OF THE COMPANY
Issuer has duly authorized the issuance of $________ in aggregate
principal amount of its Lease-Backed Notes, Series 1998-A, consisting of
$___________ aggregate principal amount of ___% Class A-1 Lease-Backed Notes
(the "Class A-1 Notes"), $_______ aggregate principal amount of ____% Class
A-2 Lease-Backed Notes (the "Class A-2 Notes", together with the Class A-1
Notes, the "Class A Notes") and $________ aggregate principal amount of ____%
Class B Lease-Backed Notes (the "Class B Notes", the Class A Notes and the
Class B Notes are referred to collectively as the "Notes"), of substantially
the tenor hereinafter set forth, and to provide therefor Issuer has duly
authorized the execution and delivery of this Indenture. The Class A Notes and
the Class B Notes shall be entitled to payments of interest and principal as
set forth herein.
All things necessary to make the Notes, when executed by Issuer and
authenticated and delivered hereunder, the valid obligations of Issuer, and to
make this Indenture a valid agreement of Issuer, in accordance with its terms,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Notes by the holders thereof, it is mutually covenanted and agreed, for the
benefit of all Noteholders, as follows:
GRANTING CLAUSE
Issuer hereby Grants to Indenture Trustee on the Issuance Date, for
the benefit and security of the Noteholders, all of Issuer's right, title and
interest in and to:
(a) all Leases, including all instruments, documents, books and other
records relating thereto,
(b) all Lease Payments, Casualty Payments, Termination Payments and
other amounts not collected with respect thereto on or prior to the Cut-Off
Date (other than any prepayments of rent required pursuant to the terms of any
Lease at
-1-
<PAGE>
or before the commencement of the Lease), all Payaheads relating to payments
on the Leases due or becoming due after the Cut-Off Date and all Substitute
Leases and all Lease Payments, Casualty Payments, Termination Payments and
other amounts not collected with respect thereto prior to the effective date
of their respective substitution (other than any prepayments of rent required
by the terms of any Lease at or before the commencement of the Lease) and all
Payaheads relating to payments on the Substitute Leases due or becoming due
after the effective date of their respective substitution,
(c) all rights of Issuer to or under any guarantees of or collateral
(including all rights of Issuer in any security deposits) for the Lessee's
obligations under any Lease and all UCC financing statements relating to such
collateral,
(d) all interests of Issuer in the Equipment at any time subject to
any Lease, including any security interest of Issuer in the Equipment,
(e) any proceeds with respect to the Leases from claims on insurance
policies covering the Equipment or Lessees,
(f) all moneys from time to time on deposit in any of the Trust
Accounts, including all investments and income from the investment of such
moneys,
(g) all rights of Issuer under the Pooling and Servicing Agreement
and the Purchase Agreement, including the right of Issuer to cause Transferor
and ILC to repurchase Leases under the Pooling and Servicing Agreement and
Purchase Agreement respectively; and
(h) all proceeds of the foregoing, whether by voluntary or
involuntary conversion thereof (collectively, the "Granted Assets"). Such
Grant is made in trust to secure (i) the payment of all amounts due on the
Class A Notes and the Class B Notes, in accordance with their terms, equally
and ratably without prejudice, priority, or distinction among any of the Class
A Notes and the Class B Notes, respectively, by reason of differences in time
of issuance or otherwise, (ii) the payment of all other sums payable under
this Indenture with respect to the Notes and (iii) compliance with the
provisions of this Indenture with respect to the Notes.
Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions hereof, and agrees to perform the
duties herein required to the best of its ability and to the end that the
interests of the Noteholders may be adequately and effectively protected as
hereinafter provided.
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<PAGE>
ARTICLE 1.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions; Interpretive Provisions. (a) Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to
such terms in Appendix X to this Indenture.
(b) The other interpretive provisions specified in Appendix X to the
Indenture shall apply to this Agreement.
SECTION 1.2. Compliance Certificates and Opinions.
-------------------------------------
Upon any written application or request (or oral application with
prompt written or telecopied confirmation) by Issuer to Indenture Trustee to
take any action under any provision of this Indenture, other than any request
that (a) Indenture Trustee authenticate the Notes specified in such request,
(b) Indenture Trustee invest moneys in any of the Trust Accounts pursuant to
the written directions specified in such request, or (c) Indenture Trustee pay
moneys due and payable to Issuer hereunder to the Issuer's assignee specified
in such request, Indenture Trustee shall require Issuer to furnish to
Indenture Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and that the request otherwise is in accordance
with the terms of the Indenture, and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that, in the case of any such requested action as to
which other evidence of satisfaction of the conditions precedent thereto is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
SECTION 1.3. Form of Documents Delivered to Indenture Trustee.
-------------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of Issuer
delivered to Indenture Trustee 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
-3-
<PAGE>
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion and any
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 Servicer, Transferor, or the Manager as to such factual matters
unless such officer or 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. Any Opinion of Counsel may be based on the
written opinion of other counsel, in which event such Opinion of Counsel shall
be accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and
Indenture Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Wherever in this Indenture, in connection with any application or
certificate or report to Indenture Trustee, it is provided that Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of 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 Issuer to have such application granted or to the sufficiency of
such certificate or report. The foregoing shall not, however, be construed to
affect Indenture Trustee's right to rely upon the truth and accuracy of any
statement or opinion contained in any such document as provided in Section
7.1(a)(ii).
Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default or Servicer Event
of Default is a condition precedent to the taking of any action by Indenture
Trustee at the request or direction of Issuer, then, notwithstanding that the
satisfaction of such condition is a condition precedent to the Issuer's right
to make such request or direction, Indenture Trustee shall be protected in
acting in accordance with such request or direction if it does not have
knowledge of the occurrence and continuation of such Default or Event of
Default or Servicer Event of Default. For all purposes of this Indenture,
Indenture Trustee shall not be deemed to have knowledge of any Default or
Event of Default nor shall Indenture Trustee have any duty to monitor or
investigate to determine whether a default has occurred (other than an Event
of Default of the kind described in Section 6.1(a)) or Servicer Event of
Default unless a Responsible Officer of Indenture Trustee shall have actual
knowledge thereof or shall have been notified in writing thereof by Issuer,
Servicer, Transferor, or any Noteholder.
-4-
<PAGE>
SECTION 1.4. Acts of Noteholders, etc.
-------------------------
(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 otherwise expressly provided, such
action shall become effective when such instrument or instruments are
delivered to Indenture Trustee and, where it is hereby expressly required, to
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are 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 7.1) conclusive in favor
of Indenture Trustee and Issuer, if made in the manner provided in this
Section 1.4.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer's individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer's authority. The fact and date of
the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which
Indenture Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefore or in lieu thereof in respect of
anything done, omitted or suffered to be done by Indenture Trustee or Issuer
in reliance thereon, whether or not notation of such action is made upon such
Note.
(d) By accepting the Notes issued pursuant to this Indenture, each
Noteholder irrevocably appoints Indenture Trustee hereunder as the special
attorney-in-fact for such Noteholder vested with full power on behalf of such
Noteholder to effect and enforce the rights of such Noteholder and the
revisions pursuant hereto for the benefit of such Noteholder; provided that
nothing contained in this Section 1.4(d) shall be deemed to confer upon
Indenture Trustee any duty or power to vote on behalf of the Noteholders with
respect to any matter on which the Noteholders have a right to vote pursuant
to the terms of this Indenture.
SECTION 1.5. Notices, etc., to Indenture Trustee, Servicer, Issuer
-----------------------------------------------------
and Rating Agencies.
--------------------
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Any request, demand, authorization, direction, notice, consent,
waiver, Act of Noteholders, or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with, Indenture
Trustee, Issuer or Servicer shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid or certified mail return receipt requested, or
sent by private courier or confirmed telecopy. Unless otherwise specifically
provided herein, no such request, demand, authorization, direction, notice,
consent, waiver, Act of Noteholders or other document shall be effective until
received and any provision hereof requiring the making, giving, furnishing, or
filing of the same on any date shall be interpreted as requiring the same to
be sent or delivered in such fashion that it will be received on such date.
Any such request, demand, authorization, direction, notice, consent, waiver,
Act of Noteholders, or other document shall be sent or delivered to the
following addresses:
(a) if to Indenture Trustee, at the Corporate Trust Office,
Attention: Corporate Trust Administration (Number for telecopy: ( )
______________), or at any other address previously furnished in
writing to Issuer and Servicer by Indenture Trustee; or
(b) if to Issuer, at Provident Equipment Lease Trust 1998-A,
in care of Indenture Trustee, Attention: (Number for telecopy: ( )
__________) with copies to Servicer at the address set forth in
clause (c), or at any other addresses previously furnished in writing
to Indenture Trustee and Servicer by Issuer; or
(c) if to Servicer, at 1023 West Eighth Street, Cincinnati,
Ohio 45203, Attention: [ ] (Number for telecopy: ( ) ____________, or
at any other address previously furnished in writing to Indenture
Trustee and Issuer by Servicer.
(d) if to the Rating Agencies: to [Name of Rating Agencies]
SECTION 1.6. Notice to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of any
event, or the mailing of any report to Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid or certified mail return
receipt requested, or sent by private courier or confirmed telecopy to each
Noteholder affected by such event or to whom such report is required to be
mailed, at its address as it appears in the Note Register, not later than the
latest date, and not earlier than the earliest date,
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prescribed for the giving of such notice or the mailing of such report. In any
case where a notice or report to Noteholders is mailed, neither the failure to
mail such notice or report, nor any defect in any notice or report so mailed,
to any particular Noteholder shall affect the sufficiency of such notice or
report with respect to other Noteholders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the 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 Indenture Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
(b) In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to mail or send notice to
Noteholders, in accordance with Section 1.6(a), of any event or any report to
Noteholders when such notice or report is required to be delivered pursuant to
any provision of this Indenture, then such notification or delivery as shall
be made with the approval of Indenture Trustee shall constitute a sufficient
notification for every purpose hereunder.
SECTION 1.7. Effect of Headings and Table of Contents.
-----------------------------------------
The Article and Section headings herein and in the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 1.8. Successors and Assigns.
-----------------------
All covenants and agreements in this Indenture by Issuer or Indenture
Trustee shall bind its respective successors and permitted assigns, whether so
expressed or not.
SECTION 1.9. GOVERNING LAW.
--------------
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS INDENTURE IS SUBJECT
TO THE TRUST INDENTURE ACT OF 1939 AND SHALL BE GOVERNED THEREBY AND CONSTRUED
IN ACCORDANCE THEREWITH.
SECTION 1.10. Legal Holidays.
---------------
In any case where any Payment Date or the Stated Maturity or any
other date on which principal of or interest on any Note is proposed to be
paid shall not be a Business Day, then (notwithstanding any other provision of
this Indenture or of the Notes) such payment need not be made on such date,
but may be made on the next
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succeeding Business Day with the same force and effect as if made on such
Payment Date, Stated Maturity, or other date on which principal of or interest
on any Note is proposed to be paid, provided that no interest shall accrue for
the period from and after such Payment Date, Stated Maturity, or any other
date on which principal of or interest on any Note is proposed to be paid, as
the case may be, until such next succeeding Business Day.
SECTION 1.11. Execution in Counterparts.
-------------------------
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
SECTION 1.12. Survival of Representations and Warranties.
-------------------------------------------
The representations, warranties and certifications of the Issuer made
in this Indenture or in any certificate or other writing delivered by Issuer
pursuant hereto shall survive the authentication and delivery of the Notes
hereunder.
ARTICLE 2.
THE NOTES
SECTION 2.1. General Provisions.
-------------------
(a) The Notes shall consist of $_____________ principal amount of
Class A-1 Notes, $_____________ principal amount of Class A-2 Notes, and
$_____________ principal amount of Class B Notes, and the forms thereof and of
Indenture Trustee's certificate of authentication shall be in substantially
the forms set forth in Exhibit A hereto, with such appropriate insertions,
omissions, substitutions, and other variations as are required or permitted by
this Indenture.
The aggregate principal amount of Notes which may be authenticated
and delivered under this Indenture is limited to $_____________, except for
Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Section 2.3, 2.4, or 9.5.
The Notes shall be issuable only in registered form and only in minimum
denominations of at least $1,000 with respect to the Class A Notes and the
Class B Notes; provided that the foregoing shall not restrict or prevent the
transfer in accordance with Section 2.3 of any Note having a remaining
Outstanding Principal Amount of other than an integral multiple of $1,000, or
the issuance of a single Class A Note and a single Class B Note with a
denomination less than $1,000.
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(b) For each Payment Date, payments of principal (the "Principal
Payments") on the Notes will be made in accordance with Sections 3.3(b) or
6.6, as applicable; it being understood that unless the Notes are accelerated
pursuant to Section 6.2, prior to the Stated Maturity of any class of Notes,
principal payments shall be due on such class of Notes only to the extent of
Available Funds available to make payments on principal of such class in
accordance with the priorities set forth in Section 3.3(b). Except as
otherwise provided in Section 6.2, no part of the principal of any Note shall
be paid prior to the Payment Date on which such principal is due in accordance
with the preceding provisions of this Section 2.1(b), except that Issuer may
redeem the Notes in their entirety, without premium, as of any Payment Date on
which the Discounted Present Value of the Performing Leases (after giving
effect to all Principal Payments on such Payment Date) is less than or equal
to five percent (5%) of the aggregate Discounted Present Value of the Leases
as of the Cut-Off Date. Issuer will give notice of any such redemption to each
Noteholder and Indenture Trustee at least 30 days before the Payment Date
fixed for such prepayment by certified mail return receipt requested, hand
delivery or overnight courier. Notice of such prepayment having been so given,
the remaining unpaid principal as of the Payment Date fixed for prepayment
together with all interest accrued and unpaid to such Payment Date, shall
become due and payable on such Payment Date.
(c) For each Payment Date, the interest due and payable (the
"Interest Payments") with respect to the Notes will be the interest that has
accrued on the respective Notes since the last Payment Date or, in the case of
the first Payment Date, since the Closing Date, at the Class A-1 Interest
Rate, Class A-2 Interest Rate and Class B Interest Rate, respectively, applied
to the then Outstanding Principal Amounts of the Class A-1 Notes, Class A-2
Notes and Class B Notes, respectively, on the preceding Payment Date. Interest
Payments will be made in accordance with Sections 3.3(b) and 6.6, as
applicable.
(d) All payments made with respect to any Note shall be made 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 and shall be applied
first to the interest then due and payable on such Notes, then to the
principal thereof, and finally to premium, if any.
(e) All Class A-1 Notes issued under this Indenture shall be in all
respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions
of this Indenture. Payments of principal and interest on the Class A-1 Notes
shall be made pro rata among all Outstanding Class A-1 Notes, without
preference or priority of any kind.
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(f) All Class A-2 Notes issued under this Indenture shall be in all
respects equally and ratably entitled to the benefits hereof without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions
of this Indenture. Payments of principal and interest on the Class A-2 Notes
shall be made pro rata among all Outstanding Class A-2 Notes, without
preference or priority of any kind.
(g) The Class B Notes shall be subordinated to the Class A Notes to
the extent set forth herein. All Class B Notes issued under this Indenture
shall be in all respects equally and ratably entitled to the benefits hereof
without preference, priority or distinction on account of the actual time or
times of authentication and delivery, all in accordance with the terms and
provisions of this Indenture. Payments of principal and interest on the Class
B Notes shall be made pro rata among all Outstanding Class B Notes, without
preference or priority of any kind.
SECTION 2.2. Execution, Authentication, Delivery, and Dating.
------------------------------------------------
(a) The Notes shall be manually executed on behalf of Issuer by any
of its Authorized Officers. The signature of any such Authorized Officer on
the Notes may be manual or facsimile.
(b) Any Note bearing the signature of an individual who was at the
time of execution thereof an Authorized Officer of Issuer shall bind Issuer,
notwithstanding that such individual ceases to hold such office prior to the
authentication and delivery of such Note or did not hold such office at the
date of such Note.
(c) No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by Indenture Trustee by manual signature, and such certificate upon
any Note shall be conclusive evidence, and the only evidence, that such Note
has been duly authenticated and delivered hereunder. Each Note shall be dated
the date of its authentication.
(d) The Notes may from time to time be executed by Issuer and
delivered to Indenture Trustee for authentication together with an Issuer
Request to Indenture Trustee directing the authentication and delivery of such
Notes and thereupon the same shall be authenticated and delivered by Indenture
Trustee in accordance with such Trust Request.
SECTION 2.3. Transfer and Exchange.
----------------------
(a) Issuer shall cause to be kept at the Corporate Trust Office a
register (the "Note Register") in which, subject to such reasonable
regulations as Indenture
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Trustee may prescribe, Issuer shall provide for the registration of Notes and
of transfers of Notes. Indenture Trustee is hereby appointed "Note Registrar"
for the purpose of registering Notes and transfers of Notes as herein
provided. Upon any resignation of any Note Registrar, 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 Indenture Trustee is appointed by Issuer as
Note Registrar, Issuer will give Indenture Trustee prompt written notice of
the appointment of such Note Registrar and of the location, and any change in
the location, of Note Register, and Indenture Trustee shall have the right to
inspect Note Register at all reasonable times, to obtain copies thereof and to
rely upon a certificate executed on behalf of Note Registrar by an executive
officer thereof as to the names and addresses of Holders of Notes and the
principal amounts and number of such Notes.
(b) Subject to Section 2.3(a), upon surrender for registration of
transfer of any Note at the office of Issuer designated pursuant to Section
8.2 for such purpose, Issuer shall execute and Indenture Trustee upon request
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Notes of any authorized denominations and of a
like aggregate original principal amount. Indenture Trustee shall make a
notation on any such new Note of the amount of principal, if any, that has
been paid on such Note.
(c) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of 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.
(d) Every Note presented or surrendered for registration of transfer
or for exchange shall (if so required by Issuer or Indenture Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to Issuer and Indenture Trustee duly executed, by the Holder
thereof or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration of transfer
or exchange of Notes, but Issuer or Indenture Trustee may require payment by
the transferor 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 9.5 not involving
any transfer.
SECTION 2.4. Mutilated, Destroyed, Lost and Stolen Notes.
--------------------------------------------
(a) If any mutilated Note is surrendered to Indenture Trustee, Issuer
shall execute and Indenture Trustee shall authenticate and deliver in exchange
therefore
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a replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
(b) If there shall be delivered to Issuer and Indenture Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Note
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of actual
notice to Issuer or Indenture Trustee that such Note has been acquired by a
bona fide purchaser, Issuer shall execute and upon its request Indenture
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Note, a replacement Note of like tenor and principal amount and bearing
a number not contemporaneously outstanding.
(c) In case the final installment of principal on any such mutilated,
destroyed, lost or stolen Note has become or will at the next Payment Date
become due and payable, Issuer in its discretion may, instead of issuing a
replacement Note, pay such Note.
(d) Upon the issuance of any replacement Note under this Section,
Issuer or Indenture Trustee may require the payment by the Noteholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed
as a result of the issuance of such replacement Note.
(e) Every replacement Note issued pursuant to this Section 2.4 in
lieu of any destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of Issuer, whether or not the 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.
(f) The provisions of this Section 2.4 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 2.5. Book-Entry Registration of Class A Notes and Class
--------------------------------------------------
B Notes.
--------
Each of the Class A-1 Notes and the Class B Notes, upon original
issuance, shall be issued in the form of one or more typewritten Class A-1
Notes, Class A-2 Notes, and Class B Notes, respectively, (the "Book-Entry
Class A-1 Notes," "Book-Entry Class A-2 Notes," and "Book-Entry Class B
Notes", respectively) to be delivered to The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, Issuer. Each of the Class A-1
Notes, Class A-2 Notes, and Class B Notes shall initially be registered on the
Note Register in the name of Cede & Co., the nominee of The Depository Trust
Company, as the initial Clearing Agency, and no Class A-1 Note Owner, Class
A-2 Note Owner, or Class B Note Owner will receive
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a definitive note representing such Note Owner's interest in the Class A-1
Notes, Class A-2 Notes, or Class B Notes, as the case may be, except as
provided in Section 2.7. Unless and until Definitive Class A-1 Notes,
Definitive Class A-2 Notes, and/or Definitive Class B Notes have been issued
to the applicable Note Owners pursuant to Section 2.7:
(a) the provisions of this Section 2.5 shall be in full force and
effect with respect to the Class A-1 Notes, Class A-2 Notes, or the Class B
Notes, as the case may be;
(b) Issuer, Servicer and Indenture Trustee may deal with the Clearing
Agency and the Clearing Agency Participants for all purposes with respect to
the Class A-1 Notes, Class A-2 Notes or Class B Notes, as the case may be,
(including the making of distributions on the Class A-1 Notes, Class A-2
Notes, and the Class B Notes, as the case may be) as the authorized
representatives of the respective Note Owners;
(c) to the extent that the provisions of this Section 2.5 conflict
with any other provisions of this Indenture, the provisions of this Section
2.5 shall control; and
(d) the rights of the respective Note Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and shall be
limited to those established by law and agreements between such respective
Note Owners and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depository Agreement, unless and until Definitive Class A-1
Notes, Definitive Class A-2 Notes, or Definitive Class B Notes, as the case
may be, are issued pursuant to Section 2.7, the initial Clearing Agency will
make book-entry transfers among the Clearing Agency Participants and receive
and transmit distributions of principal and interest on the related Class A-1
Notes, Class A-2 Notes, and Class B Notes, as the case may be, to such
Clearing Agency Participants.
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Principal Amount of the Notes (or a
class of Notes), 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
(or class of Notes) and has delivered such instructions to Indenture Trustee.
SECTION 2.6. Notice to Clearing Agency.
--------------------------
Whenever notice or other communication to the Class A-1 Noteholders,
Class A-2 Noteholders, or Class B Noteholders is required under this
Agreement, unless
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and until Definitive Class A-1 Notes, Definitive Class A-2 Notes, or
Definitive Class B Notes shall have been issued to the related Note Owners
pursuant to Section 2.7, Indenture Trustee shall give all such notices and
communications specified herein to be given to such Noteholders to the
applicable Clearing Agency which shall give such notices and communications to
the related Class A-1 Note Owners, Class A-2 Note Owners, and Class B Note
Owners in accordance with its applicable rules, regulations and procedures.
SECTION 2.7. Definitive Class A Notes and Definitive Class B
-----------------------------------------------
Notes.
------
If (a) (i) Manager advises Indenture Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities under the Depository Agreement with respect to the Class A-1
Notes, Class A-2 Notes, and/or the Class B Notes and (ii) Indenture Trustee or
Manager is unable to locate a qualified successor, (b) Manager, at its option,
advises Indenture Trustee in writing that it elects to terminate the
book-entry system with respect to the Class A-1 Notes, Class A-2 Notes and/or
the Class B Notes through the Clearing Agency or (c) after the occurrence of a
Servicer Event of Default, Class A-1 Note Owners, Class A-2 Note Owners, and
Class B Note Owners, with respect to the Class A-1 Notes, Class A-2 Notes, and
Class B Notes evidencing not less than a majority of the aggregate unpaid
Outstanding Principal Amount of the Class A-1 Notes, Class A-2 Notes, and
Class B Notes, respectively, advise Indenture Trustee and the Clearing Agency
through the Clearing Agency Participants in writing that the continuation of a
book-entry system with respect to the Class A-1 Notes, Class A-2 Notes, or the
Class B Notes, respectively, through the Clearing Agency is no longer in the
best interests of the Class A-1 Note Owners, Class A-2 Note Owners, or Class B
Note Owners, as the case may be, Indenture Trustee shall notify all Class A-1
Note Owners, Class A-2 Note Owners, and Class B Note Owners with respect to
the Class A-1 Notes, Class A-2 Notes, and Class B Notes, respectively, through
the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Class A-1 Notes, Definitive Class A-2 Notes and
Definitive Class B Notes to Class A-1 Notes Owners, Class A-2 Note Owners and
Class B Note Owners, respectively, requesting the same. Upon surrender to
Indenture Trustee of the Class A-1 Notes, Class A-2 Notes, or Class B Notes,
as the case may be, by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, Issuer shall execute
and Indenture Trustee shall authenticate and deliver the Definitive Class A-1
Notes, Definitive Class A-2 Notes, or Definitive Class B Notes, as the case
may be. Neither Manager nor 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
Class A-1 Notes, Definitive Class A-2 Notes, or Definitive Class B Notes, as
the case may be, all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall be deemed to be imposed upon and
performed by Indenture Trustee,
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to the extent applicable with respect to such Definitive Class A-1 Notes,
Definitive Class A-2 Notes, or Definitive Class B Notes, respectively, and
Indenture Trustee shall recognize the Holders of the Definitive Class A-1
Notes as Class A-1 Noteholders, Holders of the Definitive Class A-2 Notes as
Class A-2 Noteholders, and/or the Holders of the Definitive Class B Notes as
Class B Noteholders hereunder.
SECTION 2.8. Payment of Interest and Principal; Rights Preserved.
---------------------------------------------------
(a) Any installment of interest or principal, payable on any Note
that is punctually paid or duly provided for by Issuer on the applicable
Payment Date shall be paid to the Person in whose name such Note was
registered at the close of business on the Record Date for such Payment Date
by wire transfer of federal funds to the account and number specified in the
Note Register on such Record Date for such Person or, if no such account or
number is so specified, then by check mailed to such Person's address as it
appears in the Note Register on such Record Date.
(b) All reductions in the principal amount of a Note effected by
payments of installments of principal made on any Payment Date shall be
binding upon all Holders of such Note and of any Note issued upon the
registration of transfer thereof or in exchange therefore or in lieu thereof,
whether or not such payment is noted on such Note. All payments on the Notes
shall be paid without any requirement of presentment but each Holder of any
Note shall be deemed to agree, by its acceptance of the same, upon at least
ten (10) days notice from Indenture Trustee to surrender such Note at the
Corporate Trust Office against payment of the final installment of principal
of such Note.
SECTION 2.9. Persons Deemed Owners.
----------------------
Prior to due presentment of a Note for registration of transfer,
Issuer, Indenture Trustee, and any agent of Issuer or Indenture Trustee may
treat the Noteholder as the owner of such Note for the purpose of receiving
payment of principal of and interest on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither Issuer, Indenture
Trustee, nor any agent of Issuer or Indenture Trustee shall be affected by
notice to the contrary.
SECTION 2.10. Cancellation.
-------------
All Notes surrendered for registration of transfer or exchange or
following final payment shall, if surrendered to any Person other than
Indenture Trustee, be delivered to Indenture Trustee and shall be promptly
cancelled by it. Issuer may at any time deliver to Indenture Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
Issuer may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly cancelled by
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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 held by Indenture Trustee may
be disposed of in the normal course of its business or as directed by an
Issuer Order.
SECTION 2.11. Noteholder Lists.
-----------------
Indenture Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Noteholders and shall otherwise comply with Section 312(a) of the
Trust Indenture Act. In the event Indenture Trustee no longer serves as the
Note Registrar, Issuer (or any other obligor upon the Notes) shall furnish to
Indenture Trustee at least five Business Days before each interest payment
date (and in all events in intervals of not more than 6 months) and at such
other times as Indenture Trustee may request in writing a list in such form
and as of such date as Indenture Trustee may reasonably require of the names
and addresses of Noteholders, and Issuer shall otherwise comply with Section
312(a) of the Trust Indenture Act. Three or more Holders or one or more
Holders of the Notes evidencing at least 25% of the Outstanding Principal
Amount of the Notes may, by written request to Indenture Trustee, obtain
access to the list of all Holders maintained by Indenture Trustee for the
purpose of communicating with other Holders with respect to their rights under
the Indenture or under the Notes. Indenture Trustee may elect not to afford
the requesting Holders access to the list of Holders if it agrees to mail the
desired communication or proxy, on behalf of and at the expense of the
requesting Holders, to all Holders.
SECTION 2.12. Treasury Securities.
--------------------
In determining whether the Noteholders of the required Outstanding
Principal Amount of the Notes have concurred in any direction, waiver or
consent, Notes owned by Issuer, Transferor, ILC, any other obligor upon the
Notes or an Affiliate of Transferor shall be considered as though not
outstanding, except that for the purposes of determining whether Indenture
Trustee shall be protected in relying on any such direction, waiver or
consent, only Notes which a Responsible Officer knows are so owned shall be so
disregarded.
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ARTICLE 3.
ACCOUNTS; INVESTMENT OF MONEYS;
COLLECTION AND APPLICATION OF MONEYS; REPORTS
SECTION 3.1. Trust Accounts; Investments by Indenture Trustee.
-------------------------------------------------
(a) On or before the Issuance Date, Issuer shall cause Servicer to
establish in the name of Indenture Trustee for the benefit of the Noteholders
and the Certificateholders, to the extent of their interests therein as
provided in this Indenture, the Pooling and Servicing Agreement and the Trust
Agreement, the Trust Accounts as provided in Section 6.1 of the Pooling and
Servicing Agreement.
(b) Indenture Trustee shall not have any right of set-off with
respect to any Trust Account or any investment therein. So long as no Event of
Default shall have occurred and be continuing, all or a portion of the amounts
in the Trust Account shall be invested and reinvested by the Indenture Trustee
pursuant to an Issuer Order or Servicer Order in one or more Eligible
Investments in accordance with Section 6.1 of the Pooling and Servicing
Agreement.
(c) If either (i) Issuer or Servicer, as the case may be, shall have
failed to give investment directions to Indenture Trustee by 9:30 a.m., New
York City time on any Business Day on which there may be uninvested cash or
(ii) an Event of Default shall be continuing, Indenture Trustee shall promptly
invest and reinvest the funds then in the Trust Accounts to the fullest extent
practicable in one or more Eligible Investments. All investments made by
Indenture Trustee shall mature no later than the maturity date therefore
permitted by Section 3.1(d) unless Indenture Trustee shall have received
written confirmation from each Rating Agency, that the liquidation of such
Eligible Investments prior to their respective maturity dates has satisfied
the Rating Agency Condition.
(d) No investment of any amount held in any Trust Account shall
mature later than the Business Day immediately preceding the Payment Date
which is scheduled to occur immediately following the date of investment. All
income or other gains (net of losses) from the investment of moneys deposited
in the Trust Accounts shall be deposited by Indenture Trustee in such account
immediately upon receipt.
(e) If any amounts are needed for disbursement from any Trust Account
and sufficient uninvested funds are not collected and available therein to
make such disbursement, in the absence of an Issuer Order or Servicer Order
for the liquidation of investments held therein in an amount sufficient to
provide the required funds, Indenture Trustee shall select and cause to be
sold or otherwise converted to cash a sufficient amount of the investments in
such accounts.
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(f) Indenture Trustee shall not in any way be held liable by reason
of any insufficiency in the Collection Account, the Reserve Account, or the
Residual Account resulting from losses on investments made in accordance with
the provisions of this Section 3.1 and Section 6.1 of the Pooling and
Servicing Agreement (but the institution serving as Indenture Trustee shall at
all times remain liable for its own debt obligations, if any, constituting
part of such investments). Indenture Trustee shall not be liable for any
investment made by it in accordance with this Section 3.1 and Section 6.1 of
the Pooling and Servicing Agreement on the grounds that it could have made a
more favorable investment or a more favorable selection for sale of an
investment.
SECTION 3.2. Collection of Moneys.
---------------------
Indenture Trustee shall from time to time, in accordance with
instructions of Servicer, withdraw from the Collection Account and pay as
instructed by the Servicer any amounts in the Collection Account which
Servicer advises Indenture Trustee are Other Lease Payments or otherwise not
part of the Trust Estate. Prior to such payment, Indenture Trustee shall have
rights to and an interest in such amounts to the extent (but only to the
extent) it is determined that such amounts actually constitute Transaction
Payment Amounts.
SECTION 3.3. Collection Account; Payments.
-----------------------------
(a) Not later than the Required Deposit Date, Available Funds will be
deposited into the Collection Account as provided in Section 6.2 (c) of the
Pooling and Servicing Agreement. On or before each Payment Date, Available
Funds will be transferred to the Note Distribution Account as provided in
Section 6.3 of the Pooling and Servicing Agreement.
(b) Unless the Notes have been declared due and payable pursuant to
Section 6.2 and moneys collected by Indenture Trustee are being applied in
accordance with Section 6.6, Available Funds on deposit in the Note
Distribution Account shall be distributed on each Payment Date to the extent
of amount due and unpaid on the Notes in the following amounts and in
following order of priority:
(i) concurrently: (A) to make Interest Payments on the Class
A-1 Notes; and (B) to make Interest Payments on the Class A-2 Notes;
(ii) to make Interest Payments on the Class B Notes;
(iii) to make the Class A Principal Payment (i) to the Class
A-1 Noteholders only, until the Outstanding Principal Amount of the
Class A-1
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Notes is reduced to zero, then (ii) to the Class A-2 Noteholders
only, until the Outstanding Principal Amount of the Class A-2 Notes
is reduced to zero;
(iv) to pay the Class B Principal Payment to the Class B
Noteholders; and
(v) to pay the Additional Principal, if any, as an
additional reduction of principal, first to the Class A-2 Noteholders
until the Outstanding Principal Amount of the Class A-2 Notes has
been reduced to zero, second to the Class B Noteholders as an
additional reduction of principal until the Outstanding Principal
Amount of the Class B Notes has been reduced to zero.
SECTION 3.4. Reports by Indenture Trustee; Notices of Certain
------------------------------------------------
Payments.
---------
(a) Indenture Trustee shall within two Business Days after the
request of Issuer, Servicer or any Noteholder, deliver to the requesting
person a written report setting forth the amounts on deposit in the Collection
Account, the Reserve Account, and the Residual Account and identifying the
investments included therein.
(b) Within five Business Days following each Payment Date or as
promptly as possible thereafter but in no event later than two Business Days
following the receipt of the Monthly Status Report from Servicer pursuant to
Section 4.8 of the Pooling and Servicing Agreement, Indenture Trustee shall
mail to Transferor, each Rating Agency and Servicer and make available to each
Noteholder the following information:
(i) the principal amount of all Outstanding Class A-1 Notes,
Class A-2 Notes and Class B Notes, respectively, and of the
Outstanding Class A-1 Notes, Class A-2, Class B Notes respectively,
held by each Noteholder on the Record Date with respect to such
Payment Date;
(ii) the amount of Interest Payments and payments in
reduction of principal paid on such Payment Date with respect to all
Class A-1 Notes, Class A-2 Notes and Class B Notes, respectively, and
with respect to the Notes held by each Noteholder;
(iii) the amount of the Servicing Fee and unreimbursed
Servicer Advances paid on such Payment Date pursuant to Section
6.3(b)(i) of the Pooling and Servicing Agreement;
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(iv) the Available Residual Amount and the Utilized Residual
Amounts as of the date of the most recent Monthly Status Report
delivered pursuant to Section 4.8 of the Pooling and Servicing
Agreement;
(v) the amounts, if any, paid to Servicer or Transferor
pursuant to Section 6.3(b)(xi) of the Pooling and Servicing
Agreement; and
(vi) the amount on deposit in the Collection Account, the
Reserve Account and the Residual Account, in each case after giving
effect to all of the withdrawals and applications or transfers
required on or before such Payment Date pursuant to Sections 3.2 and
3.3
With each report of Indenture Trustee furnished pursuant to this
Section 3.4(b) following any Payment Date, Indenture Trustee shall enclose a
copy of the Servicing Report and the report required to be furnished to
Indenture Trustee by Servicer following such Payment Date pursuant to Section
4.8 of the Pooling and Servicing Agreement or, if such reports have not been
received, a statement to such effect.
SECTION 3.5. Indenture Trustee May Rely on Certain Information
-------------------------------------------------
from Servicer.
- -------------
Pursuant to the Pooling and Servicing Agreement and Section 3.2
hereof, Servicer is required to furnish to Indenture Trustee from time to time
certain information and make various calculations which are relevant to the
performance of Indenture Trustee's duties in Article Three and in Article Four
of this Indenture. Indenture Trustee shall be entitled to rely in good faith
on such information or calculations in the performance of its duties hereunder
(i) unless and until a Responsible Officer of Indenture Trustee has actual
knowledge, or is advised by any Noteholder (either in writing or orally with
prompt written or telecopied confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information.
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ARTICLE 4.
RELEASE OF COLLATERAL
SECTION 4.1. Release of Collateral.
----------------------
(a) Except as otherwise provided below in this Article IV, the
Indenture Trustee shall release property from the Lien of this Indenture only
upon receipt of an Issuer Request accompanied by an Officers' Certificate, an
Opinion of Counsel and Independent Certificates in accordance with Trust
Indenture Act Sections 314(c) and 314(d)(l), or an Opinion of Counsel in lieu of
such Independent Certificates to the effect that the Trust Indenture Act does
not require any such Independent Certificates.
(b) Subject to the satisfaction of the provisions of Sections 4.2 and
4.4, Indenture Trustee shall release Equipment from the Lien of the Indenture
upon the occurrence of any of the following events: (a) the sale of such
Equipment pursuant to Section 3.3(b) of the Pooling and Servicing Agreement
(unless retained by Issuer for re-leasing), (b) the expiration of the related
Lease upon the payment of the final Lease Payment due and payable under such
Lease and the deposit of any Residual Realization in respect thereof subject
to the Residual Amount Cap, (c) the repurchase of the related Lease in
accordance with the provisions of Section 4 of the Pooling and Servicing
Agreement and upon the substitution of a Substitute Lease in accordance with
the provisions of Section 9 of the Pooling and Servicing Agreement. The
proceeds of any such sale, repurchase or releasing shall be deposited in the
Collection Account for disposition under this Indenture.
SECTION 4.2. Release of Leases Upon Final Lease Payment.
-------------------------------------------
Subject to the satisfaction of the provisions of Section 4.4, if
Indenture Trustee shall have received notice (either in writing or orally with
prompt written or telecopied confirmation) from Servicer that Indenture
Trustee has received from amounts paid by the Lessee, from the Lease
Repurchase Amount or from the proceeds of the Equipment subject to any Lease
(i) the final Lease Payment due and payable under such Lease and the deposit
of any Residual Realization in respect thereof, (ii) a Termination Payment in
respect of such Lease, and the deposit of any Residual Realization in respect
thereof, (iii) a Casualty Payment under such Lease (and, following such final
Lease Payment, Casualty Payment or Termination Payment, no further payments on
or in respect of such Lease are or will be due and payable), or (iv) the full
amount of any Non-Performing Lease Pay-Through Amount with respect to such
Lease, such Lease shall be released from the lien of this Indenture.
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SECTION 4.3. Execution of Documents.
-----------------------
Indenture Trustee shall promptly execute and deliver such documents,
including without limitation partial releases and termination statements
(which shall be furnished to Indenture Trustee by the Servicer), and take such
other actions as Issuer, by Issuer Request, may reasonably request (including
the return of any Lease which has been released) to fully effectuate the
release from this Indenture of any Lease and interests in the related
Equipment required to be so released pursuant to Sections 4.1 or 4.2.
SECTION 4.4. Officer's Certificates.
-----------------------
The Issuer may, without compliance with the requirements of Section
4.1(a): (A) take all of the actions described in Sections 4.1(b) and 4.2; (B)
collect, liquidate, sell or otherwise dispose of Leases and Equipment as and
to the extent permitted or required by the Pooling and Servicing Agreement and
(B) make cash payments out of the Trust Accounts as and to the extent
permitted or required by the Pooling and Servicing Agreement, this Indenture
and the Trust Agreement so long as the Manager, on behalf of the Issuer, shall
deliver to the Indenture Trustee every six months, commencing [March 1], 1999,
an Officers' Certificate of the Issuer stating that all such dispositions of
Granted Assets that occurred since the execution of the previous such
Officers' Certificate (or for the first such Officers' Certificate, since the
Closing Date) were in the ordinary course of the Issuer's business and that
the proceeds thereof were applied in accordance with the Pooling and Servicing
Agreement, this Indenture and the Trust Agreement.
ARTICLE 5.
SERVICER EVENTS OF DEFAULT; SUBSTITUTE SERVICER
SECTION 5.1. Servicer Events of Default.
---------------------------
If a Servicer Event of Default shall have occurred and be continuing,
Indenture Trustee shall, upon the written request of the Holders of Notes
evidencing at least 66-2/3% of the then Outstanding Principal Amount of the
Notes, give notice in writing to Servicer of the termination of all of the
rights and obligations of Servicer under the Pooling and Servicing Agreement.
On and after the giving of such written notice, all rights and obligations of
Servicer under the Pooling and Servicing Agreement, including, Servicer's
right thereunder to receive the Servicing Fee and the Supplemental Servicing
Fee, shall pass to, be vested in, and be assumed by Indenture Trustee, and
Indenture Trustee shall be authorized to, and shall, execute and deliver, on
behalf of 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 termination and of
such
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passing, vesting, and assumption; provided that in performing the duties of
Servicer under the Pooling and Servicing Agreement Indenture Trustee shall at
all times be deemed to be acting as Indenture Trustee hereunder and shall be
entitled to the full benefit of all the protections, benefits, immunities and
indemnities provided in this Indenture for or with respect to Indenture
Trustee, including those set forth in Article Seven.
SECTION 5.2. Substitute Servicer.
-------------------
Notwithstanding the provisions of Section 5.1, Indenture Trustee may,
if it shall be unwilling to continue to act as the successor to Servicer in
accordance with Section 5.1, or shall, if it is unable to continue to so act
or is so instructed in writing by the Holders of Notes evidencing at least
66-2/3% of the then Outstanding Principal Amount of the Notes, appoint a
successor to Servicer in accordance with the provisions of Section 8.3 of the
Pooling and Servicing Agreement.
ARTICLE 6.
EVENTS OF DEFAULT; REMEDIES
SECTION 6.1. Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the
following (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) default in making of Principal Payments or Interest Payments when
such become due and payable;
(b) default in the performance, or breach, of any covenant of Issuer
in this Indenture, and continuance of such default or breach for a period of
30 days after the earliest of (i) any officer of Issuer first acquiring
knowledge thereof, (ii) Indenture Trustee's giving written notice thereof to
Issuer or (iii) the Holders of Notes evidencing at least 25% of the then
Outstanding Principal Amount of the Notes giving written notice thereof to
Issuer and Indenture Trustee;
(c) if any representation or warranty of Issuer made in this
Indenture or any other writing provided to the Holders of the Notes shall
prove to be incorrect in any material respect as of the time when the same
shall have been made; and continuance of such default or breach for a period
of 30 days after the earliest of (i) any officer of Issuer first acquiring
knowledge thereof, (ii) Indenture Trustee's
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giving written notice thereof to Issuer or (iii) the Holders of Notes
evidencing at least 25% of the then Outstanding Principal Amount of the Notes
giving written notice thereof to Issuer and Indenture Trustee;
(d) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of Issuer in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (ii) a decree or order adjudging
Issuer a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in
respect of Issuer under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or other
similar official of Issuer or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(e) the commencement by Issuer of a voluntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization,
or other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of Issuer in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of Issuer or of any substantial part of its
property, or the making by it of an assignment for the benefit of creditors,
or Issuer's failure to pay its debts generally as they become due, or the
taking of corporate action by Issuer in furtherance of any such action.
SECTION 6.2. Acceleration of Maturity; Rescission and Annulment.
---------------------------------------------------
(a) If an Event of Default of the kind specified in Section 6.1(d) or
Section 6.1(e) occurs, the unpaid principal amount of the Notes shall
automatically become due and payable at par together with all accrued and
unpaid interest thereon, without presentment, demand, protest or notice of any
kind, all of which are hereby waived by Issuer. If an Event of Default (other
than an Event of Default of the kind described in Section 6.1(d) and Section
6.1(e)) occurs and is continuing, then and in every such case Indenture
Trustee may and shall, if so directed by the Holders of Notes evidencing at
least 66-2/3% of the then Outstanding Principal Amount of Notes, declare the
unpaid principal amount of all the Notes to be due and payable immediately, by
a notice in writing to Issuer (and to Indenture Trustee if given by
Noteholders), and upon any such declaration such principal amount shall become
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immediately due and payable together with all accrued and unpaid interest
thereon, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by Issuer.
(b) At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has been
obtained by Indenture Trustee as hereinafter in this Article provided, the
Holders of Notes evidencing at least 66-2/3% of the then Outstanding Principal
Amount of Notes, by written notice to Issuer and Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(i) Issuer has paid or deposited with Indenture Trustee a
sum sufficient to pay:
(A) all Principal Payments on any Notes which have
become due otherwise than by such declaration of
acceleration and interest thereon from the date when the
same first became due until the date of payment or deposit
at the appropriate Note Interest Rate,
(B) all Interest Payments due with respect to any
Notes and, to the extent that payment of such interest is
lawful, interest upon overdue interest from the date when
the same first became due until the date of payment or
deposit at a rate per annum equal to the appropriate Note
Interest Rates, and
(C) all sums paid or advanced by Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements, and advances of Indenture Trustee, its agents
and counsel; and
(ii) all Events of Default, other than the non-payment of
the Outstanding Principal Amount of the Notes which has become due
solely by such declaration of acceleration, have been cured or waived
as provided in Section 6.13.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 6.3. Remedies.
---------
(a) If an Event of Default occurs and is continuing of which a
Responsible Officer has actual knowledge, Indenture Trustee shall immediately
give notice to each Noteholder as set forth in Section 7.2 and shall solicit
the Noteholders
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for advice. Indenture Trustee shall then take such action as so directed by
the Holders of Notes evidencing at least 66-2/3% of the then Outstanding Notes.
(b) Following any acceleration of the Notes, Indenture Trustee shall
have all of the rights, powers and remedies with respect to the Trust Estate
as are available to secured parties under the UCC or other applicable law.
Such rights, powers and remedies may be exercised by Indenture Trustee in its
own name as trustee of an express trust.
(c) If an Event of Default specified in Section 6.1(a) occurs and is
continuing, Indenture Trustee is authorized to recover judgment in its own
name and as trustee of an express trust against Issuer for the whole amount of
principal and interest remaining unpaid.
(d) In exercising its rights and obligations under this Section 6.3,
Indenture Trustee may sell the Trust Estate; provided that if the Event of
Default involves other than non-payment for five days or more of principal or
interest on the Notes, Indenture Trustee may not sell the Trust Estate unless:
(A) all the Noteholders 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) Indenture Trustee determines that the Trust Estate will not
continue to provide sufficient funds for the payment of principal of and
interest on the Notes as they would have become due if the Notes had not been
declared due and payable, and Indenture Trustee obtains the consent of Holders
of Notes evidencing at least 66-2/3% of the Outstanding Principal Amount of the
Notes.
SECTION 6.4. Indenture Trustee Shall File Proofs of Claim.
---------------------------------------------
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition,
or other judicial proceeding relative to Issuer or any other obligor upon the
Notes or the other obligations secured hereby or relating to the property of
Issuer or of such other obligor or their creditors, Indenture Trustee
(irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective
of whether Indenture Trustee shall have made any demand on Issuer for the
payment of overdue principal or interest or any such other obligation) shall
by intervention in such proceeding or otherwise,
(i) file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Notes and any other
obligation secured hereby and to file such other papers or documents
as may be necessary or advisable in order to have the claims of
Indenture Trustee (including any claim for the reasonable
compensation, expenses,
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disbursements and advances of Indenture Trustee, its agents and
counsel) and of the Noteholders allowed in such judicial proceeding,
and
(ii) collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator, or
other similar official in any such judicial proceeding is hereby authorized by
each Noteholder to make such payments to Indenture Trustee and, in the event
that Indenture Trustee shall consent to the making of such payments directly
to the Noteholders to pay to Indenture Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of Indenture
Trustee, its agents and counsel, and any other amounts due Indenture Trustee
under Section 7.7.
(b) Nothing herein contained shall be deemed to authorize Indenture
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize
Indenture Trustee to vote in respect of the claim of any Noteholder in any
such proceeding.
SECTION 6.5. Indenture Trustee May Enforce Claims Without
--------------------------------------------
Possession of Notes.
--------------------
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by Indenture Trustee without the possession of any
of the Notes or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by Indenture Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of Indenture Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Notes in respect of which such
judgment has been recovered.
SECTION 6.6. Application of Money Collected.
-------------------------------
Any money collected by Indenture Trustee pursuant to this Article,
and any moneys that may then be held or thereafter received by Indenture
Trustee shall be applied in the following order, at the date or dates fixed by
Indenture Trustee and, in case of the distribution of the entire amount due on
account of principal or interest, upon presentation of the Notes and surrender
thereof:
first: to the payment of all costs and expenses of
collection incurred by Indenture Trustee and the Noteholders
(including the reasonable fees and expenses of any counsel to
Indenture Trustee and the Noteholders);
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second: if the person then acting as Servicer under the
Pooling and Servicing Agreement is not ILC or an Affiliate of ILC, to
the payment of all Servicer's Fees then due to such person;
third: first, pro-rata to the payment of all accrued and
unpaid interest on the Outstanding Principal Amount of the Class A-1
Notes and the Outstanding Principal Amount of the Class A-2 Notes,
respectively, to the date of payment thereof, including (to the
extent permitted by applicable law) interest on any overdue
installment of interest and principal from the maturity of such
installment to the date of payment thereof at the rate per annum
equal to the Class A-1 Note Interest Rate and Class A-2 Note Interest
Rate, respectively, second, to the payment of all accrued and unpaid
interest on the Outstanding Principal Amount of the Class B Notes to
the date of payment thereof, including (to the extent permitted by
applicable law) interest on any overdue installment of interest and
principal from the maturity of such installment to the date of
payment thereof at the rate per annum equal to the Class B Note
Interest Rate, third, to the payment of all accrued and unpaid
interest on the Certificate Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of
such installment to the date of payment thereof at the rate per annum
equal to the Certificate Rate, fourth, to the payment of the
Outstanding Principal Amount of the Class A-1 Notes, fifth, to the
payment of the Outstanding Principal Amount of the Class A-2 Notes,
sixth, to the payment of the Outstanding Principal Amount of the
Class B Notes, and seventh, to the payment of the Certificate;
provided, that the Noteholders may allocate such payments for
interest, principal and premium at their own discretion, except that
no such allocation shall affect the allocation of such amounts or
future payments received by any other Noteholder;
fourth: to the payment of amounts then due Indenture Trustee
hereunder and the Trustee under the Trust Agreement;
fifth: if the person then acting as Servicer is ILC or an
Affiliate of ILC, to the payment of all Servicer's Fees then due to
such Person; and
sixth: to the payment of the remainder, if any, to
Transferor or any other Person legally entitled thereto.
SECTION 6.7. Limitation on Suits.
--------------------
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None of the Noteholders shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(i) such Noteholder has previously given written notice to
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the then
Outstanding Principal Amount of the Notes shall have made written
request to Indenture Trustee to institute proceedings in respect of
such Event of Default in its own name as Indenture Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to
Indenture Trustee adequate indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(iv) Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(v) so long as any of the Notes remain Outstanding, no
direction inconsistent with such written request has been given to
Indenture Trustee during such 60-day period by the Holders of Notes
evidencing at least 66-2/3% of the then Outstanding Principal Amount
of the Notes;
it being understood and intended that no one or more Noteholders 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 Noteholders, or to obtain or to seek to obtain priority or preference
over any other Noteholders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all the Noteholders. Nothing in this Section 6.7 shall be construed as
limiting the rights of otherwise qualified Noteholders to petition a court for
the removal of a Indenture Trustee pursuant to Section 7.9(h) hereof.
SECTION 6.8. Unconditional Right of Noteholders to Receive
---------------------------------------------
Principal and Interest.
- -----------------------
Notwithstanding any other provision in this Indenture, other than the
provisions hereof limiting the right to recover amounts due on the Notes to
recoveries from the property of Trust Estate, the Holder of any Note shall
have the absolute and unconditional right to receive payment of the principal
of and interest on such Note on the Maturities for such payments, including
the Stated Maturity, and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Noteholder.
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SECTION 6.9. Restoration of Rights and Remedies.
-----------------------------------
If Indenture Trustee or any Noteholder has instituted any proceeding
to enforce any right or remedy under this Indenture and such proceeding has
been discontinued or abandoned for any reason, or has been determined
adversely to Indenture Trustee or to such Noteholder, then and in every such
case, subject to any determination in such proceeding, Issuer, Indenture
Trustee and the Noteholders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of
Indenture Trustee and the Noteholders continue as though no such proceeding
had been instituted.
SECTION 6.10. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost, or stolen Notes in Section 2.4(f), no
right or remedy herein conferred upon or reserved to 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 6.11. Delay or Omission Not Waiver.
-----------------------------
No delay or omission of Indenture Trustee or of any Holder of any
Note to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article or by law to Indenture Trustee or to the Noteholders may be exercised
from time to time, and as often as may be deemed expedient, by Indenture
Trustee or by the Noteholders, as the case may be.
SECTION 6.12. Control by Noteholders.
-----------------------
Except as may otherwise be provided in this Indenture, until such
time as the conditions specified in Sections 10.1(a)(i) and (ii) have been
satisfied in full, the Holders of Notes evidencing at least 66-2/3% of the then
Outstanding Principal Amount of the Notes shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available
to Indenture Trustee or exercising any trust or power conferred on Indenture
Trustee. Notwithstanding the foregoing,
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(i) no such direction shall be in conflict with any rule of
law or with this Indenture;
(ii) Indenture Trustee shall not be required to follow any
such direction which Indenture Trustee reasonably believes might
result in any personal liability on the part of Indenture Trustee for
which Indenture Trustee is not adequately indemnified; and
(iii) Indenture Trustee may take any other action deemed
proper by Indenture Trustee which is not inconsistent with any such
direction; provided that Indenture Trustee shall give notice of any
such action to each Noteholder.
SECTION 6.13. Waiver of Events of Default.
----------------------------
(a) The Holders of Notes evidencing at least 66-2/3% of the then
Outstanding Principal Amount of the Notes may, by one or more instruments in
writing, waive any Event of Default hereunder and its consequences, except a
continuing Event of Default:
(i) in respect of the payment of the principal of or premium
or interest on any Note (which may only be waived by the Holder of
such Note), or
(ii) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent
of the Holder of each Outstanding Note affected (which only may be
waived by the Holders of all Outstanding Notes affected).
(b) A copy of each waiver pursuant to Section 6.13(a) shall be
furnished by Issuer to Indenture Trustee. Upon any such waiver, such Event of
Default shall cease to exist and shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent
or other Event of Default or impair any right consequent thereon.
SECTION 6.14. Undertaking for Costs.
----------------------
All parties to this Indenture agree (and each Holder of any Note by
its 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 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
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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 any suit instituted by Indenture
Trustee, to any suit instituted by any Noteholder, or group of Noteholders,
holding in the aggregate more than 10% of the then Outstanding Principal
Amount of the Notes, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or interest on any Note on or
after the Maturities for such payments, including the Stated Maturity as
applicable.
SECTION 6.15. Waiver of Stay or Extension Laws.
---------------------------------
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, which may affect the covenants
or the performance of this Indenture; and Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law and covenants that it will not hinder, delay or impede the execution of
any power herein granted to Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 6.16. Sale of Trust Estate.
---------------------
(a) The power to effect any sale of any portion of the Trust Estate
pursuant to Section 6.3 shall not be exhausted by any one or more sales as to
any portion of the Trust Estate remaining unsold, but shall continue
unimpaired until the entire Trust Estate shall have been sold or all amounts
payable on the Notes shall have been paid. Indenture Trustee may from time to
time, upon directions in accordance with Section 6.12, postpone any public
sale by public announcement made at the time and place of such sale. For any
public sale of the Trust Estate, Indenture Trustee shall have provided each
Noteholder with notice of such sale at least two weeks in advance of such sale
which notice shall specify the date, time and location of such sale.
(b) To the extent permitted by applicable law, Indenture Trustee
shall not in any private sale sell to a third party the Trust Estate, or any
portion thereof unless,
(i) until such time as the conditions specified in Sections
10.1(a)(i) and (ii) have been satisfied in full, the Holders of Notes
evidencing at least 66-2/3% of the then Outstanding Principal Amount
of each Class of the Notes voting separately consent to or direct
Indenture Trustee in writing to make such sale; or
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(ii) the proceeds of such sale would be not less than the
sum of all amounts due to Indenture Trustee hereunder and the entire
unpaid principal amount of the Notes and interest due or to become
due thereon in accordance with Section 6.6 on the Payment Date next
succeeding the date of such sale.
The foregoing provisions shall not preclude or limit the ability of Indenture
Trustee to purchase all or any portion of the Trust Estate at a private sale.
(c) In connection with a sale of all or any portion of Trust Estate:
(i) any one or more Noteholders may bid for and purchase the
property offered for sale, and upon compliance with the terms of sale
may hold, retain, and possess and dispose of such property, without
further accountability, and any Noteholder may, in paying the
purchase money therefore, deliver in lieu of cash any Outstanding
Notes or claims for interest thereon for credit in the amount that
shall, upon distribution of the net proceeds of such sale, be payable
thereon, and the Notes, in case the amounts so payable thereon shall
be less than the amount due thereon, shall be returned to the
Noteholders after being appropriately stamped to show such partial
payment;
(ii) Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of Trust Estate in connection with a sale thereof;
(iii) Indenture Trustee is hereby irrevocably appointed the
agent and attorney-in-fact of Issuer to transfer and convey its
interest in any portion of the Trust Estate in connection with a sale
thereof, and to take all action necessary to effect such sale; and
(iv) no purchaser or transferee at such a sale shall be
bound to ascertain Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of
any moneys.
(d) The method, manner, time, place and terms of any sale of all or
any portion of the Trust Estate shall be commercially reasonable.
(e) The provisions of this Section 6.16 shall not be construed to
restrict the ability of Indenture Trustee to exercise any rights and powers
against Issuer or the Trust Estate that are vested in Indenture Trustee by
this Indenture, including, without limitation, the power of Indenture Trustee
to proceed against the collateral subject to the lien of this Indenture and to
institute judicial proceedings for the collection of any deficiency remaining
thereafter.
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ARTICLE 7.
THE TRUSTEE
SECTION 7.1. Certain Duties and Responsibilities.
------------------------------------
(a) Except during the continuance of an Event of Default known to
Indenture Trustee,
(i) 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 Indenture Trustee; and
(ii) in the absence of bad faith on its part, Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to Indenture Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to Indenture Trustee, Indenture
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing to the
actual knowledge of a Responsible Officer of Indenture Trustee, Indenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve
Indenture Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall
be proved, subject to Section 7.3(f), that Indenture Trustee was
negligent in ascertaining the pertinent facts;
(iii) Indenture Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Noteholders in accordance with
Section 6.12 relating to the
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time, method, and place of conducting any proceeding for any remedy
available to Indenture Trustee, or exercising any trust or power
conferred upon Indenture Trustee, under this Indenture; and
(iv) no provision of this Indenture shall require Indenture
Trustee to expend or risk its own funds or otherwise incur any
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 for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to Indenture Trustee shall be subject to the provisions
of this Section.
SECTION 7.2. Notice of Defaults or Events of Default.
----------------------------------------
Within two Business Days after a Responsible Officer obtaining
knowledge of the occurrence of any Default or Event of Default hereunder,
Indenture Trustee shall transmit, by certified mail return receipt requested,
hand delivery or overnight courier, to all Noteholders, as their names and
addresses appear in the Note Register, Servicer, Transferor, and the Rating
Agencies notice of such Default or Event of Default hereunder known to
Indenture Trustee, unless such Default or Event of Default shall have been
cured or waived.
SECTION 7.3. Certain Rights of Indenture Trustee.
------------------------------------
Subject to the provisions of Section 7.1:
(a) Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, note,
debenture, other evidence of indebtedness or other paper or document believed
by it to be genuine and to have been signed or presented by the proper party
or parties;
(b) any request or direction of Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order and any action of
Issuer may be sufficiently evidenced by an Issuer Order;
(c) whenever in the administration of this Indenture Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, Indenture Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
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(d) Indenture Trustee may consult with counsel as to legal matters
and the written advice of any such counsel selected by Indenture Trustee with
due care shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) Indenture Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction;
(f) 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, direction, consent, order, note,
debenture, other evidence of indebtedness, or other paper or document, but
Indenture Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if Indenture
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of Issuer,
personally or by agent or attorney; and
(g) 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 and Indenture Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.
SECTION 7.4. Not Responsible for Recitals or Issuance of Notes.
--------------------------------------------------
The recitals contained herein and in the Notes, except Indenture
Trustee's certificates of authentication, shall be taken as the statements of
Issuer, and Indenture Trustee assumes no responsibility for their correctness.
Indenture Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Notes. Indenture Trustee shall not be accountable
for the use or application by Issuer of the proceeds of the Notes.
SECTION 7.5. May Hold Notes.
---------------
Indenture Trustee, in its individual or any other capacity, may
become the owner or pledgee of Notes and may otherwise deal with Issuer with
the same rights it would have if it were not Indenture Trustee.
SECTION 7.6. Money Held in Trust.
--------------------
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Money and investments held by Indenture Trustee shall be held in
trust in one or more trust accounts hereunder, but need not be segregated from
other funds except to the extent required by law.
SECTION 7.7. [Reserved.]
SECTION 7.8. Corporate Indenture Trustee Required; Eligibility.
--------------------------------------------------
There shall at all times be an Indenture Trustee hereunder which
shall (a) be a corporation organized and doing business under the laws of the
United States of America, any state thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers; (b) have a
combined capital and surplus of at least $100,000,000; (c) be subject to
supervision or examination by federal or state authority; and (d) at the time
of appointment, shall have long-term debt obligations (or, if Indenture
Trustee does not have outstanding long-term debt obligations and is a
subsidiary of a holding company, which holding company shall have long-term
obligations) having a credit rating of at least "[___]" or its equivalent from
each of the Rating Agencies.
If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes 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. If
at any time Indenture Trustee shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.
This Indenture shall always have a Indenture Trustee who satisfies
the requirements of Section 310(a)(1) of Trust Indenture Act. Indenture
Trustee is subject to the provisions of Section 310(b) of Trust Indenture Act
regarding disqualification of a trustee upon acquiring any conflicting
interest.
If a default occurs under this Indenture, and Indenture Trustee is
deemed to have a conflicting interest as a result of acting as trustee for
both the Class A Notes and the Class B Notes, a successor Indenture Trustee
shall be appointed for one or both of such Classes, so that there will be
separate Indenture Trustees for the Class A Notes and the Class B Notes. No
such event shall alter the voting rights of the Class A Noteholders or Class B
Noteholders under this Indenture. However, so long as any amounts remain
unpaid with respect to the Class A Notes, only Indenture Trustee for the Class
A Noteholders will have the right to exercise remedies under this Indenture
(but subject to the express provisions of Section 6.2 and to the right of the
Class B Noteholders to receive their share of any proceeds of enforcement,
subject to the subordination of the Class B Notes to the Class A Notes as
described
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herein). Upon repayment of the Class A Notes in full, all rights to exercise
remedies under the Indenture will transfer to Indenture Trustee for the Class
B Notes.
In the case of the appointment hereunder of a successor Indenture
Trustee with respect to any Class of Notes, the Issuer, retiring Indenture
Trustee and successor Indenture Trustee with respect to such Class of Notes
shall execute and deliver an indenture supplemental hereto wherein each
successor Indenture Trustee shall accept such appointment and which (i) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, successor Indenture Trustee all the rights,
powers, trusts and duties of retiring Indenture Trustee with respect to the
Notes of the Class to which the appointment of such successor Indenture
Trustee relates, (ii) if retiring Indenture Trustee is not retiring with
respect to all Classes of Notes, shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of retiring Indenture Trustee with respect to the Notes of each
Class as to which retiring Indenture Trustee is not retiring shall continue to
be vested in retiring Indenture Trustee, and (iii) shall add to or change any
of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Indenture Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Indenture Trustees as co-trustees
of the same trust and that each such Indenture Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Indenture Trustee; and upon the
execution and delivery of such supplemental indenture the resignation or
removal of the retiring Indenture Trustee shall become effective to the extent
provided therein.
SECTION 7.9. Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of Indenture Trustee and no appointment
of a successor Indenture Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Indenture
Trustee under Section 7.10.
(b) Indenture Trustee may resign at any time by giving written notice
thereof to Issuer and by mailing notice of resignation by first-class mail,
postage prepaid, to Noteholders at their addresses appearing on the Note
Register.
(c) Indenture Trustee may be removed at any time by Act of the
Holders of Notes evidencing not less than a majority of the then Outstanding
Principal Amount of the Notes, delivered to Indenture Trustee and Issuer.
(d) If Indenture Trustee shall resign, be removed, or become
incapable of acting, or if a vacancy shall occur in the office of Indenture
Trustee for any cause, Issuer, with the consent of the Holders of Notes
evidencing at least 66-2/3% of the
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Outstanding Principal Amount of the Notes, by an act of Issuer, shall promptly
appoint a successor Indenture Trustee.
(e) If no successor Indenture Trustee shall have been so appointed by
Issuer or the Noteholders as hereinbefore provided and accepted appointment in
the manner hereinafter provided within 30 days after any such resignation or
removal, existence of incapability, or occurrence of such vacancy, Indenture
Trustee or any Noteholder may petition any court of competent jurisdiction for
the appointment of a successor Indenture Trustee.
(f) Issuer shall give notice of each resignation and each removal of
Indenture Trustee and each appointment of a successor Indenture Trustee by
mailing written notice of such event by first-class mail, postage prepaid, to
all Noteholders, as their names and addresses appear in the Note Register and
each Rating Agency. Each notice shall include the name of the successor
Indenture Trustee and the address of its Corporate Trust Office.
(g) Issuer may remove Indenture Trustee if Indenture Trustee fails to
comply with Section 7.8 of this Indenture.
(h) If Indenture Trustee after written request by any Noteholder who
has been a Noteholder for at least six months fails to comply with Section
310(b) of the Trust Indenture Act, such Noteholder may petition any court of
competent jurisdiction, for the removal of Indenture Trustee and the
appointment of a successor Indenture Trustee.
SECTION 7.10. Acceptance of Appointment by Successor.
---------------------------------------
(a) Every successor Indenture Trustee appointed hereunder shall
execute, acknowledge and deliver to Issuer and to the retiring Indenture
Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Indenture Trustee shall become
effective and such successor Indenture Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Indenture Trustee; but, on request of Issuer or the
successor Indenture Trustee, such retiring Indenture Trustee shall, upon
payment of its charges and expenses, execute and deliver an instrument
transferring to such successor Indenture Trustee all the rights, powers and
trusts of the retiring Indenture Trustee and shall duly assign, transfer and
deliver to such successor Indenture Trustee all property and money held by
such retiring Indenture Trustee hereunder. Upon request of any such successor
Indenture Trustee, Issuer shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Indenture Trustee
all such rights, powers and trusts.
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(b) No successor Indenture Trustee shall accept its appointment
unless at the time of such acceptance such successor Indenture Trustee shall
be qualified and eligible under this Article.
SECTION 7.11. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
---------
Any Person into which Indenture Trustee may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which Indenture Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of Indenture Trustee, shall be the successor of Indenture Trustee hereunder,
provided such Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by Indenture Trustee then in office, any
successor by merger, conversion, or consolidation to such authenticating
Indenture Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Indenture Trustee had
itself authenticated such Notes. Indenture Trustee shall provide prompt
written notice to each Rating Agency of any event referenced in this Section
7.11.
SECTION 7.12. Co-trustees and Separate Indenture Trustees.
--------------------------------------------
(a) At any time or times, if Issuer, Indenture Trustee or any
Noteholder determines that it is necessary for the purpose of meeting the
legal requirements of any jurisdiction in which any of Trust Estate may at the
time be located, Issuer and Indenture Trustee shall have power to appoint,
and, upon the written request of Indenture Trustee or the Holders of Notes
evidencing at least a majority of the then Outstanding Principal Amount of the
Notes, Issuer shall for such purpose join with Indenture Trustee in the
execution, delivery, and performance of all instruments and agreements
necessary or proper to appoint one or more Persons approved by Indenture
Trustee either to act as co-trustee, jointly with Indenture Trustee, of all or
any part of such Trust Estate, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such Person or Persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. If Issuer does not join in
such appointment within 15 days after the receipt by it of a request so to do,
or in case an Event of Default has occurred and is continuing, Indenture
Trustee, or the Holders of Notes evidencing a majority of the then Outstanding
Principal Amount of the Notes, alone shall have power to make such
appointment.
(b) Should any written instrument from Issuer be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
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co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and
delivered by Issuer.
(c) Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms:
(i) The Notes shall be authenticated and delivered and all
rights, powers, duties, and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, Indenture Trustee
hereunder, shall be exercised, solely by Indenture Trustee.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon Indenture Trustee in respect of any
property covered by such appointment shall be conferred or imposed
upon and exercised or performed by Indenture Trustee or by Indenture
Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that, under any law of any jurisdiction
in which any particular act is to be performed, Indenture Trustee
shall be incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations shall be exercised
and performed by such co-trustee or separate trustee.
(iii) Indenture Trustee at any time, by an instrument in
writing executed by it, with the concurrence of Issuer evidenced by a
Trust Order, may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section, and, in case an
Event of Default has occurred and is continuing, Indenture Trustee
shall have power to accept the resignation of, or remove, any such
co-trustee or separate trustee without the concurrence of Issuer.
Upon the written request of Indenture Trustee, Issuer shall join with
Indenture Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner
provided in this Section.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of Indenture
Trustee or any other such trustee hereunder and Indenture Trustee
shall not be personally liable by reason of any act or omission of
any co-trustee or other such separate trustee hereunder selected by
Indenture Trustee with due care or appointed in accordance with
directions to Indenture Trustee pursuant to Section 6.12.
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(v) Any Act of Noteholders delivered to Indenture Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 7.13. Acceptance by Indenture Trustee.
--------------------------------
Indenture Trustee hereby acknowledges the conveyance of the Granted
Assets and the receipt of the Leases and the other Granted Assets granted by
Issuer hereunder and declares that Indenture Trustee, through a custodian,
will hold such Leases and other Granted Assets conveyed by Issuer in trust,
for the use and benefit of all Noteholders subject to the terms and provisions
hereof.
SECTION 7.14. Preferential Collection of Claims Against Issuer.
-------------------------------------------------
Indenture Trustee is subject to Trust Indenture Act Section 311(a),
excluding any creditor relationship listed in Trust Indenture Act Section
311(b). A Indenture Trustee who has resigned or been removed shall be subject
to Trust Indenture Act Section 311(a) to the extent indicated therein.
SECTION 7.15. Reports by Indenture Trustee to Noteholders.
--------------------------------------------
To the extent required by the Trust Indenture Act, within 60 days
after each May 15, following the date of this Indenture, Indenture Trustee
shall mail to Noteholders a brief report dated as of such reporting date that
complies with Trust Indenture Act Section 313(a), if such a report is required
pursuant to Trust Indenture Act Section 313(a), except with respect Section
313(a)(6) of the Trust Indenture Act and transactions described in Section
4.4. Indenture Trustee also shall comply with Trust Indenture Act Section
313(b). Indenture Trustee shall also transmit by mail all reports as required
by Trust Indenture Act Section 313(c).
A copy of each such report required under Trust Indenture Act Section
313 shall, at the time of such transmission to Noteholders be filed with the
Commission and with each stock exchange or other market system on which the
Notes are listed. Issuer or any other obligor upon the Notes shall notify
Indenture Trustee if the Notes become listed on any stock exchange or market
trading system.
SECTION 7.16. No Proceedings.
---------------
Indenture Trustee hereby agrees that it will not, with respect to its
fees and expenses, directly or indirectly institute, or cause to be
instituted, against Issuer or Transferor any proceeding of the type referred
to in Section 6.1(e) or (f) so long as there shall not have elapsed one year
plus one day since the latest maturing Notes have been paid in full in cash.
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ARTICLE 8.
COVENANTS
SECTION 8.1. Payment of Principal and Interest.
----------------------------------
Issuer will duly and punctually pay the principal of and interest on
the Notes in accordance with the terms of the Notes and this Indenture.
SECTION 8.2. Maintenance of Office or Agency; Chief Executive
------------------------------------------------
Office.
------
Issuer will maintain at the Corporate Trust Office an office
or agency where Notes may be surrendered for registration of transfer or
exchange and where notices and demands to or upon Issuer in respect of the
Notes and this Indenture may be served. Issuer hereby appoints Indenture
Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
SECTION 8.3. Money for Payments to Noteholders to be Held in
-----------------------------------------------
Trust.
-----
(a) All payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Collection Account
pursuant to Section 3.3(b) or Section 6.6 shall be made on behalf of Issuer by
Indenture Trustee, and no amounts so withdrawn from the Collection Account for
payments of Notes shall be paid over to Issuer under any circumstances except
as provided in this Section 8.3 or in Section 3.3(b) or Section 6.6.
(b) In making payments hereunder, Indenture Trustee will:
(i) allocate all sums received for payment to the
Noteholders on each Payment Date among such Noteholders, first to the
Class A Noteholders on a pro rata basis and then to the Class B
Noteholders on a pro rata basis basis in accordance with the
information known to Indenture Trustee;
(ii) 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; and
(iii) comply with all requirements of the Internal Revenue
Code of 1986, as amended (or any successor statutes), and all
regulations thereunder, with respect to the withholding from any
payments made by it on
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any Notes of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in connection
therewith.
Whenever Issuer shall have one or more Paying Agents, it will, prior
to each due date of the principal of or interest on any Notes, deposit with a
Paying Agent a sum sufficient to pay the principal or interest so becoming
due, such sum to be held in trust for the benefit of the Noteholders entitled
to such principal or interest, and (unless such Paying Agent is Indenture
Trustee) Issuer will promptly notify Indenture Trustee of its action or
failure so to act.
Issuer will cause each Paying Agent other than Indenture Trustee to
execute and deliver to Indenture Trustee an instrument in which such Paying
Agent shall agree with Indenture Trustee, subject to the provisions of this
Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of or interest on 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
(2) give Indenture Trustee notice of any default by Issuer
(or any other obligor upon the Securities) in the making of any
payment of principal or interest.
(c) Except as required by applicable law, any money held by Indenture Trustee
in trust for the payment of any amount due with respect to any Note and
remaining unclaimed for three years after such amount has become due and
payable to the Noteholder shall be discharged from such trust and, subject to
applicable escheat laws, paid to Issuer upon request; and such Noteholder
shall thereafter, as an unsecured general creditor, look only to Issuer for
payment thereof (but only to the extent of the amounts so paid to the Trust),
and all liability of Indenture Trustee with respect to such trust money shall
thereupon cease.
SECTION 8.4. Corporate Existence; Merger; Consolidation, etc.
------------------------------------------------
(a) Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware, and
will obtain and preserve its qualification to do business as a foreign entity
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Indenture, the Notes or any of
the Leases.
(b) Issuer shall not consolidate or merge with or into any other
Person, unless:
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(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized
and existing under the laws of the United States of America or any
State and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to Indenture Trustee, in form
satisfactory to Indenture Trustee, the due and punctual payment of
the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of 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) Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the Lien and
security interest created by this Indenture shall have been taken;
and
(vi) Issuer shall have delivered to Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that
such consolidation or merger and such supplemental indenture comply
with this Article VIII and that all conditions precedent herein
provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
(c) Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of Issuer the conveyance or transfer of which
is hereby restricted shall: (A) be a United States citizen or a
Person organized and existing under the laws of the United States of
America or any State, (B) expressly assumes, by an indenture
supplemental hereto, executed and delivered to Indenture Trustee, in
form satisfactory to Indenture Trustee, the due and punctual payment
of the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of Issuer to be performed or observed, all as provided herein,
(C) expressly agrees by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be subject
and subordinate to the
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rights of Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agrees to indemnify, defend and
hold harmless Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agrees by means of such supplemental indenture that such
Person (or if a group of Persons, then one specified Person) shall
make all filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the Lien and
security interest created by this Indenture shall have been taken;
and
(vi) Issuer shall have delivered to Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that
such conveyance or transfer and such supplemental indenture comply
with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with (including
any filing required by the Exchange Act).
SECTION 8.5. Protection of Trust Estate; Further Assurances.
-----------------------------------------------
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, and will take such other action as may be necessary or advisable
to:
(i) Grant more effectively all or any portion of Trust
Estate;
(ii) maintain or preserve the Lien of this Indenture or
carry out more effectively the purposes hereof;
(iii) publish notice of, or protect the validity of, any
Grant made or to be made by this Indenture and perfect the security
interest contemplated hereby in favor of Indenture Trustee in each of
the Leases, in the Equipment
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and all other property included in Trust Estate; provided, that
Issuer shall not be required to file Financing Statements with
respect to the interests in the Equipment in addition to those
contemplated by Section 4.3(d) of the Pooling and Servicing
Agreement;
(iv) enforce or cause Servicer to enforce any of the Leases;
or
(v) preserve and defend title to the Leases (including the
right to receive all payments due or to become due thereunder), the
interests in the Equipment, or other property included in Trust
Estate and preserve and defend the rights of Indenture Trustee and
the Noteholders in such Leases (including the right to receive all
payments due or to become due thereunder), interests in the Equipment
and other property against the claims of all Persons and parties.
Issuer, upon Issuer's failure to do so, hereby designates Indenture Trustee
its agent and attorney-in-fact to execute any Financing Statement or
continuation statement required pursuant to this Section 8.5; provided, that
such designation shall not be deemed to create a duty in Indenture Trustee to
monitor the compliance of Issuer with the foregoing covenants; and provided,
further, that the duty of Indenture Trustee to execute any instrument required
pursuant to this Section 8.5 shall arise only if a Responsible Officer of
Indenture Trustee has actual knowledge of any failure of Issuer to comply with
the provisions of this Section 8.5.
SECTION 8.6. [Reserved].
--------
SECTION 8.7. Performance of Obligations; Pooling and Servicing
-------------------------------------------------
Agreement.
----------
(a) Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Notes and the Trust Agreement.
(b) Issuer will not take any action or permit any action to be taken
by others which would release any Person from any of such Person's covenants
or obligations under any Lease or any other instrument included in Trust
Estate, or which would result in the amendment, hypothecation, subordination,
termination, or discharge of, or impair the validity or effectiveness of, any
Lease or such other instrument, except as expressly provided in this Indenture
or the Pooling and Servicing Agreement.
(c) If any Authorized Officer shall have knowledge of the occurrence
of a default under the Pooling and Servicing Agreement, Issuer shall promptly
notify Indenture Trustee and the Noteholders thereof, and shall specify in
such notice the action, if any, Issuers taking in respect of such default.
Except as otherwise
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provided therein, Issuer may not waive any default under or amend the Pooling
and Servicing Agreement.
SECTION 8.8. Negative Covenants.
-------------------
Issuer will not:
(a) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Estate except as expressly permitted by this Indenture, the Pooling
and Servicing Agreement, and the Trust Agreement;
(b) claim any credit on, or make any deduction from, the principal
of, or interest on, any of the Notes by reason of the payment of any taxes
levied or assessed upon any portion of the Trust Estate;
(c) engage in any business or activity other than in connection with,
or relating to the ownership of, the Leases and the interests in the
Equipment, the issuance of the Notes, and the specific transactions
contemplated hereby;
(d) become liable for, issue, incur, assume, or allow to remain
outstanding any indebtedness, or guaranty any indebtedness of any Person,
other than the Notes, except as contemplated by this Indenture, the
registration statement filed with respect to the Class A Notes and Class B
Notes (and any registration statement for similar securities), and the Pooling
and Servicing Agreement;
(e) seek dissolution or liquidation in whole or in part or
reorganization of its business or affairs;
(f) (i) permit the validity or effectiveness of this Indenture or any
Grant hereby to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or permit any
Person to be released from any covenants or obligations under this Indenture,
except as may be expressly permitted hereby, (ii) permit any lien, charge,
security interest, mortgage or other encumbrance to be created on or to extend
to or otherwise arise upon or burden Trust Estate or any part thereof or any
interest therein or the proceeds thereof other than the lien of this
Indenture, or (iii) subject to Section 3.1(c) of the Pooling and Servicing
Agreement, permit the lien of this Indenture not to constitute a valid first
priority security interest in Trust Estate; or
(g) Issuer shall not make any expenditure (by long-term or operating
lease or otherwise) for capital assets (either realty or personalty).
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(h) So long as any Notes are Outstanding, Issuer shall not remove the
Manager without cause unless the Rating Agency Condition shall have been
satisfied in connection with such removal.
(i) Issuer shall not, directly or indirectly: (i) pay any dividend or
make any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to Trustee or any owner of a
beneficial interest in Issuer or otherwise with respect to any ownership or
equity interest or security in or of Issuer or to Servicer or Manager, (ii)
redeem, purchase, retire or otherwise acquire for value any such ownership or
equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that Issuer may make, or
cause to be made, distributions to Servicer, Trustee, Noteholders,
Certificateholders and Manager as contemplated by, and to the extent funds are
available for such purpose under, the Pooling and Servicing Agreement. Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the other
Basic Documents.
SECTION 8.9. Notice of Events of Default.
----------------------------
Issuer shall give the Indenture Trustee and the Rating Agencies
prompt written notice of each Event of Default hereunder, each default on the
part of Servicer or Transferor of its obligations under the Pooling and
Servicing Agreement and each default on the part of ILC of its obligations
under the Purchase Agreement.
SECTION 8.10. Taxes.
------
Issuer shall pay all taxes when due and payable or levied against its
assets, properties or income, including any property that is part of Trust
Estate.
SECTION 8.11. Indemnification.
----------------
Issuer agrees to indemnify and hold harmless Indenture Trustee and
each Noteholder (each an "Indemnified Party") against any and all liabilities,
losses, damages, penalties, costs and expenses (including costs of defense and
legal fees and expenses) which may be incurred or suffered by such Indemnified
Party without negligence or willful misconduct on its part as a result of
claims, actions, suits or judgments asserted or imposed against it and arising
out of the transactions contemplated hereby or by the Pooling and Servicing
Agreement, including without limitation, any claims resulting from any use,
operation, maintenance, repair, storage or transportation of any item of
Equipment, whether or not in Issuer's possession or under its control, and any
tort claims and any fines or penalties arising from any violation of the laws
or regulations of the United States or any state or local government or
governmental authority; provided that, all amounts payable pursuant
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to this Section 8.11 shall be fully subordinated to amounts payable under the
Notes, shall be without recourse to Issuer except to the extent that all
amounts otherwise due and payable under the terms of this Indenture have been
fully paid and shall not, to the extent that such amounts are unpaid,
constitute a claim against Issuer except to the extent that all amounts
otherwise due and payable under the terms of this Indenture have been fully
paid.
SECTION 8.12. Commission Reports; Reports to Indenture Trustee;
-------------------------------------------------
Reports to Noteholders.
-----------------------
Issuer shall:
(a) file with Indenture Trustee, within 15 days after Issuers
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports which Issuer may be
required to file with the Commission pursuant to Section 13 or Section 15(d)
of the Exchange Act (or copies of such portions thereof as may be prescribed
by rules and regulations of the Commission); or, if Issuers not required to
file with the Commission information, documents or reports pursuant to either
Section 13 or Section 15(d) of the Exchange Act, then Issuer will file with
Indenture Trustee and with the Commission, in accordance with rules and
regulations prescribed by the Commission, such of the supplementary and
periodic information, documents and reports required pursuant to Section 13 of
the Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations;
(b) file with Indenture Trustee and the Commission, in accordance
with the rules and regulations prescribed by the Commission, such additional
information, documents and reports with respect to compliance by Issuer with
the conditions and covenants provided for in this Indenture as may be required
by such rules and regulations, including, in the case of annual reports, if
required by such rules and regulations, certificates or opinions of
independent public accountants, conforming to the requirements of Sections
11.3 and 11.4 hereof, as to compliance with conditions or covenants,
compliance with which is subject to verification by accountants; and
(c) furnish to Indenture Trustee for distribution to the Noteholders,
as the names and addresses of such Noteholders appear in the Note Register, in
the manner and to the extent provided in Section 7.15 hereof, such summaries
of any information, documents and reports required to be filed with Indenture
Trustee pursuant to the provisions of Subsections (a) and (b) of this Section
8.12 as may be required to be provided to such Noteholders by the rules and
regulations of the Commission under the provisions of the Trust Indenture Act.
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ARTICLE 9.
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of
------------------------------------------
Noteholders.
------------
(a) Without the consent of any Noteholders, Issuer, by a Trust Order,
and Indenture Trustee, at any time and from time to time, may enter into one
or more indentures supplemental hereto, in form satisfactory to Indenture
Trustee, for any of the following purposes:
(i) to add to the covenants of Issuer for the benefit of the
Noteholders, or to surrender any right or power herein conferred upon
the Trust;
(ii) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein; or
(iii) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or to better
assure, convey and confirm unto Indenture Trustee any property
subject or required to be subjected to the lien of this Indenture;
provided such action pursuant to this Section 9.1(a) shall not adversely
affect the interests of the Noteholders in any respect. Additionally, Issuer,
by Trust Order, and Indenture Trustee, without the consent of any Noteholders,
may execute a Supplemental Indenture to conform the Indenture to the
description thereof and of the Notes and Certificates contained in the
Prospectus.
(b) Indenture Trustee shall promptly deliver to each Noteholder and
each Rating Agency a copy of any supplemental indenture entered into pursuant
to Section 9.1(a).
SECTION 9.2. Supplemental Indentures with Consent of
---------------------------------------
Noteholders.
------------
(a) With the consent of the Holders of Notes evidencing not less than
66-2/3% of the then Outstanding Principal Amount of the Notes and by Act of
said Noteholders delivered to Issuer and Indenture Trustee, Issuer, by a Trust
Order, and Indenture Trustee may 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
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the Noteholders under this Indenture; provided, that no supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby,
(i) change the Stated Maturity of any Note or the Principal
Payments or Interest Payments due or to become due on any Payment
Date with respect to any Note, or change the priority of payment
thereof as set forth herein, or reduce the principal amount thereof
or the Note Interest Rate thereon, or change the place of payment
where, or the coin or currency in which, any Note or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Maturity thereof;
(ii) reduce the percentage of the Outstanding Principal
Amount of the Notes the consent of whose Noteholders is required for
any such supplemental indenture, for any waiver of compliance with
provisions of this Indenture or Events of Default and their
consequences, or for any Act of Noteholders;
(iii) modify any of the provisions of this Section or
Section 6.13 except to increase any percentage or fraction set forth
therein or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of
each Outstanding Note affected thereby;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of
Trust Estate or, except as provided in Sections 4.1 or 4.2, terminate
the lien of this Indenture on any property at any time subject hereto
or deprive any Noteholder of the security afforded by the lien of
this Indenture.
(b) Indenture Trustee shall promptly deliver to each Noteholder and
each Rating Agency a copy of any supplemental indenture entered into pursuant
to Section 9.2(a).
SECTION 9.3. Execution of Supplemental Indentures.
-------------------------------------
In executing any supplemental indenture (a) pursuant to Section 9.1
or (b) pursuant to Section 9.2 without the consent of each Holder of the Notes
to the execution of the same, Indenture Trustee shall be entitled to receive,
and (subject to Section 7.1) 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. Indenture Trustee may, but shall
not be obligated to, enter into any
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supplemental indenture which affects Indenture Trustee's own rights, duties,
projections, or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
----------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes,
and every Noteholder of Notes theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 9.5. Reference in Notes to Supplemental Indentures.
----------------------------------------------
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
Indenture Trustee, bear a notation in form approved by Indenture Trustee as to
any matter provided for in such supplemental indenture. If Issuer shall so
determine, new Notes so modified as to conform, in the opinion of Indenture
Trustee and Issuer, to any such supplemental indenture may be prepared and
executed by Issuer and authenticated and delivered by Indenture Trustee in
exchange for Outstanding Notes.
SECTION 9.6. Compliance with Trust Indenture Act.
------------------------------------
Every amendment, supplement or waiver to this Indenture or the Notes
shall comply with the Trust Indenture Act as then in effect.
ARTICLE 10.
SATISFACTION AND DISCHARGE
SECTION 10.1. Satisfaction and Discharge of Indenture.
----------------------------------------
(a) This Indenture shall cease to be of further effect (except as to
any surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and Indenture Trustee, on demand of and at the
expense of Issuer, shall execute proper instruments acknowledging satisfaction
and discharge of this Indenture, when
(i) 100 days shall have elapsed since either
(A) all Notes theretofore authenticated and
delivered (other than (1) Notes which have been destroyed,
lost or stolen and which have been replaced or paid as
provided in Section 2.4 and (2) Notes for whose payment
money has theretofore been deposited in
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trust or segregated and held in trust by Issuer and
thereafter repaid to Issuer or discharged from such trust,
as provided in Section 8.3(c)) have been delivered to
Indenture Trustee for cancellation; or
(B) the final installments of principal on all such
Notes not theretofore delivered to Indenture Trustee for
cancellation
(1) have become due and payable, or
(2) will become due and payable at their
Stated Maturity, as applicable, within one year,
and Issuer has irrevocably deposited or caused to be
deposited with Indenture Trustee as trust funds in trust for
the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered
to Indenture Trustee for cancellation, for principal and
interest to the date of such deposit (in the case of Notes
which have become due and payable) or to the Stated Maturity
thereof;
(ii) Issuer has paid or caused to be paid all other sums
payable hereunder by Issuer for the benefit of the Noteholders; and
(iii) Issuer has delivered to Indenture Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
At such time, Indenture Trustee shall deliver to Issuer or, upon Issuer Order,
its assignee, all cash, securities and other property held by it as part of
Trust Estate other than funds deposited with Indenture Trustee pursuant to
Section 10.1(a)(i)(B), for the payment and discharge of the Notes.
(b) Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of Issuer to Indenture Trustee under Sections 7.7 and 8.11,
and, if money shall have been deposited with Indenture Trustee pursuant to
Section 10.1(a)(i)(B), the obligations of Indenture Trustee under Section 10.2
and Section 8.3(c) shall survive.
(c) Indenture Trustee shall provide prompt written notice to each
Rating Agency of any satisfaction and discharge of this Indenture pursuant to
this Article 10.
SECTION 10.2. Application of Trust Money.
---------------------------
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Subject to the provisions of Section 8.3(c), all money deposited with
Indenture Trustee pursuant to Sections 10.1 and 8.3 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment to the Persons entitled thereto, of the principal
and interest for whose payment such money has been deposited with Indenture
Trustee.
ARTICLE 11.
MISCELLANEOUS
SECTION 11.1. Trust Indenture Act Controls.
-----------------------------
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by operation of Trust Indenture Act Section 318(a),
the duties imposed by Section 318(a) shall control.
SECTION 11.2. Communication by Noteholders with Other
---------------------------------------
Noteholders.
------------
Noteholders may communicate, pursuant to Trust Indenture Act Section
312(b), with other Noteholders with respect to their rights under this
Indenture or the Notes. Issuer, Indenture Trustee, the Note Registrar and all
other parties shall have the protection of Trust Indenture Act Section 312(c).
SECTION 11.3. Officers' Certificate and Opinion of Counsel as to
--------------------------------------------------
Conditions Precedent.
--------------------
Upon any request or application by Issuer (or any other obligor upon
the Notes) to Indenture Trustee to take any action under this Indenture,
Issuer (or such other Obligor) shall furnish to Indenture Trustee:
(a) an Officers' Certificate (which shall include the
statements set forth in Section 11.4) stating that, in the opinion of
the signers, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been
complied with; and
(b) an Opinion of Counsel (which shall include the
statements set forth in Section 11.4) stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been
complied with.
SECTION 11.4. Statements Required in Certificate or Opinion.
----------------------------------------------
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Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
SECTION 11.5. Nonpetition.
------------
Indenture Trustee shall not petition or otherwise invoke the process
of any Governmental Authority for the purpose of commencing or sustaining a
case against Issuer or Transferor under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of Issuer or
Transferor any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of Issuer or Transferor.
SECTION 11.6. ERISA Matters. Each Holder and Note Owner, by
acceptance of a Note, or, in the case of a Note Owner, a beneficial interest
in the Note, shall be deemed to represent and warrant that either (a) it is
not acquiring the Note with the plan assets of a plan described in Section
4975(e)(1) of the Code, or any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (each, a "Benefit
Plan"); or (b) the acquisition and holding of the Note will not give rise to a
nonexempt prohibited transaction under Section 406(a) of ERISA or Section 4975
of the Code.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and witnessed, all as of the day and year first above written.
PROVIDENT EQUIPMENT LEASE TRUST
1998-A
By: [NAME OF TRUSTEE], not in its individual
capacity, but solely as Trustee of the Provident
Equipment Lease Trust 1998-A
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
[ ], as Indenture Trustee
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
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EXHIBIT A
{FORM OF CLASS A-1 NOTE}
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
[_______]% CLASS A-1 LEASE-BACKED NOTE
CUSIP NO. ____________
No. R- $_____________
PROVIDENT EQUIPMENT LEASE TRUST 1998-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Trust",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of ___________________________________
Dollars ($_____________), payable in monthly installments beginning on [ ],
1998, in accordance with the Indenture. Interest will accrue on the unpaid
principal hereof from the date of issuance, at the rate of [ ] per annum,
until the full amount of principal hereof is otherwise paid or made available
for payment and shall be computed on the basis of a year of 360 days and the
actual number of days in the period since the last Payment Date or with
respect to the [ ] Payment Date, since the Issuance Date.
Principal and interest on this Class A-1 Note shall be paid on the
25th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing [ ], 1998, either by check to the
registered address of the Holder of this Class A-1 Note as of the relevant
Record Date or by wire transfer to an account at a bank in the United States
as the Holder shall specify, as provided more fully in the Indenture;
provided, that the final payment of principal and interest in respect of the
Notes shall be payable to the Holder of this Note only upon
A-1
<PAGE>
presentation and surrender of this Note at the Corporate Trust Office of
Indenture Trustee or at the principal office of any Paying Agent appointed
pursuant to the Indenture.
The Stated Maturity of the Class A-1 Notes is [ ], on which date the
Outstanding Principal Amount of the Class A-1 Notes shall be due and payable.
Unless the certificate of authentication hereon has been executed by
Indenture Trustee referred to on the reverse hereof by manual signature, this
Class A-1 Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
This Class A-1 Note is one of a duly authorized issue of Class A
Notes of Issuer designated as its "[ %] Class A-1 Lease-Backed Notes (herein
called the "Class A-1 Notes") limited in aggregate principal amount of
$_____________, issued under the Indenture, dated as of September , 1998
(herein called the "Indenture"), between Issuer and [ ] as Indenture Trustee
(herein called the "Indenture Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
Issuer, Indenture Trustee and the Holders and of the terms upon which the
Class A-1 Notes are authenticated and delivered. Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings set forth in
Appendix X of the Indenture.
This Class A-1 Note will be secured by the pledge to Indenture
Trustee of the Trust Estate.
If an Event of Default under the Indenture has been declared by
Indenture Trustee, the principal of all the Class A-1 Notes (but not less than
all the Class A-1 Notes) may be declared due and payable in the manner and
with the effect provided in the Indenture. Notice of such declaration will be
given by mail to Holders, as their names and addresses appear in the Note
Register, as provided in the Indenture. Upon payment of such principal amount
together with all accrued interest, the obligations of Issuer with respect to
the payment of principal and interest on this Class A-1 Note shall terminate.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
Issuer and the rights of the Holders under the Indenture at any time by Issuer
and Indenture Trustee with the consent of the Holders of Notes evidencing at
least 66-2/3% in aggregate principal amount of the Class A Notes and the
Issuer's [ %] Class B Lease-Backed Notes (the "Class B Notes") at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate
A-2
<PAGE>
principal amount of the Class A Notes and the Class B Notes at the time
Outstanding, on behalf of all the Holders, to waive compliance by 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 Class A-1 Note shall be conclusive and binding upon such Holder and upon
all future Holders of this Class A-1 Note and of any Class A-1 Note issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Class A-1 Note or any Class A-1 Note.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Class A-1 Note is registrable in the
Note Register, upon surrender of this Class A-1 Note for registration of
transfer at the office or agency of Indenture Trustee in [ ], and at any other
office or agency maintained by Issuer for that purpose, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to
the Note Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class A-1 Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
Each Holder and Note Owner, by acceptance of a Class A-1 Note, or, in
the case of a Note Owner, a beneficial interest in the Class A-1 Note, shall
be deemed to represent and warrant that either (a) it is not acquiring the
Class A-1 Note with the plan assets of an "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is subject to Title I of ERISA, or a "plan" as
defined in Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") (each such entity a "Benefit Plan"); or (b) the acquisition and
holding of the Class A-1 Note will not give rise to a nonexempt prohibited
transaction under Section 406(a) of ERISA or Section 4975 of the Code.
The Class A-1 Notes are issuable only in registered form without
coupons in minimum denominations of $1,000. As provided in the Indenture and
subject to certain limitations therein set forth, Class A-1 Notes are
exchangeable for a like aggregate principal amount of Class A-1 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Issuer, Indenture Trustee and any agent of Issuer or Indenture
Trustee may treat the Person in whose name this Class A-1 Note is registered
as the owner hereof for all purposes, whether or not this Class A-1 Note may
be overdue, and neither
A-3
<PAGE>
Issuer, Indenture Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Class A-1 Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.
A-4
<PAGE>
IN WITNESS WHEREOF, Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: , 199
PROVIDENT EQUIPMENT LEASE TRUST
1998-A
By:
--------------------------------------
Authorized Officer
Attest:
- ------------------------
Indenture Trustee's Certificate of Authentication
This is one of the Class A-1 Notes referred to in the within
mentioned Indenture.
[ ]
By:
--------------------------------------
Authorized Signatory
A-5
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Class A-1 Note, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Class A-1 Note to:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code and social security or tax ID number
of assignee)
and irrevocably appoint ____________________, agent to transfer this Class A-1
Note on the books of Issuer. The agent may substitute another to act for him.
Dated: __________________ Signed:__________________________________
_________________________________________
(sign exactly as the name appears on the
other side of this Class A-1 Note)
Signature Guarantee____________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class A-1 Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class A-1 Note and the signed "power of attorney" in separate
envelopes. For added protection, use certified or registered mail for a Class
A-1 Note.
A-6
<PAGE>
{FORM OF CLASS A-2 NOTE}
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
[ % ] CLASS A-2 LEASE-BACKED NOTE
CUSIP NO. __________________
No. R- $_____________
PROVIDENT EQUIPMENT LEASE TRUST 1998-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of __________________________ Dollars
($_____________), payable in monthly installments beginning on [ ], in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of [ %] per annum, until the
full amount of principal hereof is otherwise paid or made available for
payment and shall be computed on the basis of twelve 30-day months and a year
of 360 days.
Principal and interest on this Class A-2 Note shall be paid on the
25th day of each month (or, if such day is not a Business Day, the next
succeeding Business Day), commencing [ ], 1998, either by check to the
registered address of the Holder of this Class A-2 Note as of the relevant
Record Date or by wire transfer to an account at a bank in the United States
as the Holder shall specify, as provided more fully in the Indenture;
provided, that the final payment of principal and interest in respect of the
Notes shall be payable to the Holder of this Note only upon presentation and
surrender of this Note at the Corporate Trust Office of Indenture Trustee or
at the principal office of any Paying Agent appointed pursuant to the
Indenture.
A-7
<PAGE>
The Stated Maturity of the Class A-2 Notes is [ ], on which date the
Outstanding Principal Amount of the Class A-2 Notes shall be due and payable.
Unless the certificate of authentication hereon has been executed by
Indenture Trustee referred to on the reverse hereof by manual signature, this
Class A-2 Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
This Class A-2 Note is one of a duly authorized issue of Class A-2
Notes of Issuer designated as its "[ %] Class A-2 Lease-Backed Notes" (herein
called the "Class A-2 Notes") limited in aggregate principal amount of
$_____________, issued under the Indenture, dated as of September ____, 1998
(herein called the "Indenture"), between Issuer and [ ] as Indenture Trustee
(herein called the "Indenture Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
Issuer, Indenture Trustee and the Holders and of the terms upon which the
Class A-2 Notes are authenticated and delivered. Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings set forth in
Appendix X of the Indenture.
This Class A-2 Note will be secured by the pledge to Indenture
Trustee of the Trust Estate.
If an Event of Default under the Indenture has been declared by
Indenture Trustee, the principal of all the Class A-2 Notes (but not less than
all the Class A-2 Notes) may be declared due and payable in the manner and
with the effect provided in the Indenture. Notice of such declaration will be
given by mail to Holders, as their names and addresses appear in the Note
Register, as provided in the Indenture. Upon payment of such principal amount
together with all accrued interest, the obligations of Issuer with respect to
the payment of principal and interest on this Class A-2 Note shall terminate.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
Issuer and the rights of the Holders under the Indenture at any time by Issuer
and Indenture Trustee with the consent of the Holders of [ %] in aggregate
principal amount of the Class A Notes and the Trust's [ %] Class B
Lease-Backed Notes (the "Class B Notes") at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Class A Notes and the Class B
Notes at the time Outstanding, on behalf of all the Holders, to waive
compliance by 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 Class A-2 Note shall be conclusive and binding
upon
A-8
<PAGE>
such Holder and upon all future Holders of this Class A-2 Note and of any
Class A-2 Note issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Class A-2 Note or any Class A-2 Note.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Class A-2 Note is registrable in the
Note Register, upon surrender of this Class A-2 Note for registration of
transfer at the office or agency of Indenture Trustee in ___________________,
and at any other office or agency maintained by Issuer for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class A-2
Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
Each Holder and Note Owner, by acceptance of a Class A-2 Note, or, in
the case of a Note Owner, a beneficial interest in the Class A-2 Note, shall
be deemed to represent and warrant that either (a) it is not acquiring the
Class A-2 Note with the plan assets of an "employee benefit plan" as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is subject to Title I of ERISA, or a "plan" as
defined in Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") (each such entity a "Benefit Plan"); or (b) the acquisition and
holding of the Class A-2 Note will not give rise to a nonexempt prohibited
transaction under Section 406(a) of ERISA or Section 4975 of the Code.
The Class A-2 Notes are issuable only in registered form without
coupons in minimum denominations of $1,000. As provided in the Indenture and
subject to certain limitations therein set forth, Class A-2 Notes are
exchangeable for a like aggregate principal amount of Class A-2 Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Issuer, Indenture Trustee and any agent of Issuer or Indenture
Trustee may treat the Person in whose name this Class A-2 Note is registered
as the owner hereof for all purposes, whether or not this Class A-2 Note may
be overdue, and neither Issuer, Indenture Trustee nor any such agent shall be
affected by notice to the contrary.
A-9
<PAGE>
The Indenture and this Class A-2 Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.
A-10
<PAGE>
IN WITNESS WHEREOF, Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: , 199
PROVIDENT EQUIPMENT LEASE TRUST
1998-A
{SEAL} By:
--------------------------------------
Authorized Officer
Attest:
- ---------------------------
Indenture Trustee's Certificate of Authentication
This is one of the Class A-2 Notes referred to in the within
mentioned Indenture.
[ ], as Indenture Trustee
By:
--------------------------------------
Authorized Signatory
A-11
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Class A-2 Note, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Class A-2 Note to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code and social security or tax ID number
of assignee)
and irrevocably appoint ___________________, agent to transfer this Class A-2
Note on the books of Issuer. The agent may substitute another to act for him.
Dated: _____________________ Signed:__________________________________
_________________________________________
(sign exactly as the name appears on the
other side of this Class A-2 Note)
Signature Guarantee____________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class A Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class A Note and the signed "power of attorney" in separate
envelopes. For added protection, use certified or registered mail for a Class
A-2 Note.
A-12
<PAGE>
{FORM OF CLASS B NOTE}
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUIRED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
[ %] CLASS B LEASE-BACKED NOTE
CUSIP No. ___________________
No. R- $_____________
PROVIDENT EQUIPMENT LEASE TRUST 1998-A, a business trust duly
organized and existing under the laws of Delaware (herein called the "Issuer",
which term includes any successor Person under the Indenture referred to
herein), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of ____________________ Dollars
($_____________), payable in monthly installments beginning on [ ], 1998, in
accordance with the Indenture. Interest will accrue on the unpaid principal
hereof from the date of issuance, at the rate of [ %] per annum, until the
full amount of principal hereof is otherwise paid or made available for payment
and shall be computed on the basis of twelve 30-day months and a year of 360
days.
Principal and interest on this Class B Note shall be paid on the 25th
day of each month (or, if such day is not a Business Day, the next succeeding
Business Day), commencing [ ], 1998, either by check to the registered address
of the Holder of this Class B Note or by wire transfer to an account at a bank
in the United States as the Holder shall specify, as provided more fully in
the Indenture; provided, that the final payment of principal and interest in
respect of the Class B Notes during the Principal Amortization Period shall be
payable to the Holder of this Class B Note only upon presentation and
surrender of this Class B Note at the Corporate Trust Office of Indenture
Trustee or at the principal office of any Paying Agent appointed pursuant to
the Indenture.
A-13
<PAGE>
The Stated Maturity of the Class B Notes is [ ], on which date the
Outstanding Principal Amount of the Class B Notes shall be due and payable.
Unless the certificate of authentication hereon has been executed by
Indenture Trustee referred to on the reverse hereof by manual signature, this
Class B Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
This Class B Note is one of a duly authorized issue of Class B Notes
of Issuer designated as its "[ ]% Class B Lease-Backed Notes" (herein called
the "Class B Notes"), limited in aggregate principal amount of $_____________,
issued under the Indenture, dated as of September , 1998 (herein called the
"Indenture"), between Issuer and [ ] as Indenture Trustee (herein called the
"Indenture Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of Issuer, Indenture Trustee and
the Holders and of the terms upon which the Class B Notes are authenticated
and delivered. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings set forth in Appendix X of the Indenture.
If an Event of Default under the Indenture has been declared by
Indenture Trustee, the principal of all the Class B Notes (but not less than
all the Class B Notes) may be declared due and payable in the manner and with
the effect provided in the Indenture. Notice of such declaration will be given
by mail to Holders, as their names and addresses appear in the Note Register,
as provided in the Indenture. Upon payment of such principal amount together
with all accrued interest, the obligations of Issuer with respect to the
payment of principal and interest on this Class B Note shall terminate.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
Issuer and the rights of the Holders under the Indenture at any time by Issuer
and Indenture Trustee with the consent of the Holders of Notes evidencing at
least 66-2/3% in aggregate principal amount of the Trust's _____% Class A
Lease-Backed Notes (the "Class A Notes") and the Class B Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Class A Notes and
the Class B Notes at the time Outstanding, on behalf of all the Holders, to
waive compliance by 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 Class B Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Class B Note and
of any Class B Note issued upon the registration of transfer hereof
A-14
<PAGE>
or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Class B Note or any Class B Note.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Class B Note is registrable in the
Note Register, upon surrender of this Class B Note for registration of
transfer at the office or agency of Indenture Trustee in ____________________,
and at any other office or agency maintained by Issuer for that purpose, duly
endorsed by, or accompanied by a written instrument of transfer in the form
satisfactory to the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Class B
Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
Each Holder and Note Owner, by acceptance of a Class B Note, or, in
the case of a Note Owner, a beneficial interest in the Class B Note, shall be
deemed to represent and warrant that either (a) it is not acquiring the Class
B Note with the plan assets of an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is subject to Title I of ERISA, or a "plan" as
defined in Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") (each such entity a "Benefit Plan"); or (b) the acquisition and
holding of the Class B Note will not give rise to a nonexempt prohibited
transaction under Section 406(a) of ERISA or Section 4975 of the Code.
The Class B Notes are issuable only in registered form without
coupons in minimum denominations of $1,000. As provided in the Indenture and
subject to certain limitations therein set forth, Class B Notes are
exchangeable for a like aggregate principal amount of Class B Notes of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but Issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Issuer, Indenture Trustee and any agent of Issuer or Indenture
Trustee may treat the Person in whose name this Class B Note is registered as
the owner hereof for all purposes, whether or not this Class B Note may be
overdue, and neither Issuer, Indenture Trustee nor any such agent shall be
affected by notice to the contrary.
The Indenture and this Class B Note shall be deemed to be contracts
made under the laws of the State of New York and shall for all purposes be
governed by, and construed in accordance with, the laws of the State of New
York.
A-15
<PAGE>
A-16
<PAGE>
IN WITNESS WHEREOF, Issuer has caused this instrument to be duly
executed under its corporate seal.
Dated: ______________, 199
PROVIDENT EQUIPMENT LEASE TRUST
1998-A
{SEAL} By:
--------------------------------------
Authorized Officer
Attest:
- ---------------------------
Indenture Trustee's Certificate of Authentication
This is one of the Class B Notes referred to in the within mentioned
Indenture.
[ ], as Indenture Trustee
By:
--------------------------------------
Authorized Signatory
A-17
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Class B Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Class B Note to:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code and social security or tax ID number
of assignee)
and irrevocably appoint ___________________________, agent to transfer this
Class B Note on the books of Issuer. The agent may substitute another to act
for him.
Dated: _____________________ Signed:__________________________
(signed exactly as the name
appears on the other side of this
Class B Note)
Signature Guarantee___________________________________________________________
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Class B Note, it is recommended that you fill in the name of the new
owner in the "Assignee" blank. Alternatively, instead of using this Assignment
Form, you may sign a separate "power of attorney" form and then mail the
unsigned Class B Note and the signed "power of attorney" in separate
envelopes. For added protection, use certified or registered mail for a Class
B Note.
A-18
<PAGE>
APPENDIX X
DEFINITIONS
SECTION 1.1 Defined Terms. The following terms have the meanings set
forth below for all purposes of the Basic Documents, and the definitions of
such terms are applicable to the singular as well as to the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders
of such terms.
"Act" is defined in Section 1.4 of the Indenture.
"Additional Principal" means with respect to each Payment Date, an
amount equal to (a) the difference between (i) the Discounted Present Value of
the Performing Leases as of the Determination Date for the preceding Payment
Date and (ii) the Discounted Present Value of the Performing Leases as of the
related Determination Date, less (b) the Class A Principal Payment, the Class
B Principal Payment and the Certificate Principal Payment to be paid on such
Payment Date.
"Affiliate" means, with respect to any specified Person, any other
Person which directly or indirectly controls, or is controlled by, or is under
common control with, such specified Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agreement" means the Indenture, Trust Agreement, Pooling and
Servicing Agreement, or Management Agreement, as applicable, as the same may
be amended and supplemented from time to time.
"Authorized Officer" means, with respect to Issuer, any officer of
Indenture Trustee who is authorized to act for Indenture Trustee in matters
relating to the Trust and, so long as the Management Agreement is in effect,
any Vice President or more senior officer of Manager who is authorized to act
for Manager in matters relating to Issuer and to be acted upon by Manager
pursuant to the Management Agreement and who is identified on the list of
Authorized Officers delivered by Manager to Indenture Trustee on the Closing
Date (in each case as such list may be modified or supplemented from time to
time thereafter). With respect to ILC or Servicer, any officer of ILC or
Servicer, as the case may be, who is authorized to act for Servicer or ILC as
the case may be.
"Available Funds" means, with respect to any Payment Date, the amount
on deposit in the Collection Account with respect to the immediately preceding
Due Period received on or prior to the Record Date for such Due Period,
including (a) Lease Payments due during the immediately preceding Due Period
(net of any Third
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Party Amounts), (b) Residual Realizations up to the Residual Amount Cap; (c)
recoveries from Non-Performing Leases (net of amounts retained by Servicer in
accordance with the Pooling and Servicing Agreement); (d) proceeds from
repurchases by Transferor or ILC of Leases to the extent Transferor or ILC has
not substituted Substitute Leases for such Leases; (e) proceeds from the
investment of funds (other than Security Deposit Earnings) in the Collection
Account, the Residual Account and the Reserve Account; (f) Casualty Payments;
(g) Servicer Advances; (h) Termination Payments; and (i) funds, if any, on
deposit in the Reserve Account and/or the Residual Account, to the extent
provided in the Pooling and Servicing Agreement.
"Available Funds Shortfall" is defined in Section 6.4(b) of the
Pooling and Servicing Agreement.
"Available Reserve Amount" means the amount on deposit in the Reserve
Account.
"Available Residual Amount" means the excess of (a) the Residual
Amount Cap over (b) the Utilized Residual Amount.
"Basic Documents" means the Purchase Agreement, the Pooling and
Servicing Agreement, the Indenture, the Trust Agreement, the Management
Agreement, the Certificate Depository Agreement and the Depository Agreement.
"Benefit Plan" is defined in Section 3.4 of the Trust Agreement.
"Book-Entry Class A-1 Notes" means beneficial interests in the Class
A-1 Notes, the ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.5 of the Indenture.
"Book-Entry Class A-2 Notes" means beneficial interests in the Class
A-2 Notes, the ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.5 of the Indenture.
"Book-Entry Class B Notes" means beneficial interests in the Class B
Notes, the ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 2.5 of the Indenture.
"Booked Residual Value" means the estimated residual value of the
Equipment recorded on the books of Transferor.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banking institutions in the cities in which the
Corporate Trust
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Office or Servicer are located are authorized or obligated by law or executive
order to remain closed.
"Casualty Payment" means any payment pursuant to a Lease on account
of the loss, theft, condemnation, governmental taking, destruction, or damage
beyond repair of any item of Equipment subject thereto which results, in
accordance with the terms of the Lease, in a reduction in the number or amount
of any future Lease Payments due thereunder or in the termination of the
Lessee's obligation to make future Lease Payments thereunder.
"Cede & Co." means the initial registered holder of the Class A Notes
and the Class B Notes, acting as nominee of The Depository Trust.
"Certificated Security" has the meaning assigned thereto in Section
8-102(a)(4) of Article 8 of the UCC.
"Certificate Balance" means the aggregate principal amount of the
Certificates outstanding at any time.
"Certificate Distribution Account" is defined in Section 5.1 of the
Trust Agreement.
"Certificate Floor" means, with respect to each Payment Date, an
amount equal to the total of (a) [_______]% of the initial Discounted Present
Value of the Leases as of the Cut-Off Date, plus (b) the Cumulative Loss
Amount with respect to such Payment Date, minus (c) the sum of the
Overcollateralization Amount as of such Payment Date plus the amount on
deposit in the Reserve Account after giving effect to withdrawals to be made
on such Payment Date.
"Certificate of Trust" means the Certificate of Trust substantially
in the form of Exhibit B to the Trust Agreement to be filed for Trust pursuant
to Section 3810(a) of the Trust Statute.
"Certificate Owner" means each Holder of a Definitive Trust
Certificate.
"Certificate Percentage" means [_______]%.
"Certificate Principal Payment" means (a) while the Class A-1 Notes
are outstanding, zero and (b) after the Outstanding Principal Amount on the
Class A-1 Notes has been reduced to zero, the amount necessary to reduce the
Certificate Balance to the greater of the Certificate Target Investor
Principal Amount and the Certificate Floor.
"Certificate Rate" means ____%.
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"Certificate Register" and "Certificate Registrar" means the register
mentioned and the registrar appointed pursuant to Section 3.4 of the Trust
Agreement.
"Certificate Target Investor Principal Amount" means, with respect to
each Payment Date, an amount equal to the product of (a) the Certificate
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date.
"Certificateholder" means a Person in whose name a Trust Certificate is
registered.
"Certificates" means Issuer's [______]% Lease-Backed Certificates
issued in the original principal amount of [$___________].
"Class A Notes" means Issuer's Class A-1 Notes and Class A-2 Notes.
"Class A Percentage" means [_____%].
"Class A Principal Payment" means (a) while the Class A-1 Notes are
outstanding, (i) on all Payment Dates prior to the [Month/Year] Payment Date,
the lesser of (1) the amount necessary to reduce the Outstanding Principal
Amount on the Class A-1 Notes to zero and (2) the difference between (A) the
Discounted Present Value of the Performing Leases as of the Determination Date
for the preceding Payment Date and (B) the Discounted Present Value of the
Performing Leases as of the related Determination Date, and (ii) on the
[Month/Year] Payment Date and thereafter until the Class A-1 Notes have been
paid in full, the entire Outstanding Principal Amount on the Class A-1 Notes,
and (b) after the Class A-1 Notes have been paid in full, the amount necessary
to reduce the aggregate Outstanding Principal Amount on the Class A Notes to
the Class A Target Investor Principal Amount.
"Class A Target Investor Principal Amount" means, with respect to
each Payment Date, an amount equal to the product of (a) the Class A
Percentage and (b) the Discounted Present Value of the Performing Leases as of
the related Determination Date.
"Class A-1 Note Interest Rate" means the rate at which interest
accrues on the Class A-1 Notes, which rate with respect to each Due Period
shall be at a rate per annum equal to [____]%.
"Class A-1 Note Owner" means with respect to a Book-Entry Class A-1
Note, the Person who is the beneficial owner of such Book-Entry Class A-1
Note, as reflected on the books of the Clearing Agency, or on the books of a
Person
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maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency) and with
respect to a Definitive Class A-1 Note, a Holder of a Definitive Class A-1
Note.
"Class A-1 Noteholder" means each Holder of a Class A-1 Note.
"Class A-1 Notes" means Issuer's [_____]% Class A-1 Lease-Backed
Notes issued in the original principal amount of [$_____________].
"Class A-2 Note Interest Rate" means, the rate at which interest
accrues on the Class A-2 Notes, which rate with respect to each Due Period
shall be at a rate per annum equal to [___%].
"Class A-2 Note Owner" means, with respect to a Book-Entry Class A-2
Note, the Person who is the beneficial owner of such Book-Entry Class A-2
Note, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly or as an
indirect participant, in accordance with the rules of such Clearing Agency)
and, with respect to a Definitive Class A-2 Note, a Holder of a Definitive
Class A-2 Note.
"Class A-2 Noteholder" means the Holder of a Class A-2 Note.
"Class A-2 Notes" means Issuer's [_____]% Class A-2 Lease-Backed
Notes issued in the original principal amount of [$____________].
"Class B Floor" means, with respect to each Payment Date (the
"subject Payment Date"), an amount equal to the total of (a) [___]% of the
initial Discounted Present Value of the Leases as of the Cut-Off Date, plus
(b) the Cumulative Loss Amount with respect to the subject Payment Date, minus
(c) the sum of the Certificate Balance as of the preceding Payment Date after
giving effect to all payments made on such Payment Date plus the
Overcollateralization Amount as of the subject Payment Date plus the amount on
deposit in the Reserve Account after giving effect to any withdrawals to be
made on the related Payment Date.
"Class B Note Interest Rate" means the rate at which interest accrues
on the Class B Notes, which rate shall be [___%] per annum.
"Class B Note Owner" means with respect to a Book-Entry Class B Note,
the Person who is the beneficial owner of such Book-Entry Class B 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 or as an indirect
participant, in accordance with the rules of such Clearing Agency) and, with
respect to a Definitive Class B Note, a Holder of a Class B Note.
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"Class B Noteholder" means a Holder of a Class B Note.
"Class B Notes" means Issuer's [_____]% Class B Lease-Backed Notes
issued in the original principal amount of [$_____________].
"Class B Percentage" means [_____]%.
"Class B Principal Payment" means (a) while the Class A-1 Notes are
outstanding, zero and (b) after the Outstanding Principal Amount on the Class
A-1 Notes has been reduced to zero, the amount necessary to reduce the
Outstanding Principal Amount of the Class B Notes to the greater of the Class
B Target Investor Principal Amount and the Class B Floor.
"Class B Target Investor Principal Amount" means with respect to each
Payment Date, an amount equal to the product of (a) the Class B Percentage and
(b) the Discounted Present Value of the Performing Leases as of the related
Determination Date.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means September __, 1998.
"Code" means the Internal Revenue Code of 1986.
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 6.1(a) of the Pooling and
Servicing Agreement.
"Commission" means the Securities and Exchange Commission.
"Contributed Assets" are defined in Section 2.3 of the Purchase
Agreement.
"Control" means with respect to any Federal Book Entry Security,
Indenture Trustee shall have obtained control if:
(i) Indenture Trustee is a participant in the book
entry system maintained by the Federal Reserve Bank that is acting as
fiscal agent for the issuer of such Federal Book Entry Security, and
such Federal Reserve Bank has indicated by book entry that such
Federal Book Entry
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Security has been credited to Indenture Trustee's securities account
in such book entry system; or
(ii) (a) Indenture Trustee (1) is registered on the
records of a Securities Intermediary as the person having a
Securities Entitlement in respect of such Federal Book Entry Security
against such Securities Intermediary; or (2) has obtained the
agreement, in writing, of the Securities Intermediary for such
Securities Entitlement that such Securities Intermediary will comply
with Entitlement Orders of Indenture Trustee without further consent
of any other Person; and (b) the Securities Intermediary is a
participant in the book entry system maintained by the Federal
Reserve Bank that is acting as fiscal agent for the issuer of such
Federal Book Entry Security; and (c) such Federal Reserve Bank has
indicated by book entry that such Federal Book Entry Security has
been credited to the Securities Intermediary's Securities Account in
such book entry system.
"Corporate Trust Office" means, with respect to Indenture Trustee,
the principal corporate trust office of Indenture Trustee located at
[________________], or at such other address as Indenture Trustee may
designate from time to time by notice to Noteholders, Issuer and ILC, and with
respect to Trustee means, the principal corporate trust office of Trustee
located at [ ], Wilmington, Delaware [ ], Attention: [ ];
or at such other address as Trustee may designate from time to time by notice
to the Certificateholders and Depositor, or the principal corporate trust
office of any successor Trustee (the address of which the successor Trustee
will notify the Certificateholders and Depositor).
"Cumulative Loss Amount" means, with respect to each Payment Date
(the "subject Payment Date"), an amount equal to the excess, if any, of (a)
the difference of (i) the sum of the Outstanding Principal Amount of the Notes
and the Certificate Balance as of the immediately preceding Payment Date after
giving effect to all payments made on such Payment Date, minus (ii) the lesser
of (A) the Discounted Present Value of the Performing Leases as of the
Determination Date relating to the immediately preceding Payment Date minus
the Discounted Present Value of the Performing Leases as of the Determination
Date related to the subject Payment Date and (B) Available Funds for the
subject Payment Date (including any funds withdrawn from the Reserve Account
or the Residual Account as a result of an Available Funds Shortfall) remaining
after the payment of amounts owing to Servicer and in respect of interest on
the Notes and Certificates on the subject Payment Date over (b) the Discounted
Present Value of Performing Leases as of the Determination Date related to the
subject Payment Date.
"Cut-Off Date" means the close of business on August 31, 1998.
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"Default" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Definitive Class A-1 Note" means a definitive, fully registered
Class A-1 Note issued pursuant to Section 2.7 of the Indenture.
"Definitive Class A-2 Note" means a definitive, fully registered
Class A-2 Note issued pursuant to Section 2.7 of the Indenture.
"Definitive Class B Note" means a definitive, fully registered Class
B Note issued pursuant to Section 2.7 of the Indenture.
"Definitive Trust Certificate" is defined in Section 3.11 of the Trust
Agreement.
"Delinquent Lease" means, as of any Determination Date, any Lease
(other than a Lease which became a Non-Performing Lease prior to such
Determination Date) with respect to which the Lessee has not paid all Lease
Payments then due.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to a Certificated Security,
transfer of such Certificated Security to Indenture Trustee or its
nominee or custodian by physical delivery to Indenture Trustee or its
nominee or custodian, endorsed to, or registered in the name of,
Indenture Trustee or its nominee or custodian or endorsed in blank; and
(b) with respect to any such Trust Account Property
that constitutes an Uncertificated Security (including any
investments in money market mutual funds, but excluding any Federal
Book Entry Security), (A) registration of Indenture Trustee as the
registered owner by the issuer, or (B) satisfaction of the
requirements for obtaining "control" pursuant to Section 8-106(c)(2)
of Article 8 of the UCC.
"Depositor" means Transferor in its capacity as Depositor under the
Trust Agreement.
"Depository Agreement" means the letter of representations, between
Issuer, Indenture Trustee and the Depository Trust Company, as Clearing
Agency.
"Determination Date" means with respect to any Payment Date, the
third day immediately preceding such Payment Date, or if such day is not a
Business Day, the first Business Day preceding such day.
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"Discount Rate" means, with respect to any Determination Date,
[_______]%, which equals the sum of (a) the weighted-average interest rate of
the Class A Notes (utilizing the Class A-2 Note Interest Rate), Class B Note
Interest Rate and the Certificate Rate on the Closing Date and (b) the
Servicing Fee rate of 0.75% per annum.
"Discounted Present Value of the Leases" means, with respect to any
Lease as of the Cut-Off Date or any date thereafter, an amount equal to the
net present value of all Lease Payments (including Payaheads but excluding
delinquent amounts and Third Party Amounts) to become due thereunder following
the Cut-Off Date or the Due Period preceding the following Payment Date, as
the case may be (determined by discounting on a monthly basis (assuming a
calendar year consisting of twelve 30-day months), at a rate equal to the
Discount Rate, each such Lease Payment from the Payment Date following such
Lease Payment to such date). In determining the Discounted Present Value of
the Leases on any Determination Date or with respect to a Payment Date, the
future remaining Lease Payments will be calculated after giving effect to any
payments received on or prior to the Record Date for the related Due Period to
the extent such payments relate to Lease Payments due and payable by the
Lessees with respect to the related Due Period and any prior Due Period.
"Discounted Present Value of the Performing Leases" means the
Discounted Present Value of the Leases, reduced by the Discounted Present
Value of the Leases that are Non-Performing Leases.
"Due Period" means with respect to any Payment Date and the
Determination Date with respect thereto, the calendar month prior to the month
in which such Payment Date and Determination Date occur; provided, that the
initial Due Period shall be the period from the Closing Date through the
calendar month prior to the month in which such Payment Date and Determination
Date occur.
"Eligible Account" means either (a) a segregated account maintained
with an Eligible Institution or any other segregated account, the deposit of
funds into which has been approved by the Rating Agencies or (b) a segregated
trust account maintained in the corporate trust department of a depository
institution organized under the laws of the United States of America or any of
the states thereof, the District of Columbia, or any domestic branch of a
foreign bank, in any case having corporate trust powers and acting as trustee
for funds deposited in such account, so long as any of the securities of such
depository institution have a credit rating from each Rating Agency in one of
its generic rating categories which signifies investment grade.
"Eligible Institution" means either (a) The Provident Bank or the
corporate trust department of the Indenture Trustee or the Trustee, as
applicable, or (b) a
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depository institution organized under the laws of the United States of
America or any of the states thereof, the District of Columbia, or any
domestic branch of a foreign bank, (i) which has either (A) a long-term
unsecured debt rating or certificate of deposit rating acceptable to the
Rating Agencies or (B) a short-term unsecured debt rating or certificate of
deposit rating acceptable to the Rating Agencies and (ii) whose deposits are
insured by the FDIC.
"Eligible Investments" means any one or more of the following
obligations or securities:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) (i) demand deposits, time deposits or certificates of deposit of
The Provident Bank and (ii) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated under the
laws of the United States of America or any State (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that in the
case of clause (ii), at the time of the investment or contractual commitment
to invest therein, the commercial paper or other short-term senior unsecured
debt obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the Rating Agencies
in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted thereby
(including funds for which Indenture Trustee, Trustee, Transferor or any of
their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b);
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to timely payment 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 (b); and
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(g) any other investment permitted by each of the Rating Agencies as
set forth in writing delivered to the Indenture Trustee; provided, that
investments described in clauses (d) and (g) shall be made only so long as
making such investments will not require the Issuer to register as an
investment company under the Investment Company Act of 1940, as amended.
"Eligible Lease" means a Lease that, on the effective date of the
substitution of such Lease, satisfies the representations and warranties set
forth in Section 3.4 of the Purchase Agreement and the requirements of Section
4.3 of the Purchase Agreement or Section 5.4 of the Pooling and Servicing
Agreement, as applicable.
"Entitlement Order" has the meaning assigned thereto in Section
8-102(a)(8) of Article 8 of the UCC.
"Equipment" means each item of personal property, together with any
replacement parts, additions, and repairs thereto, any replacements thereof,
and any accessories incorporated therein and/or affixed thereto, subject to a
Lease or, following expiration or termination of the Lease to which the same
was previously subject, remaining subject to the lien of the Indenture in
accordance with the provisions hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Event of Default" is defined in Section 6.1 of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934.
"Expenses" is defined in Section 8.2 of the Trust Agreement.
"Federal Book Entry Security" means an obligation (i) issued by the
U.S. Treasury, the Federal Home Loan Mortgage Corporation or the Federal
National Mortgage Association, or any other direct obligation of, or
obligation fully guaranteed as to timely payment or principal and interest by,
the United States of America, that is a book-entry security held through the
Federal Reserve System pursuant to Federal book entry regulations, and (ii)
the perfection of a security interest in which is governed pursuant to federal
regulations by Article 8 of the UCC.
"Filing Requirements" means Financing Statements necessary to perfect
the ownership interest of the Transferor and Issuer and the perfected security
interest of Indenture Trustee in the Leases and as of the Closing Date and as
of June 1 and December 1 of every year following the Closing Date, in
Equipment (i) subject to Leases having a Discounted Present Value of at least
75% of the aggregate Discounted Present Value of the Leases and (ii) relating
to not less than 75% of the Booked Residual Value of such Equipment.
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"Financing Statement" means a statement filed pursuant to the UCC
which evidences a perfected security or ownership interest in an asset.
"Governmental Authority" means any court or federal or state
regulatory body, administrative agency or other tribunal or other governmental
instrumentality.
"Grant" means to grant, bargain, convey, assign, transfer, mortgage,
pledge, create and grant a security interest in and right of set-off against,
deposit, set over and confirm. The Grant of the Trust Estate effected by the
Indenture shall include all rights, powers, and options (but none of the
obligations) of Issuer with respect thereto, including the immediate and
continuing right to claim for, collect, receive, and give receipts for Lease
Payments in respect of the Leases 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 judicial proceedings
in the name of Issuer or otherwise, and generally to do and receive anything
that Issuer may be entitled to do or receive thereunder or with respect
thereto.
"Granted Assets" means the assets referred to in the Granting Clause
of the Indenture.
"Holder" as used in the Indenture and Pooling and Servicing
Agreement, means each Noteholder and each Certificateholder, and as used in
the Trust Agreement, means a Certificateholder.
"ILC" means Information Leasing Corporation, an Ohio corporation.
"Indemnified Party" with respect to the Indenture and Pooling and
Servicing Agreement is defined in Section 4.3 of the Indenture, with respect
to the Purchase Agreement, is defined in Section 4.1 of the Purchase
Agreement, and with respect to the Trust Agreement is defined in Section 8.2
of the Trust Agreement.
"Indenture" means the Indenture, dated the date hereof, between
Issuer and Indenture Trustee, as the same may be amended and supplemented from
time to time.
"Indenture Trustee" means the Person acting as Indenture Trustee
under the Indenture, its successors in interest and any successor trustee
under the Indenture.
"Independent" means, when used with respect to any specified Person,
that the Person: (a) is in fact independent of the Issuer, any other obligor
upon the Notes, the Transferor and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the
Transferor or any Affiliate of any of the foregoing Persons and (c) is not
connected with the Issuer, any such other obligor, the
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Transferor or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.4 of the
Indenture, 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 the Indenture and that the signer
is Independent within the meaning thereof.
"Initial Certificate Balance" means the amount specified as the
Initial Certificate Balance in a letter of instruction from Depositor to
Trustee.
"Initial Payment Date" means November 25, 1998.
"Interest Payments" is defined in Section 2.1(c) of the Indenture.
"Issuer" means Provident Equipment Lease Trust 1998-A.
"Issuer Order" or "Issuer Request" means a written order or request
delivered to Indenture Trustee and signed in the name of Issuer by an
Authorized Officer.
"Lease" means, at any time, each separate lease agreement and each
lease schedule or supplement (and each master lease agreement insofar as the
same relates to any such schedule or supplement) described in Schedule 1 of
the Purchase Agreement, as the same may be amended or modified from time to
time in accordance with the provisions thereof unless and until released from
the lien of the Indenture.
"Lease Files" is defined in Section 3.2 of the Pooling and Servicing
Agreement.
"Lease Payment" means each periodic installment of rent payable by a
Lessee under a Lease. The following shall not be deemed to be "Lease
Payments": (a) prepayments of rent required pursuant to the terms of a Lease,
at or before the commencement of the Lease; (b) payments (other than
Payaheads) collected on or before the Cut-Off Date, (c) Payaheads, until such
time as such Payaheads are released from the Collection Account in accordance
with Section 6.5 of the Pooling and Servicing Agreement, (d) Third Party
Amounts and (e) any security deposit, unless and until such security deposit
is permitted to be treated as a payment on a Lease in accordance with the
terms of such Lease.
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"Lease Repurchase Amount" means at any date with respect to any
Lease, an amount equal to the Discounted Present Value of the Lease as of the
next following Payment Date plus any amounts previously due and unpaid.
"Lessee" means each lessee under a Lease.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics liens, and any liens
that attach to a Lease by operation of law.
"Management Agreement" means the Management Agreement, dated as of
the date hereof, among Manager, Issuer and Indenture Trustee.
"Management Fee" means the fee payable to the Manager pursuant to
Section 3 of the Management Agreement.
"Manager" means Information Leasing Corporation, a Delaware
corporation, or any successor Manager under the Management Agreement.
"Maturity" means with respect to any installment of principal of or
interest on any Note, the date on which such installment is due and payable as
therein or herein provided, whether at the Stated Maturity, by declaration of
acceleration, or otherwise.
"Monthly Delinquency Percentage" means, with respect to any Payment
Date, the percentage equivalent of a fraction (a) the numerator of which is
the Discounted Present Value of the Delinquent Leases determined as of the
related Determination Date and (b) the denominator of which is the Discounted
Present Value of the Performing Leases as of the related Determination Date.
"Monthly Servicer Realization Percentage" means, with respect to any
Payment Date, the percentage equivalent of a fraction (a) the numerator of
which is the aggregate amount of Servicer Residual Realizations collected
during the related Due Period and (b) the denominator of which is equal to the
aggregate Servicer Booked Residual Values with respect to the Leases for which
Servicer Residual Realizations have been collected in respect of such related
Due Period.
"Nominal Buy-Out Lease" means each Lease identified on Schedule 1 of
the Agreement as having an estimated residual value of $0 or $1 in the column
under the-heading "RESIDUAL".
"Non-Performing Lease" means, as of any Determination Date, any Lease
with respect to which at any time following the Cut-Off Date or related
Pooling Date, as the case may be, either (a) a Lease Payment, or any portion
thereof, was
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determined by Servicer to be more than 90 days overdue as of the last day of
the Due Period with respect to such Determination Date, unless on or before
such Determination Date such Lease Payment (or portion thereof) has been paid
or (b) Servicer has accelerated the remaining payments or has determined such
Lease to be uncollectible in accordance with Servicer's customary practices
prior to the last day of the Due Period with respect to such Determination
Date.
"Non-Performing Lease Payments" means any payment made with respect
to a Non-Performing Lease in an amount equal to all or part of any specific
Lease Payment due with respect to such Non-Performing Lease.
"Non-Performing Lease Pay-Through Amount" means with respect to any
Lease with respect to which a Lease Payment is made or due, an amount equal to
the Discounted Present Value of such Lease as of the Payment Date immediately
following the first Determination Date on which such Lease was a
Non-Performing Lease.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.1(a) of the Pooling and
Servicing Agreement.
"Note Interest Rate" means the Class A-1 Note Interest Rate, the
Class A-2 Note Interest Rate or the Class B Note Interest Rate, as the case
may be.
"Note Owner" means a Class A-1 Note Owner, Class A-2 Note Owner, or
Class B Note Owner, as the case may be.
"Note Register" is defined in Section 2.3 of the Indenture.
"Noteholder" means at any time, any Holder of a Note.
"Notes" means the Class A Notes and Class B Notes issued pursuant to
the Indenture and all notes issued in exchange therefor pursuant to the
Indenture.
"Officers' Certificate" means (i) with respect to Transferor or
Servicer, a certificate delivered to Trustee and signed by the Chairman, the
President, or a Vice President, and by another Vice President, the Treasurer,
an Assistant Treasurer, the Secretary, or an Assistant Secretary of Transferor
or Servicer, as the case may be, who is not the same person as the other
officer signing such certificate and (ii) a certificate delivered to Indenture
Trustee and signed by the Chairman, the President, or a Vice President of
Manager, and by another Vice President, the Treasurer, and Assistant
Treasurer, the Secretary, or an Assistant Secretary of Manager who is not the
same Person as the other officer signing such certificate.
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<PAGE>
"Opinion of Counsel" means a written opinion, which shall be
satisfactory in form and substance to Indenture Trustee, of counsel who may,
except as otherwise expressly provided in this Indenture, be inside or outside
counsel for Issuer or Manager and who shall be satisfactory to Indenture
Trustee.
"Other Lease Payments" means all payments on or in respect of leases
which are not Lease Payments, Casualty Payments, Termination Payments or
Residual Realizations.
"Outstanding" means with respect to the Notes, as of any date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(a) Notes theretofore canceled by
Indenture Trustee or delivered to Indenture Trustee for cancellation;
(b) Notes or portions thereof for
whose payment money in the necessary amount has been theretofore
irrevocably deposited with Indenture Trustee in trust for the holders
of such Notes; and
(c) Notes in exchange for or in lieu
of which other Notes have been authenticated and delivered pursuant
to this Indenture unless proof satisfactory to Indenture Trustee is
presented that any such Notes are held by a Person in whose hands the
Note is a valid obligation;
provided, that in determining whether the holders of the requisite percentage
of the Outstanding Principal Amount of the Notes have given any request,
demand, authorization, direction, notice, consent, or waiver hereunder, Notes
owned by Transferor, ILC or any Affiliate of ILC shall be disregarded and
deemed not to be Outstanding, except that, in determining whether Indenture
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes that a
Responsible Officer of Indenture Trustee actually knows to be so owned shall
be so disregarded.
"Outstanding Principal Amount" means the aggregate unpaid principal
amount of the Notes at any time.
"Overcollateralization Amount" means, with respect to each Payment
Date, an amount equal to (a) the Discounted Present Value of the Performing
Leases as of the related Determination Date minus (b) the Outstanding
Principal Amount of the Notes and the Certificate Balance (after giving effect
to payments of principal (other
A-34
<PAGE>
than Additional Principal) on such Payment Date); provided, that such amount
will never be less than zero.
"Payaheads" means Lease Payments received prior to their respective
Due Periods that do not constitute full prepayments or partial prepayments in
accordance with Servicer's customary practices.
"Paying Agent" means each agent of Issuer appointed for the purpose
of making payments on the Notes or Certificates, as applicable, including
Indenture Trustee.
"Payment Date" means the 25th day of each month, or if such day is
not a Business Day, the next succeeding Business Day, commencing on the
Initial Payment Date, and ending on the latest Stated Maturity.
"Pension Plan" is defined in Section 3.13 of the Purchase Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Placement Agent Agreement" means the Placement Agent Agreement,
among Issuer, ILC, and Lehman Brothers Inc.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement dated as of the date hereof between Issuer, Transferor and Servicer,
as the same may be amended or modified from time to time in accordance with
the provisions hereof and thereof.
"Predecessor Lease" for purposes of the Pooling and Servicing
Agreement, is defined in Section 5.4(a) of the Pooling and Servicing
Agreement, and for purposes of the Purchase Agreement, is defined in Section
4.3(a) of the Purchase Agreement.
"Predecessor Notes" means with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.4 of the Indenture in lieu of a
lost, destroyed or stolen Note (or a mutilated Note surrendered to Indenture
Trustee) shall be deemed to evidence
A-35
<PAGE>
the same debt as the lost, destroyed or stolen Note (or a mutilated Note
surrendered to Indenture Trustee).
"Prime Rate" means the [Name of Indenture Trustee] prime lending rate.
"Principal Payments" is defined in Section 2.1(b) of the Indenture.
"Private Placement Memorandum" means the final Private Placement
Memorandum used in connection with the private offering of the Certificates.
"Prohibited Transaction" means any transaction described in Section
406 of ERISA which is not exempt by reason of Section 408 of ERISA or the
transitional rules set forth in Section 414(c) of ERISA and any transaction
described in Section 4975(c) of the Code which is not exempt by reason of
Section 4975(c)(2) or Section 4975(d) of the Code, or the transitional rules
of Section 2003(c) of ERISA.
"Prospectus" means the form of final prospectus to be used in
connection with the public offering of the Notes as filed with the Securities
and Exchange Commission pursuant to Rule 424(b).
"Purchase Agreement" means the Purchase Agreement dated as of the
date hereof, between Transferor and ILC, as the same may be amended and
supplemented from time to time, which term shall also include, as the context
requires, the Liquidity Receivables Purchase Agreement.
"Rating Agency" means [Name of each Rating Agency].
"Rating Agency Condition" means, with respect to any action, that
each Rating Agency shall have been given 10 days prior notice thereof and that
each of the Rating Agencies shall have notified Transferor that such action
will not result in a reduction or withdrawal of the then current rating of any
Class of the Notes.
"Record Date" means with respect to any Payment Date, the close of
business on the last day of the calendar month immediately preceding such
Payment Date.
"Registration Statement" means the registration statement (File No.
333-58909) filed with the Securities and Exchange Commission for the
registration of the Notes.
"Related Person" means any Person (whether or not incorporated) which
is under common control with Transferor within the meaning of Section 414(c)
of the Internal Revenue Code of 1986, as amended, or of Section 4001(b) of
ERISA.
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<PAGE>
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, a withdrawal from a Pension
Plan described in Section 4063 of ERISA, or a cessation of operations
described in Section 4062(e) of ERISA.
"Required Deposit Date" means, as to any funds or item required to be
deposited into the Collection Account, the date falling two Business Days
after Servicer's receipt of such funds or item, provided that at any time when
(a) ILC is Servicer, (b) there exists no Servicer Event of Default and (c) any
other condition to making deposits less frequently than daily as may be
specified by the Rating Agencies is satisfied, the Business Day preceding the
applicable Payment Date shall be the "Required Deposit Date."
"Required Payment" is defined in Section 6.4(b) of the Pooling and
Servicing Agreement.
"Required Reserve Amount" means the lesser of (a) 1.0% of the
Discounted Present Value of the Leases as of the Cut-Off Date and (b) the
Outstanding Principal Amount of the Notes and the Certificate Balance.
"Reserve Account" means the account or accounts by that name
established and maintained by Indenture Trustee pursuant to Section 6.1(a) of
the Pooling and Servicing Agreement.
"Residual Account" means the account or accounts by that name
established and maintained by Indenture Trustee pursuant to Section 6.1(a) of
the Pooling and Servicing Agreement.
"Residual Amount Cap" means an amount equal to $[ ] which equals [ ]%
of the Discounted Present Value of the Leases as of the Cut-Off Date.
"Residual Event" means the occurrence of one or more of the
following: (a) ILC is no longer the Servicer, (b) with respect to the
[month/year] Due Period and each Due Period thereafter, the Three-Month
Servicer Realization Percentage calculated on any Determination Date is less
than [___]%; or (c) with respect to the [month/year] Due Period and each Due
Period thereafter, the Three-Month Delinquency Percentage is greater than
[__]%; provided, that the Residual Event referred to in clause (b) may be
cured if the Three-Month Servicer Realization Percentage is greater than or
equal to [___]% for three consecutive months thereafter and the Residual Event
referenced in clause (c) may be cured if the Three-Month Delinquency
Percentage for any Due Period thereafter is less than or equal to [___]%.
A-37
<PAGE>
"Residual Realizations" means the net cash flows realized by and
allocable to ILC from the sale (including pursuant to a Lessee's purchase
option) or reletting of any Equipment following the scheduled termination of
the related Lease. Amounts received in respect of Non-Performing Leases shall
only be included as Residual Realizations to the extent such amounts exceed
the related Non-Performing Lease Pay-Through Amount.
"Responsible Officer" means with respect to Indenture Trustee, any
person regularly engaged in the administration or supervision of corporate
trust accounts (including, in the case of the original Indenture Trustee
hereunder, any officer in its Corporate Trust Office) and also, with respect
to a particular corporate trust matter, any other officer to whom such matter
is referred because of his knowledge of and familiarity with the particular
subject.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Securities Account" has the meaning assigned thereto in Section
8-501(a) of Article 8 of the UCC.
"Securities Entitlement" has the meaning assigned thereto in Section
8-102(a)(17) of Article 8 of the UCC.
"Securities Intermediary" is defined in Section 8-102(a)(14) of
Article 8 of the UCC.
"Security Deposit Earnings" are defined in Section 6.1(b) of the
Pooling and Servicing Agreement.
"Seller Assets" are defined in Section 2.1 of the Purchase Agreement.
"Servicer" means ILC and any successor Servicer appointed pursuant to
the terms of the Pooling and Servicing Agreement and, to the extent that it at
any time is performing the functions of Servicer, Indenture Trustee.
"Servicer Advance" means a payment by Servicer pursuant to Section
5.1 of the Pooling and Servicing Agreement.
"Servicer Booked Residual Values" means the estimated residual value
of the Equipment recorded on the books of ILC.
"Servicer Event of Default" is defined in Section 9.1 of the Pooling
and Servicing Agreement.
A-38
<PAGE>
"Servicer Order" means a written order or request delivered to
Indenture Trustee and signed in the name of Servicer by an Authorized Officer.
"Servicer Residual Realizations" means the aggregate cash flows
realized by ILC from the sale (including pursuant to a Lessee's purchase
option) or releasing of any Equipment following the termination of the related
Lease.
"Servicer's Certificate" means an Officers' Certificate of Servicer
delivered pursuant to Section 4.8 of the Pooling and Servicing Agreement,
substantially in the form of Exhibit C to the Pooling and Servicing Agreement.
"Servicing Fee" means the fee payable to Servicer for services
rendered during the respective Due Period, determined pursuant to Section 4.6
of the Pooling and Servicing Agreement.
"Servicing Report" is defined in Section 4.8(b) of the Pooling and
Servicing Agreement.
"Servicing Standard" is defined in Section 4.1 of the Pooling and
Servicing Agreement.
"Securities Act" the Securities Act of 1933.
"Stated Maturity" means the date on which the entire remaining unpaid
Outstanding Principal Amount of each class of Notes is due and payable, which
date is the [month/year] Payment Date with respect to the Class A-1 Notes and
the [month/year] Payment Date for the Class A-2 Notes and Class B Notes.
"Stated Maturity of the Notes" means [month/year] Payment Date for
the Class A-1 Notes; the Certificates Payment Date for the Class A-2 Notes,
Class B Notes and Certificates.
"Substitute Lease" for purposes of the Pooling and Servicing
Agreement, is defined in Section 5.4(a) of the Pooling and Servicing
Agreement, and for purposes of the Purchase Agreement, is defined in Section
4.3(a) of the Purchase Agreement.
"Supplemental Servicing Fee" is defined in Section 4.6(d) of the
Pooling and Servicing Agreement.
"Termination Payment" means a payment payable by a Lessee under a
Lease upon the early termination, in full or in part, of such Lease (but not
on account of a Casualty or a Lease default) which may be agreed upon by
Servicer, acting in the name of Issuer, and the Lessee in accordance with the
provisions of Section 4.5 of the Pooling and Servicing Agreement.
A-39
<PAGE>
"Third Party Amounts" means supplemental or additional Payments
required by the terms of a Lease with respect to taxes, insurance,
maintenance, or other specific charges, including charges included in an
invoice but payable to vendors.
"Three-Month Delinquency Percentage" means, with respect to any
Payment Date, the percentage equivalent of fraction, (a) the numerator of
which is the sum of the Monthly Delinquency Percentage for such Payment Date
and the two immediately preceding Payment Dates and (b) the denominator of
which is three.
"Three-Month Servicer Realization Percentage" means, with respect to
any Payment Date, the percentage equivalent of a fraction, (a) the numerator
of which is the sum of the Monthly Servicer Realization Percentage for such
Payment Date and the two immediately preceding Payment Dates and (b) the
denominator of which is three.
"Transaction Payment Amount" means for each Required Deposit Date,
the amount of all Lease Payments, Non-Performing Lease Payments, Casualty
Payments, Termination Payments and other payments on or in respect of a Lease
received by Servicer excluding Payaheads and deposited in the Collection
Account pursuant to Section 6.2(c) of the Pooling and Servicing Agreement and
reported by Servicer for such Required Deposit Date in accordance with Section
4.8 of the Pooling and Servicing Agreement.
"Transfer Date" means the Business Day immediately preceding any
Payment Date.
"Transfer Taxes" are defined in Section 3.20 of the Purchase Agreement.
"Transferor" means Provident Lease Receivables Corporation, a
Delaware corporation, and its successors in interest to the extent permitted
hereunder.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" means the trust established by the Trust Agreement.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
A-40
<PAGE>
"Trust Accounts" is defined in Section 6.1(b) of the Pooling and
Servicing Agreement.
"Trust Agreement" means the Trust Agreement dated as of the date
hereof, between Transferor and Trustee, as the same may be amended and
supplemented from time to time.
"Trust Certificate" means a certificate evidencing the beneficial
interest of a Certificateholder in Trust, substantially in the form attached
as Exhibit A to the Trust Agreement.
"Trustee" means the Person acting as Trustee under the Trust
Agreement, its successors in interest and any successor trustee under the
Trust Agreement.
"Trust Estate" means all money, instruments and other property
subject to or intended to be subject to the lien of the Indenture including
all proceeds thereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
effect on the date on which the Indenture is qualified under Trust Indenture
Act, except as provided in Section 9.6 of the Indenture.
"Trust Officer" means, in the case of Indenture Trustee, any officer
within the Corporate Trust Office of Indenture Trustee, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary or any
other officer of Indenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and, with respect to Trustee, any officer in the Corporate Trust
Administration Department of Trustee with direct responsibility for the
administration of the Trust Agreement and the Basic Documents on behalf of
Trustee.
"Trust Statute" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code Section 3801 et seq., as the same may be amended from time to time.
"Uncertificated Security" has the meaning assigned thereto in Section
8-102(a)(18) of Article 8 of the UCC.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code as in effect in the relevant jurisdiction, as amended from
time to time.
"Underwriting Agreement" means the Underwriting Agreement, among
Transferor, ILC and Lehman Brothers Inc.
A-41
<PAGE>
"Utilized Residual Amount" means on any day of determination, the sum
of (a) the total Residual Realizations applied to make payments of amounts
owing Servicer, Noteholders and Certificateholders (including any such amounts
withdrawn from the Reserve Account and the Residual Account, but not including
any amounts paid to Issuer under Section 6.3 of the Pooling and Servicing
Agreement the amount on deposit in the Reserve Account and the Residual
Account on such date allocable to Residual Realizations.
"Warranty Lease" means a Lease subject to repurchase by ILC as a
result of a breach of a representation or warranty in accordance with the
provisions of Section 5.2 of the Pooling and Servicing Agreement.
SECTION 1.2 Other Interpretive Provisions. All terms defined in this
Appendix X shall have the defined meanings when used in any Basic Document or
any certificate or other document delivered pursuant to any Basic Document
unless otherwise defined therein. For purposes of the Basic Documents, and all
certificates and other documents delivered in connection with the Basic
Documents, unless the context otherwise requires: (a) accounting terms not
otherwise defined in any Basic Document, and accounting terms partly defined
in any Basic Document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles; (b)
terms defined in Article 9 of the UCC as in effect in the State of New York
and not otherwise defined in the Basic Documents are used in the Basic
Documents as defined in that Article; (c) any reference to each Rating Agency
shall only apply to any specific rating agency if such rating agency is then
rating any outstanding Notes and/or Certificates, as applicable; (d)
references to any amount as on deposit or outstanding on any particular date
means such amount at the close of business on such day; (e) the words
"hereof," "herein" and "hereunder" and words of similar import refer to this
in any Basic Document (or any certificate or other document in which they are
used) as a whole and not to any particular provision of such Basic Document
(or such certificate or document); (f) references in any Basic Document to any
Section, Schedule or Exhibit are references to Sections, Schedules and
Exhibits in such Basic Document (or the certificate or other document in which
the reference is made), and references to any paragraph, subsection, clause or
other subdivision within any Section or definition refer to such paragraph,
subsection, clause or other subdivision of such Section or definition; (g) the
term "including" means "including without limitation"; (h) references to any
law or regulation refer to that law or regulation as amended from time to time
and include any successor law or regulation; and (i) references to any Person
include that Person's successors and assigns.
A-42
<PAGE>
Exhibit 5.1
[MAYER, BROWN & PLATT LETTERHEAD]
September 8, 1998
Provident Lease Receivables Corporation
One East Fourth Street
Cincinnati, OH 45202
Provident Equipment Lease Trust 1998-A
RE: Registration Statement on Form S-1 (No. 333-58909)
Ladies and Gentlemen:
We have acted as your special counsel in connection with the
above-referenced registration statement (together with the exhibits and any
amendments thereto, the "Registration Statement"), filed with the Securities
and Exchange Commission in connection with the registration of the
Lease-Backed Notes (the "Notes") to be issued by Provident Equipment Lease
Trust 1998-A (the "Trust").
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Notes, and in order to express our opinion
hereinafter stated: (a) we have examined copies of the form of the
Underwriting Agreement, Pooling and Servicing Agreement, the Notes, the Trust
Agreement and the Indenture filed as exhibits to the Registration Statement
(collectively the "Operative Documents"), (b) we have examined the
Registration Statement and the prospectus contained therein (the
"Prospectus"), and (c) we have examined such other records and documents and
such matters of law, and we have satisfied ourselves as to such matters of
fact, as we have considered relevant for purposes of this opinion.
On the basis of the foregoing, it is our opinion that, the Notes,
when, as and if (i) the Registration Statement becomes effective pursuant to
the provisions of the Securities Act of 1933, as amended, (ii) the Operative
Documents relating thereto have each been duly completed, executed and
delivered by the parties thereto substantially in the form we have examined,
duly reflecting the terms established as described above, and (iii) the Notes
have been duly executed by the Owner Trustee on behalf of the Trust and duly
authenticated by the Indenture Trustee all in accordance with the terms and
conditions of the Operative Documents and sold by in the
<PAGE>
Provident Lease Receivables Corporation
Provident Equipment Lease Trust 1998-A
September 8, 1998
Page 2
manner described in the Registration Statement, such Notes will have been
legally issued and will be enforceable in accordance with their terms and
entitled to the benefits of the Operative Documents except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforcement of creditors' rights generally or the relief of
debtors, as may be in effect from time to time, or by general principles of
equity.
We wish to advise you that we are members of the bar of the State of
New York and the opinions expressed herein are limited to the laws of the
State of New York and the Federal laws of the United States.
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
<PAGE>
EXHIBIT 8.1
[MAYER, BROWN & PLATT LETTERHEAD]
September 8, 1998
Provident Lease Receivables Corporation
One East Fourth Street
Cincinnati, OH 45202
Provident Equipment Lease Trust 1998-A
RE: Registration Statement on Form S-1 (No. 333-58909)
Ladies and Gentlemen:
We have acted as your special Federal tax counsel in connection with
the above-referenced registration statement (together with the exhibits and
any amendments thereto, the "Registration Statement"), filed with the
Securities and Exchange Commission in connection with the registration of the
Lease-Backed Notes (the "Notes") to be issued by Provident Equipment Lease
Trust 1998-A (the "Trust").
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Notes, and in order to express our opinion
hereinafter stated: (a) we have examined copies of the form of the Pooling and
Servicing Agreement, the Notes, the Trust Agreement and the Indenture filed as
exhibits to the Registration Statement (collectively the "Operative
Documents"), (b) we have examined the Registration Statement and the
prospectus contained therein (the "Prospectus"), and (c) we have examined such
other records and documents and such matters of law, and we have satisfied
ourselves as to such matters of fact, as we have considered relevant for
purposes of this opinion.
The opinion set forth in this letter is based upon the applicable
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated and proposed thereunder, current positions of the
Internal Revenue Service (the "IRS") contained in published Revenue Rulings
and Revenue Procedures, current administrative positions of the IRS and
existing judicial decisions, all of which are subject to change, possibly
retroactively. No tax rulings will be sought from the IRS with respect to any
of the matters discussed herein.
Based on the foregoing and assuming that the Operative Documents are
executed and delivered in substantially the form we have examined, we are of
the opinion that the statements set forth in the Prospectus under the headings
"Prospectus Summary -- Federal Income Tax Considerations," "Prospectus Summary
- -- ERISA Considerations," "U.S. Federal Income Tax Considerations" and "ERISA
Considerations" are a fair and accurate summary of the material federal tax
consequences and ERISA consequences of the purchase, ownership and disposition
of the Notes, that the Notes will be treated as debt for federal income tax
purposes, and that the Trust will not be classified as an association or
publicly traded partnership taxable as a
<PAGE>
Provident Lease Receivables Corporation
Provident Equipment Lease Trust 1998-A
September 8, 1998
Page 2
corporation for federal income tax purposes, and because the Trust has not
elected (and assuming it will not elect) under Treasury Regulation 301-7701-3
to be classified as an association, the Trust will not be so classified for
federal income tax purposes.
There can be no assurance, however, that the tax conclusions
presented in the sections of the Prospectus referenced above will not be
successfully challenged by the IRS, or significantly altered by new
legislation, changes in IRS positions or judicial decisions, any of which
challenges or alterations may be applied retroactively with respect to
completed transactions.
We hereby consent to the filing of this opinion and our related
opinion with respect to the validity of the Notes as Exhibits 8.1 and 5.1,
respectively, to the Registration Statement and to the reference to our firm
in the Prospectus under the captions "Prospectus Summary -- Federal Income Tax
Considerations," "U.S. Federal Income Tax Considerations" and "Legal Matters".
In giving such consent, we do not admit that we are "experts" within the
meaning of the term used in the Act or the rules and regulations of the
Securities and Exchange Commission issued thereunder, with respect to any part
of the Registration Statement, including this opinion as an exhibit or
otherwise.
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
<PAGE>
EXHIBIT 8.2
[KEATING, MUETHING & KLEKAMP, P.L.L. LETTERHEAD]
September 8, 1998
Provident Lease Receivables Corporation
One East Fourth Street
Cincinnati, OH 45202
RE: Provident Equipment Lease Trust 1998-A
Registration Statement on Form S-1 (No. 333-58909)
--------------------------------------------------
Ladies and Gentlemen:
We have acted as your special Ohio tax counsel in connection with the
above-referenced registration statement (together with the exhibits and any
amendments thereto the "Registration Statement"), filed with the Securities
and Exchange Commission in connection with the registration of the
Lease-Backed Notes (the "Notes") to be issued by Provident Equipment Lease
Trust 1998-A (the "Trust"). You have asked for our opinion as to certain Ohio
tax law matters in connection with the issuance of the Notes by the Trust.
We are familiar with the proceedings to date in connection with the
proposed issuance and sale of the Notes, and in order to express our opinion
hereinafter stated: (a) we have examined copies of the form of the Pooling and
Servicing Agreement, the Notes, the Trust Agreement and the Indenture filed as
exhibits to the Registration Statement (collectively the "Operative
Documents"), (b) we have examined the Registration Statement and the
prospectus contained therein (the "Prospectus"), and (c) we have examined such
other records and documents and such matters of law, and we have satisfied
ourselves as to such matters of fact, as we have considered relevant for
purposes of this opinion.
In our review of the foregoing documents, we have assumed the
accuracy of all information set forth in such documents, the genuineness of
all signatures on the documents which we have reviewed and the conformity with
the originals (and the authenticity of such originals) of all documents
submitted to us as copies. Our opinion is conditioned on the accuracy of the
factual statements made in the documents, and on timely and full compliance
with the terms of the documents by all relevant parties to such documents.
We have also relied on the opinions of Mayer, Brown & Platt, special
federal tax counsel to the Trust, dated September 8, 1998, to the effect that:
<PAGE>
Page 2
September 8, 1998
1. The Trust will not be classified as an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes,
and
2. The Notes will be treated as debt for federal income tax purposes.
With your permission, we have assumed for purposes of our opinion
that the foregoing opinions of Mayer, Brown and Platt are accurate and
correct.
Our opinion is based on the Ohio Revised Code, Ohio administrative
regulations promulgated thereunder, and other administrative and judicial
interpretations thereof, all as of the date hereof and all of which are
subject to change, possibly on a retroactive basis. There can be no assurance
that current or future legislative proposals, or final legislation, adverse
judicial decisions, or official pronouncements will not affect the taxation of
the Notes by the State of Ohio. Furthermore, no tax ruling will be sought from
Ohio tax officials with respect to any of the matters discussed herein.
Subject to the assumptions, qualifications and conditions set forth
herein, it is our opinion that the statements set forth in the Prospectus
under the heading "Ohio State Tax Considerations" are a fair and accurate
summary of the material Ohio tax consequences of the purchase, ownership and
disposition of the Notes, and that unless the Noteholders are Ohio residents
or otherwise subject to Ohio taxation, the Noteholders will not be subject to
any Ohio income, franchise, or dealers in intangibles taxes as a result of the
purchase, ownership or disposition of the Notes.
This opinion is limited solely to matters of Ohio tax law discussed
herein. This opinion is subject to the qualifications and restrictions noted
herein and is based upon our understanding of the material facts as stated
herein. This opinion is expressed as of the date hereof and we disclaim any
undertaking to advise you of any subsequent changes to the facts stated or
assumed herein, or any subsequent changes in applicable law. This opinion is
rendered solely for your benefit in connection with the transaction described
herein and may not be used by any other person or for any other purpose
without our prior express written consent.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and furthermore consent to all references made to this
firm in the Registration Statement.
Very truly yours,
KEATING, MUETHING & KLEKAMP, P.L.L.
By: /s/ Joseph P. Mellen
------------------------------------
Joseph P. Mellen
<PAGE>
EXHIBIT 10.1
==============================================================================
FORM OF
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
TRUST AGREEMENT
between
PROVIDENT LEASE RECEIVABLES CORPORATION
and
[NAME OF TRUSTEE]
as Trustee
Dated as of September 1, 1998
==============================================================================
<PAGE>
Table of Contents
-----------------
Page
ARTICLE I
Definitions
SECTION 1.1. Capitalized Terms.............................................1
SECTION 1.2. Other Definitional Provisions.................................1
ARTICLE II
Organization
SECTION 2.1. Name..........................................................1
SECTION 2.2. Office........................................................1
SECTION 2.3. Purposes and Powers...........................................1
SECTION 2.4. Appointment of Trustee........................................2
SECTION 2.5. Initial Capital Contribution of Trust Estate..................2
SECTION 2.6. Declaration of Trust..........................................2
SECTION 2.7. Liability of the Certificateholders...........................3
SECTION 2.8. Title to Trust Property.......................................3
SECTION 2.9. Situs of Trust................................................3
SECTION 2.10. Representations and Warranties of Depositor...................3
SECTION 2.11. Federal Income Tax Allocations................................4
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership.............................................5
SECTION 3.2. The Trust Certificates........................................5
SECTION 3.3. Authentication of Trust Certificates..........................5
SECTION 3.4. Registration of Transfer and Exchange of Trust Certificates...6
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Trust Certificates.......7
SECTION 3.6. Persons Deemed Certificateholders.............................8
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.....8
SECTION 3.8. Maintenance of Office or Agency...............................8
SECTION 3.9. Appointment of Paying Agent...................................8
SECTION 3.10. [Reserved]....................................................9
SECTION 3.11. Definitive Certificates.......................................9
ARTICLE IV
Actions by Trustee
SECTION 4.1. Prior Notice to Certificateholders with Respect
<PAGE>
Page
to Certain Matters.............................................9
SECTION 4.2. Action by the Certificateholders with Respect to
Certain Matters...............................................10
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.......10
SECTION 4.4. Restrictions on Certificateholders' Power.....................10
SECTION 4.5. Majority Control..............................................11
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.1. Establishment of Trust Account................................11
SECTION 5.2. Applications of Trust Funds...................................11
SECTION 5.3. Method of Payment.............................................12
SECTION 5.4. No Segregation of Moneys; No Interest.........................12
SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service
and Others....................................................12
SECTION 5.6. Signature on Returns; Tax Matters Partner.....................13
ARTICLE VI
Authority and Duties of Trustee
SECTION 6.1. General Authority.............................................13
SECTION 6.2. General Duties................................................14
SECTION 6.3. Action upon Instruction.......................................14
SECTION 6.4. No Duties Except as Specified in this Agreement
or in Instructions 15
SECTION 6.5. No Action Except Under Specified Documents
or Instructions...............................................15
SECTION 6.6. Restrictions..................................................15
ARTICLE VII
Concerning Trustee
SECTION 7.1. Acceptance of Trusts and Duties...............................16
SECTION 7.2. Furnishing of Documents.......................................17
SECTION 7.3. Representations and Warranties................................17
SECTION 7.4. Reliance; Advice of Counsel...................................18
SECTION 7.5. Not Acting in Individual Capacity.............................18
SECTION 7.6. Trustee Not Liable for Trust Certificates or
The Trust Estate..............................................19
SECTION 7.7. Trustee May Not Own Notes.....................................19
ii
<PAGE>
Page
ARTICLE VIII
Compensation of Trustee
SECTION 8.1. Trustee's Fees and Expenses...................................19
SECTION 8.2. Indemnification...............................................20
SECTION 8.3. Payments to Trustee...........................................20
ARTICLE IX
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement................................20
ARTICLE X
Successor Trustees and Additional Trustees
SECTION 10.1. Eligibility Requirements for Trustee..........................21
SECTION 10.2. Resignation or Removal of Trustee.............................22
SECTION 10.3. Successor Trustee.............................................22
SECTION 10.4. Merger or Consolidation of Trustee............................23
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.................23
ARTICLE XI
Miscellaneous
SECTION 11.1. Supplements and Amendments....................................25
SECTION 11.2. No Legal Title to Trust Estate in Certificateholders..........26
SECTION 11.3. Limitations on Rights of Others...............................26
SECTION 11.4. Notices.......................................................27
SECTION 11.5. Severability..................................................27
SECTION 11.6. Separate Counterparts.........................................27
SECTION 11.7. Successors and Assigns........................................27
SECTION 11.8. Covenants of Depositor........................................27
SECTION 11.9. No Petition...................................................28
SECTION 11.10. No Recourse...................................................28
SECTION 11.11. Headings......................................................28
SECTION 11.12. Governing Law.................................................28
SECTION 11.13. Manager.......................................................28
iii
<PAGE>
EXHIBITS
EXHIBIT A Form of Trust Certificate
EXHIBIT B Form of Certificate of Trust
iv
<PAGE>
TRUST AGREEMENT dated as of September 1, 1998, between PROVIDENT
LEASE RECEIVABLES CORPORATION, a Delaware corporation, as Depositor, and [NAME
OF TRUSTEE], a Delaware [ ], as Trustee.
ARTICLE I
Definitions
SECTION 1.1. Capitalized Terms. For all purposes of this Agreement
capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in Appendix X to the Indenture dated the date
hereof, between Provident Equipment Lease Trust 1998-A and the Indenture
Trustee.
SECTION 1.2. Other Definitional Provisions. The other interpretive
provisions specified in Appendix X to the Indenture shall apply to this
Agreement.
ARTICLE II
Organization
SECTION 2.1. Name. The Trust created hereby shall be known as
"Provident Equipment Lease Trust 1998-A", in which name Trustee may conduct
the business of Trust, make and execute contracts and other instruments on
behalf of Trust and sue and be sued.
SECTION 2.2. Office. The office of Trust shall be in care of Trustee
at the Corporate Trust Office or at such other address in Delaware as Trustee
may designate by written notice to the Certificateholders and Depositor.
SECTION 2.3. Purposes and Powers. The purpose of Trust is, and Trust
shall have the power and authority to, engage in the following activities:
(a) to issue the Notes pursuant to the Indenture and the
Trust Certificates pursuant to this Agreement and to sell the Notes
and the Trust Certificates in one or more transactions;
(b) with the proceeds of the sale of the Notes and the Trust
Certificates, to acquire the Trust Estate pursuant to the Pooling and
Servicing Agreement;
(c) to assign, grant, transfer, pledge, mortgage and convey
the
<PAGE>
Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to the Pooling and
Servicing Agreement any portion of the Trust Estate released from the
Lien of, and remitted to Trust pursuant to, the Indenture;
(d) to enter into and perform its obligations under the
Basic Documents to which it is to be a party;
(e) 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
(f) 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 to
the Certificateholders and the Noteholders.
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by this Agreement or the
Basic Documents.
SECTION 2.4. Appointment of Trustee. Depositor hereby appoints
Trustee as trustee of Trust effective as of the date hereof, to have all the
rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. Depositor
hereby sells, assigns, transfers, conveys and sets over to Trustee, as of the
date hereof, the sum of $1.00. Trustee hereby acknowledges receipt in trust
from Depositor, as of the date hereof, of the foregoing contribution, which
shall constitute the initial Trust Estate and shall be deposited in the
Certificate Distribution Account. Depositor shall pay organizational expenses
of Trust as they may arise or shall, upon the request of Trustee, promptly
reimburse Trustee for any such expenses paid by Trustee. Depositor may also
take steps necessary, including the execution and filing of any necessary
filings, to ensure that Trust is in compliance with any applicable state
securities law.
SECTION 2.6. Declaration of Trust. Trustee hereby declares that it
will hold the Trust Estate in trust upon and subject to the conditions set
forth herein for the use and benefit of the Certificateholders, subject to the
obligations of Trust under the Basic Documents. It is the intention of the
parties hereto that Trust constitute a business trust under the Trust Statute
and that this Agreement constitute the governing instrument of such business
trust. It is the intention of the parties hereto that, solely for income and
franchise tax purposes, Trust shall be treated as a partnership, with the
assets of the partnership being the Trust
2
<PAGE>
Estate and other assets held by Trust, the partners of the partnership being
the Certificateholders, and the Notes being debt of the partnership. The
parties agree that, unless otherwise required by appropriate tax authorities,
Trust will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of Trust as a
partnership for such tax purposes. Effective as of the date hereof, Trustee
shall have all rights, powers and duties set forth herein and in the Trust
Statute with respect to accomplishing the purposes of Trust.
SECTION 2.7. Liability of the Certificateholders. No
Certificateholder shall have any personal liability for any liability or
obligation of Trust.
SECTION 2.8. Title to Trust Property. Legal title to all the Trust
Estate shall be vested at all times in 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 a trustee or trustees, in which case title shall
be deemed to be vested in Trustee, a co-trustee and/or a separate trustee, as
the case may be.
SECTION 2.9. Situs of Trust. Trust will be located and administered
in the State of Delaware. All bank accounts maintained by Trustee on behalf of
Trust shall be located in the State of Delaware or the State of New York.
Trust shall not have any employees in any state other than Delaware; provided
that nothing herein shall restrict or prohibit Trustee from having employees
within or without the State of Delaware. Payments will be received by Trust
only in Delaware or New York, and payments will be made by Trust only from
Delaware or New York.
SECTION 2.10. Representations and Warranties of Depositor. Depositor
hereby represents and warrants to Trustee that:
(a) Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(b) 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 shall require such
qualifications, licenses and approvals.
(c) Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; Depositor has full
power and
3
<PAGE>
authority to transfer and assign the property to be transferred and
assigned to and deposited with Trust and Depositor shall have duly
authorized such transfer and assignment and deposit to Trust by all
necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by Depositor
by all necessary corporate action.
(d) The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation or by-laws of
Depositor, or any indenture, agreement or other instrument to which
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 or other
instrument (other than pursuant to the Basic Documents); or violate
any law or, to the best of Depositor's knowledge, any order, rule or
regulation applicable to Depositor of any court or of any Federal or
State regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Depositor or its properties.
SECTION 2.11. Federal Income Tax Allocations. Interest payments on
the Certificates at the Certificate Interest Rate (including interest on
amounts previously due on the Certificates but not yet distributed) shall be
treated as "guaranteed payments" under Section 707(c) of the Code. Net income
of Trust for any month as determined for Federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation
thereof) shall be allocated:
(a) among the Certificateholders as of the close of business
on the last day of such month, in proportion to their ownership of
principal amount of Trust Certificates on such date, an amount of net
income up to the sum of: (i) the portion of the market discount on
the Trust Estate accrued during such month that is allocable to the
excess, if any, of the initial Certificate Balance over their initial
aggregate issue price, and (ii) any other amounts of income payable
to the Certificateholders for such month; and such sum of amounts
specified in clauses (i) and (ii) of this sentence shall be reduced
by any amortization by Trust of premium on the Trust Estate that
corresponds to any excess of the issue price of Certificates over
their principal amount; and
(b) to Depositor any remaining net income.
If the net income of Trust for any month is insufficient for the allocations
described in clause (a), subsequent net income shall first be allocated to
make up
4
<PAGE>
such shortfall before being allocated as provided in the preceding sentence.
Net losses of Trust, if any, for any month as determined for Federal income
tax purposes (and each item of income, gain, loss and deduction entering into
the computation thereof) shall be allocated to Depositor to the extent
Depositor (or such holders) are reasonably expected to bear the economic
burden of such net losses, and any remaining net losses shall be allocated
among the remaining Certificateholders as of the close of business on the last
day of such month in proportion to their ownership of principal amount of
Trust Certificates on such day. Depositor is authorized to modify the
allocations in this paragraph if necessary or appropriate, in its sole
discretion, for the allocations to fairly reflect the economic income, gain or
loss to Depositor or to the Certificateholders, or as otherwise required by
the Code.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership. Upon the formation of Trust by the
contribution by Depositor pursuant to Section 2.5, and until the issuance of the
Trust Certificates, Depositor shall be the sole beneficiary of Trust.
SECTION 3.2. The Trust Certificates. The Trust Certificates shall be
issued in denominations of $1,000,000 or in integral multiples of $1,000 in
excess thereof; provided that one Trust Certificate may be issued in a
denomination below $1,000,000 as to include any residual amount. The Trust
Certificates shall be executed on behalf of Trust by manual or facsimile
signature of an authorized officer of Trustee. Trust Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of Trust,
shall be, when authenticated pursuant to Section 3.3, validly issued and
entitled to the benefits of this Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Trust Certificates or did not hold such
offices at the date of authentication and delivery of such Trust Certificates.
SECTION 3.3. Authentication of Trust Certificates. Concurrently with
the transfer of the Trust Estate to Trust pursuant to the Pooling and
Servicing Agreement, Trustee shall cause the Trust Certificates in an
aggregate principal amount equal to the Initial Certificate Balance to be
executed on behalf of Trust, authenticated and delivered to or upon the
written order of Depositor, signed by its chairman of the board, its president
or any vice president, without further corporate action by Depositor, in
authorized denominations. No Trust Certificate shall entitle its Holder to any
benefit under this Agreement, or shall be valid for
5
<PAGE>
any purpose, unless there shall appear on such Trust Certificate a certificate
of authentication substantially in the form set forth in Exhibit A, executed
by Trustee or [ ], as Trustee's authenticating agent, by the manual signature
of one of its authorized signatories; such certificate of authentication shall
constitute conclusive evidence, and the only evidence, that such Trust
Certificate shall have been duly authenticated and delivered hereunder. All
Trust Certificates shall be dated the date of their authentication. No further
Trust Certificates shall be issued except pursuant to Section 3.4, 3.5, 3.10
or 3.13 hereunder.
SECTION 3.4. Registration of Transfer and Exchange of Trust
Certificates. Trust shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a register (the "Certificate Register") in
which, subject to such reasonable regulations as it may prescribe, Issuer
shall provide for the registration of Trust Certificates and of transfers and
exchanges of Trust Certificates. Paying Agent shall be the "Certificate
Registrar" for the purpose of registering Trust Certificates and the transfers
of Trust Certificates as herein provided. Upon any resignation of any
Certificate Registrar, Depositor shall promptly appoint a successor or, if it
elects not to make such an appointment, assume the duties of the Certificate
Registrar.
Upon surrender for registration of transfer of any Trust Certificate
at the office or agency maintained pursuant to Section 3.8, if the
requirements of Section 8-401(l) of the UCC are met, Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized denominations of
a like aggregate principal amount.
At the option of a Holder, Trust Certificates may be exchanged for
other Trust Certificates of authorized denominations, of a like aggregate
principal amount, upon surrender of the Trust Certificates to be exchanged at
the office or agency maintained pursuant to Section 3.8. Whenever any Trust
Certificates are so surrendered for exchange, if the requirements of Section
8-401(l) of the UCC are met, Trustee shall execute, authenticate and deliver
the Trust Certificates that the Certificateholder making the exchange is
entitled to receive.
All Trust Certificates issued upon any registration of transfer or
exchange of Trust Certificates shall be entitled to the same benefits under
this Agreement as the Trust Certificates surrendered upon such registration of
transfer or exchange.
Every Trust Certificate 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 Trustee and the Certificate
Registrar duly executed by, Holder thereof or his attorney duly authorized in
writing. Each
6
<PAGE>
Trust Certificate surrendered for registration of transfer or exchange shall
be canceled and subsequently disposed of by Trustee in accordance with its
customary practice.
No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Trust Certificates, but Trustee or the
Certificate Registrar 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 Trust Certificates.
The Trust Certificates and any beneficial interest in such Trust
Certificates may not be acquired by: (a) an employee benefit plan (as defined
in Section 3(3) of ERISA) that is subject to the provisions of Title I of
ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each a "Benefit Plan"). By accepting and holding a
Trust Certificate or an interest therein, the Holder thereof or Certificate
Owner thereof shall be deemed to have represented and warranted that it is not
a Benefit Plan. Trustee shall have no obligation to determine whether or not a
Holder of a Trust Certificate or a Certificate Owner is or is not a Benefit
Plan.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Trust Certificates.
If: (a) any mutilated Trust Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Certificate
(provided, that Trustee shall not be required to verify the evidence provided
to it), and (b) there shall be delivered to the Certificate Registrar and
Trustee such security or indemnity as may be required by them to hold each of
them harmless, then, in the absence of notice that such Trust Certificate
shall have been acquired by a bona fide purchaser, and provided that the
requirements of Section 8-405 of the UCC are met, Trustee on behalf of Trust
shall execute, authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Trust Certificate, a replacement
Trust Certificate of like tenor and denomination.
In connection with the issuance of any replacement Trust Certificate
under this Section, Trustee and the Certificate Registrar may require the
payment by the Certificateholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
Any replacement Trust Certificate issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Trust Certificate
shall constitute conclusive evidence of ownership in Trust, as if originally
issued, whether or not the mutilated, lost, stolen or destroyed Trust
Certificate shall be found at any time, and shall be entitled to all the
benefits of this Agreement.
7
<PAGE>
SECTION 3.6. Persons Deemed Certificateholders. Prior to due
presentation of a Trust Certificate for registration of transfer of any Trust
Certificate, Trustee or the Certificate Registrar may treat the Person in
whose name any Trust Certificate shall be registered in the Certificate
Register (as of the day of determination) as the owner of such Trust
Certificate for the purpose of receiving distributions pursuant to Section 5.2
and for all other purposes whatsoever, and neither Trustee nor the Certificate
Registrar shall be bound by any notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses. Trustee shall furnish or cause to be furnished to Servicer and
Depositor, within 15 days after receipt by Trustee of a request therefor from
Servicer or Depositor in writing, a list, in such form as Servicer or
Depositor may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If two or more
Certificateholders or one or more Holder(s) of Trust Certificates evidencing
not less than 25% of the Certificate Balance apply in writing to Trustee, and
such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Trust Certificates and such application shall be accompanied by a copy of
the communication that such applicants propose to transmit, then Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of the
Certificateholders. Each Holder, by receiving and holding a Trust Certificate,
shall be deemed to have agreed not to hold any of Depositor, the Certificate
Registrar or Trustee accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency. Trustee shall maintain
in the City of New York, an office or offices or agency or agencies where
Trust Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon Trustee in respect of the Trust
Certificates and the Basic Documents may be served. Trustee shall give prompt
written notice to Depositor and to the Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
SECTION 3.9. Appointment of Paying Agent. Paying Agent shall make
distributions to the Certificateholders from the Certificate Distribution
Account pursuant to Section 5.2 and shall report the amounts of such
distributions to Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. Trustee may revoke such power and
remove Paying Agent if Trustee determines in its sole discretion that Paying
Agent shall have failed to perform its obligations under this Agreement in any
material
8
<PAGE>
respect. Paying Agent shall initially be [Name of Indenture Trustee], and any
co-paying agent chosen by and acceptable to Trustee. Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to Trustee.
In the event that Trustee shall not be Paying Agent, Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
Trustee shall cause such successor Paying Agent or any additional Paying Agent
appointed by Trustee to execute and deliver to Trustee an instrument in which
such successor Paying Agent or additional Paying Agent shall agree with
Trustee that as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Paying Agent
shall return all unclaimed funds to Trustee and upon removal of a Paying Agent
such Paying Agent shall also return all funds in its possession to Trustee.
The provisions of Sections 7.1, 7.3, 7.4 and 8.1 shall apply to Trustee also
in its role as Paying Agent, for so long as Trustee shall act as Paying Agent
and, to the extent applicable, to any other paying agent appointed hereunder.
Any reference in this Agreement to Paying Agent shall include any co-paying
agent unless the context requires otherwise.
SECTION 3.10. [Reserved].
SECTION 3.11. Definitive Certificates. The Trust Certificates, upon
original issuance, will be issued in the form of definitive, fully registered
Trust Certificates (the "Definitive Trust Certificates").
SECTION 3.12. Transfer Restrictions. [Private Placement transfer
restrictions and Ohio tax transfer restrictions to be inserted].
ARTICLE IV
Actions by Trustee
SECTION 4.1. Prior Notice to Certificateholders with Respect to
Certain Matters. With respect to the following matters, Trustee shall not take
action unless, at least 30 days before the taking of such action, Trustee
shall have notified the Certificateholders in writing of the proposed action
and the Certificateholders shall not have notified Trustee in writing prior to
the 30th day after such notice is given that such Certificateholders have
withheld consent or shall not have provided alternative direction:
(a) the initiation of any claim or lawsuit by Trust (except
claims or lawsuits brought in connection with the collection of the
Trust Estate)
9
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and the compromise of any action, claim or lawsuit brought by or
against Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Trust Estate);
(b) the election by Trust to file an amendment to the
Certificate of Trust (substantially in the form of Exhibit B);
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is
required;
(d) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is not
required and such amendment materially adversely affects the interest
of the Certificateholders;
(e) the amendment, change or modification of the Management
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner, or add any provision, that would not
materially adversely affect the interests of the Certificateholders;
or
(f) the appointment pursuant to the Indenture of a successor
Note Registrar, Paying Agent or Indenture Trustee, or pursuant to
this Agreement of a successor Certificate Registrar, or the consent
to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee or Certificate Registrar of its obligations under the
Indenture or this Agreement, as applicable.
SECTION 4.2. Action by the Certificateholders with Respect to Certain
Matters. Trustee shall not have the power, except upon the direction of the
Certificateholders, to: (a) remove Manager under the Management Agreement, (b)
appoint a successor Manager, (c) remove Servicer under the Pooling and
Servicing Agreement or (d) except as expressly provided in the Basic
Documents, sell the Trust Estate after the termination of the Indenture.
Trustee shall take the actions referred to in the preceding sentence only upon
written instructions signed by the Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to Trust without the unanimous prior approval of all
Certificateholders and the delivery to Trustee by each such Certificateholder
of a certificate certifying that such Certificateholder reasonably believes
that Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. The
10
<PAGE>
Certificateholders shall not direct Trustee to take or refrain from taking any
action if such action or inaction would be contrary to any obligation of Trust
or Trustee under this Agreement or any of the Basic Documents or would be
contrary to Section 2.3, nor shall Trustee be obligated to follow any such
direction, if given.
SECTION 4.5. Majority Control. Except as expressly provided herein,
any action that may be taken by the Certificateholders under this Agreement
may be taken by Holders of Trust Certificates evidencing not less than a
majority of the Certificate Balance. Except as expressly provided herein, any
written notice of the Certificateholders delivered pursuant to this Agreement
shall be effective if signed by Holders of Trust Certificates evidencing not
less than a majority of the Certificate Balance at the time of the delivery of
such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.1. Establishment of Trust Account. Trustee, for the benefit
of the Certificateholders, shall establish and maintain in the name of Trust
an Eligible Deposit Account (the "Certificate Distribution Account"), bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders.
Trust shall possess all right, title and interest in all funds on
deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof. Except as otherwise expressly provided herein, the
Certificate Distribution Account shall be under the sole dominion and control
of Trustee for the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Account, Trustee (or
Depositor on behalf of Trustee, if the Certificate Distribution Account is not
then held by Trustee or an affiliate thereof) shall, within 10 Business Days
(or such longer period, not to exceed 30 calendar days, as to which the Rating
Agency Condition shall be satisfied), establish a new Certificate Distribution
Account as an Eligible Account and shall transfer any cash and/or any
investments to such new Certificate Distribution Account.
SECTION 5.2. Applications of Trust Funds. (a) On each Payment Date,
Trustee will distribute to Certificateholders, on a pro rata basis, amounts
deposited in the Certificate Distribution Account pursuant to Sections 6.3(b)
and 6.3(c) of the Pooling and Servicing Agreement.
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(b) On each Payment Date, Trustee shall send to each
Certificateholder the statement provided to Trustee by Servicer pursuant to
Section 4.8 of the Pooling and Servicing Agreement.
(c) In the event that any withholding tax is imposed on Trust's
payment (or allocations of income) to a Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section. Trustee is hereby authorized and directed to
retain from amounts otherwise distributable to the Certificateholders
sufficient funds for the payment of any tax that is legally owed by Trust (but
such authorization shall not prevent Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding
tax imposed with respect to a Certificateholder shall be treated as cash
distributed to such Certificateholder at the time it is withheld by Trust. If
there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-U.S. Certificateholder), Trustee
may, in its sole discretion, withhold such amounts in accordance with this
paragraph (c). In the event that a Certificateholder wishes to apply for a
refund of any such withholding tax, Trustee shall reasonably cooperate with
such Certificateholder in making such claim so long as such Certificateholder
agrees to reimburse Trustee for any out-of-pocket expenses incurred.
SECTION 5.3. Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Payment Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of
such Holder at a bank or other entity having appropriate facilities therefor,
if such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five Business Days prior to such
Payment Date and such Holder's Trust Certificates aggregate not less than
$1,000,000, or, if not, by check mailed to such Certificateholder at the
address of such Holder appearing in the Certificate Register.
SECTION 5.4. No Segregation of Moneys; No Interest. Subject to
Sections 5.1 and 5.2, moneys received by Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Pooling
and Servicing Agreement and may be deposited under such general conditions as
may be prescribed by law, and Trustee shall not be liable for any interest
thereon.
SECTION 5.5. Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Trustee shall: (a)
maintain (or cause to be maintained) the books of Trust on a calendar year basis
on the accrual method of accounting, (b) deliver to each Certificateholder, as
may
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be required by the Code and applicable Treasury Regulations, such information
as may be required (including Schedule K-1) to enable each Certificateholder
to prepare its Federal, state and local income tax returns, (c) file such tax
returns relating to Trust (including a partnership information return on
Internal Revenue Service Form 1065 or its successor), and make such elections
as may from time to time be required or appropriate under any applicable state
or Federal statute or rule or regulation thereunder so as to maintain Trust's
characterization as a partnership for Federal income tax purposes, (d) cause
such tax returns to be signed in the manner required by law and (e) collect or
cause to be collected any withholding tax as described in and in accordance
with Section 5.2(c) with respect to income or distributions to
Certificateholders. Trustee shall elect under Section 1278 of the Code to
include in income currently any market discount that accrues with respect to
the Trust Estate and shall elect under Section 171 of the Code to amortize any
bond premium with respect to the Trust Estate. Trustee shall not make the
election provided under Section 754 of the Code.
SECTION 5.6. Signature on Returns; Tax Matters Partner. (a) Trustee
shall sign on behalf of Trust the tax returns of Trust, unless applicable law
requires a Certificateholder to sign such documents, in which case such
documents shall be signed by Depositor.
(b) Depositor shall be designated the "tax matters partner" of Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
ARTICLE VI
Authority and Duties of Trustee
SECTION 6.1. General Authority. Trustee is authorized and directed to
execute and deliver the Basic Documents to which 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 Trust is to be a party, in each case in such
form as Depositor shall approve as evidenced conclusively by Trustee's
execution thereof, and, on behalf of Trust, to direct Indenture Trustee to
authenticate and deliver Notes in the aggregate principal amount specified in
a letter of instruction from Depositor to Trustee. In addition to the
foregoing, Trustee is authorized, but shall not be obligated, to take all
actions required of Trust pursuant to the Basic Documents. Trustee is further
authorized from time to time to take such action as Manager recommends with
respect to the Basic Documents.
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SECTION 6.2. General Duties. It shall be the duty of Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
this Agreement and the Basic Documents to which Trust is a party and to
administer Trust in the interest of the Certificateholders, subject to the
Basic Documents and in accordance with this Agreement. Notwithstanding the
foregoing, Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Basic Documents to the extent Manager
has agreed in the Management Agreement to perform any act or to discharge any
duty of Trustee hereunder or under any Basic Document, and Trustee shall not
be held liable for the default or failure of Manager to carry out its
obligations under the Management Agreement.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV and
in accordance with the Basic Documents, the Certificateholders may by written
instruction direct Trustee in the management of Trust. Such direction may be
exercised at any time by written instruction of the Certificateholders
pursuant to Article IV.
(b) Trustee shall not be required to take any action hereunder or
under any Basic Document if 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 Trustee or is contrary to the terms hereof or of any
Basic Document or is otherwise contrary to law.
(c) Whenever Trustee is unable to decide between alternative courses
of action permitted or required by this Agreement or any Basic Document,
Trustee shall promptly give notice (in such form as shall be appropriate under
the circumstances) to the Certificateholders requesting instruction as to the
course of action to be adopted, and to the extent Trustee acts in good faith
in accordance with any written instruction of the Certificateholders received,
Trustee shall not be liable on account of such action to any Person. If
Trustee shall not have received appropriate instruction within 10 days of such
notice (or within such shorter period of time as reasonably may be specified
in such notice or may be necessary under the circumstances) it may, but shall
be under no duty to, take or refrain from taking such action, not inconsistent
with this Agreement or the Basic Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.
(d) In the event that Trustee is unsure as to the application of any
provision of this Agreement or any Basic Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by Trustee or is silent or is incomplete as to the course of
action that Trustee is required to take with respect to a particular set of
facts, Trustee may give notice (in such form as shall be appropriate under the
circumstances)
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to the Certificateholders requesting instruction and, to the extent that
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, Trustee shall not be liable, on account of such action
or inaction, to any Person. If Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action
or inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions. 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
Trustee is a party, except as expressly provided by this Agreement or in any
document or written instruction received by Trustee pursuant to Section 6.3;
and no implied duties or obligations shall be read into this Agreement or any
Basic Document against Trustee. Trustee shall have no responsibility for
filing any financing or continuation statement in any public office at any
time or to otherwise perfect or maintain the perfection of any security
interest or Lien granted to it hereunder or to prepare or file any Securities
and Exchange Commission filing for Trust or to record this Agreement or any
Basic Document. 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, Trustee that are not related to the ownership or the administration
of the Trust Estate.
SECTION 6.5. No Action Except Under Specified Documents or
Instructions. 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 Trustee pursuant
to this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to Trustee pursuant to
Section 6.3.
SECTION 6.6. Restrictions. Trustee shall not take any action: (a)
that is inconsistent with the purposes of Trust set forth in Section 2.3 or
(b) that, to the actual knowledge of Trustee, would result in Trust's becoming
taxable as a corporation for Federal income tax purposes. The
Certificateholders shall not direct Trustee to take action that would violate
this Section.
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ARTICLE VII
Concerning Trustee
SECTION 7.1. Acceptance of Trusts and Duties. 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. 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. Trustee shall
not be answerable or accountable hereunder or under any Basic Document under
any circumstances, except: (i) for its own willful misconduct or negligence or
(ii) in the case of the inaccuracy of any representation or warranty contained
in Section 7.3 expressly made by Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) Trustee shall not be liable for any error of judgment
made in good faith by a responsible officer of Trustee unless it is
proved than Trustee was negligent in ascertaining the pertinent
facts;
(b) Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the
instructions of Manager, Servicer or any Certificateholder;
(c) no provision of this Agreement or any Basic Document
shall require 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 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 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) Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due
execution hereof by 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, other than the certificate of authentication on the
Trust Certificates, and Trustee shall in no event assume or incur any
liability, duty or obligation to any Noteholder or to any
Certificateholder, other than is expressly provided for herein and in
the Basic Documents;
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(f) Trustee shall not be liable for the default or
misconduct of Manager, Transferor, Indenture Trustee or Servicer
under any of the Basic Documents or otherwise and Trustee shall have
no obligation or liability to perform the obligations of Trust under
this Agreement or the Basic Documents that are required to be
performed by Manager under the Management Agreement, Indenture
Trustee under the Indenture or Servicer under the Pooling and
Servicing Agreement; and
(g) Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or
in relation to this Agreement or any Basic Document, at the request,
order or direction of any of the Certificateholders unless such
Certificateholders have offered to Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that
may be incurred by Trustee therein or thereby. The right of Trustee
to perform any discretionary act enumerated in this Agreement or in
any Basic Document shall not be construed as a duty, and Trustee
shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
SECTION 7.2. Furnishing of Documents. Trustee shall furnish to the
Certificateholders promptly upon receipt of a written request therefor, and at
the expense of the Certificateholders, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and any other
instruments furnished to Trustee under the Basic Documents.
SECTION 7.3. Representations and Warranties. Trustee hereby
represents and warrants to Depositor, for the benefit of the Certificateholders,
that:
(a) it is a [banking corporation] duly organized and validly
existing in good standing under the laws of the State of Delaware,
with the 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) the consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of
time) a default under, the certificate of
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incorporation or by-laws of Trustee, or any indenture, agreement or
other instrument to which Trustee is a party or by which it is bound;
or violate any Federal or Delaware law governing the banking or trust
powers of Trustee; or, to the best of Trustee's knowledge, violate
any order, rule or regulation applicable to Trustee of any court or
of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over Trustee
or its properties.
SECTION 7.4. Reliance; Advice of Counsel. (a) 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. Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any party as
conclusive evidence that such resolution has been duly adopted by such body
and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein,
Trustee may for all purposes hereof rely on a certificate, signed by the
president, any vice president, the treasurer or other authorized officers of
the relevant party as to such fact or matter, and such certificate shall
constitute full protection to Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Basic Documents, Trustee: (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and Trustee
shall not be liable for the conduct or misconduct of such agents or attorneys
if such agents or attorneys shall have been selected by 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.
Trustee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such Persons and which opinion or advice states
that such action is not contrary to this Agreement or any Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created [Name of Trustee]
acts solely as Trustee hereunder and not in its individual capacity and all
Persons having any claim against Trustee by reason of the transactions
contemplated by this Agreement or any Basic Document shall look only to the
Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Trustee Not Liable for Trust Certificates or The Trust
Estate. The recitals contained herein and in the Certificates (other than the
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signature and counter-signature of Trustee on the Trust Certificates) shall be
taken as the statements of Depositor, and Trustee assumes no responsibility
for the correctness thereof. Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any Basic Document or of the
Trust Certificates (other than the signature and countersignature, if any, of
Trustee on the Trust Certificates) or the Notes, or of any of the Trust Estate
or related documents. Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any of the Trust Estate, or the perfection and priority of any security
interest created by any of the Trust Estate in any of the 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 Certificateholders under this Agreement or the Noteholders
under the Indenture, including: (a) the existence, condition and ownership of
any Equipment, (b) the existence and enforceability of any insurance thereon,
(c) the existence and contents of any Lease on any computer or other record
thereof, (d) the validity of the assignment of any of the Trust Estate to
Trust or of any intervening assignment, (e) the completeness of any Lease, (f)
the performance or enforcement of any Lease, and (g) the compliance by
Depositor or 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 Manager, Indenture Trustee or Servicer or any
subservicer taken in the name of Trustee.
SECTION 7.7. Trustee May Not Own Notes. Trustee shall not, in its
individual capacity, but may in a fiduciary capacity, become the owner of
Notes or otherwise extend credit to Issuer. Trustee may otherwise deal with
Depositor, Manager, Indenture Trustee and Servicer with the same rights as it
would have if it were not Trustee.
ARTICLE VIII
Compensation of Trustee
SECTION 8.1. Trustee's Fees and Expenses. Trustee shall receive as
compensation for its services hereunder such fees as have been separately
agreed upon before the date hereof between Depositor and Trustee, and Trustee
shall be entitled to be reimbursed by Depositor for its other reasonable
expenses hereunder, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as Trustee
may employ in connection with the exercise and performance of its rights and
its duties hereunder.
SECTION 8.2. Indemnification. Depositor shall be liable as primary
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obligor for, and shall indemnify Trustee and its successors, assigns, agents
and servants (collectively, the "Indemnified Parties") from and against any
and all liabilities, obligations, losses, damages, taxes, claims, actions and
suits, and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses"), which may at any time be imposed on, incurred by
or asserted against Trustee or any Indemnified Party in any way relating to or
arising out of this Agreement, the Basic Documents, the Trust Estate, the
administration of the Trust Estate or the action or inaction of Trustee
hereunder, except only that Depositor shall not be liable for or required to
indemnify an Indemnified Party from and against Expenses arising or resulting
from: (a) its own willful misconduct or negligence or (b) with respect to
Trustee, the inaccuracy of any representation or warranty contained in Section
7.3 expressly made by Trustee. The indemnities contained in this Section shall
survive the resignation or termination of Trustee or the termination of this
Agreement. In any event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section, Trustee's choice of legal counsel
shall be subject to the approval of Depositor, which approval shall not be
unreasonably withheld.
SECTION 8.3. Payments to Trustee. Any amounts paid to Trustee
pursuant to this Article VIII shall be deemed not to be a part of the Trust
Estate immediately after such payment. Trustee shall also be entitled to
interest on all advances at a rate equal to: (a) the rate publicly announced
by [Name of Trustee], as its prime rate from time to time, plus (b) [3.5]%.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement
(other than Article VIII) and Trust shall terminate and be of no further force
or effect upon the final distribution by Trustee of all moneys or other
property or proceeds of the Trust Estate in accordance with the Indenture, the
Pooling and Servicing Agreement and Article V. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder, shall not: (x)
operate to terminate this Agreement or Trust, (y) entitle such
Certificateholder'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 Trust or Trust Estate or (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither Depositor nor any
Certificateholder shall be entitled to revoke or terminate Trust.
(c) Notice of any termination of Trust, specifying the Payment Date
upon
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which the Certificateholders shall surrender their Trust Certificates to
Paying Agent for payment of the final distribution and cancellation, shall be
given promptly by Trustee by letter to the Certificateholders mailed within
five Business Days of receipt of notice of such termination from Servicer
given pursuant to the Indenture stating: (i) the Payment Date upon which final
payment of the Trust Certificates shall be made upon presentation and
surrender of the Trust Certificates at the office of Paying Agent therein
designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Payment Date is not applicable,
payments being made only upon presentation and surrender of the Trust
Certificates at the office of Paying Agent therein specified. Trustee shall
give such notice to the Certificate Registrar (if other than Trustee) and
Paying Agent at the time such notice is given to Certificateholders. Upon
presentation and surrender of the Trust Certificates, Paying Agent shall cause
to be distributed to Certificateholders amounts distributable on such Payment
Date pursuant to Section 5.2.
In the event that all of Certificateholders shall not surrender their
Trust Certificates for cancellation within six months after the date specified
in the above mentioned written notice, Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Trust
Certificates for cancellation and to receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in
Trust after exhaustion of such remedies shall be distributed by Trustee to
Depositor.
(d) Upon the termination of Trust, 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
(or successor section) of the Trust Statute.
ARTICLE X
Successor Trustees and Additional Trustees
SECTION 10.1. Eligibility Requirements for Trustee. Trustee shall at
all times: (a) be a corporation satisfying the provisions of Section 3807(a)
of the Trust Statute and Section 26(a)(1) of the Investment Company Act of
1940, as amended, (b) be authorized to exercise corporate trust powers, (c)
have a combined capital and surplus of at least $50,000,000 and be subject to
supervision
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or examination by Federal or state authorities, and (d) have (or have a parent
that has) a rating of at least "Baa3" by Moody's. Trustee shall not, in its
individual capacity, but may in a fiduciary capacity, purchase any of the
Notes or otherwise extend credit to Trust. If such corporation shall publish
reports of condition at least annually, pursuant to law or 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 Trustee shall cease to be
eligible in accordance with this Section, Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Trustee. Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to Manager. Upon receiving such notice of resignation, Manager
shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If at any time Trustee shall cease to be eligible in accordance with
Section 10.1 and shall fail to resign after written request therefor by
Manager, or if at any time Trustee shall be legally unable to act, or shall be
adjudged bankrupt or insolvent, or a receiver of Trustee or of its property
shall be appointed, or any public officer shall take charge or control of
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then Manager may remove Trustee. If Manager shall
remove Trustee under the authority of the preceding sentence, Manager shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the outgoing Trustee so removed
and one copy to the successor Trustee and payment of all fees owed to the
outgoing Trustee.
Any resignation or removal of Trustee and appointment of a successor
Trustee pursuant to this Section shall not become effective until acceptance
of appointment by the successor Trustee pursuant to Section 10.3 and payment
of all fees and expenses owed to the outgoing Trustee. Manager shall provide
notice of such resignation or removal of Trustee to each of the Rating
Agencies.
SECTION 10.3. Successor Trustee. Any successor Trustee appointed
pursuant to Section 10.2 shall execute, acknowledge and deliver to Manager and
to its predecessor Trustee an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the predecessor Trustee
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shall become effective and such successor 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 Trustee. The predecessor Trustee shall upon
payment of its fees and expenses deliver to the successor Trustee all
documents and statements and monies held by it under this Agreement; and
Manager and the predecessor 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 Trustee all such rights, powers,
duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Trustee pursuant to
this Section, Manager shall mail notice of such appointment to all
Certificateholders, Indenture Trustee, the Noteholders and the Rating
Agencies. If Manager shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of Manager.
SECTION 10.4. Merger or Consolidation of Trustee. Any corporation or
other entity into which 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 Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of
Trustee, shall be the successor of Trustee hereunder; provided, such
corporation shall be eligible pursuant to Section 10.1, 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; and provided
that Trustee shall mail notice of such merger or consolidation to the Rating
Agencies.
SECTION 10.5. 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 Trust or any Equipment may at the time be located, Manager and Trustee
acting jointly shall have the power and may execute and deliver all
instruments to appoint one or more Person(s) approved by Trustee to act as
co-trustee(s), jointly with Trustee, or separate trustee(s), of all or any
part of the Trust Estate, and to vest in such Person(s), in such capacity and
for the benefit of the Certificateholders, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as Manager and Trustee may
consider necessary or desirable. If Manager shall not have joined in such
appointment within 15 days after the
23
<PAGE>
receipt by it of a request so to do, Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee under this Agreement
shall be required to meet the terms of eligibility as a successor trustee
pursuant to Section 10.1 and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon Trustee shall be conferred or imposed upon and exercised
or performed by 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 Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act(s) are to be performed, Trustee shall be
incompetent or unqualified to perform such act(s), 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
Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under
this Agreement; and
(iii) Manager and 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 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
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, Trustee. Each such instrument shall be filed with Trustee and a
copy thereof given to Manager.
24
<PAGE>
Any separate trustee or co-trustee may at any time appoint 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
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Trustee shall have no obligation to determine whether a co-trustee or
separate trustee is legally required in any jurisdiction in which any part of
the Trust Estate may be located.
ARTICLE XI
Miscellaneous
SECTION 11.1. Supplements and Amendments. This Agreement may be
amended from time to time by a written amendment duly executed and delivered
by Depositor and Trustee, with prior written notice to the Rating Agencies,
without the consent of any of the Noteholders or the Certificateholders, to
cure any ambiguity, to correct or supplement any provisions in this Agreement
or for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by Depositor and
Trustee, with prior written notice to the Rating Agencies, with the written
consent of Holders of Notes evidencing not less than 66-2/3% of the Outstanding
Principal Amount of the Notes and the written consent of Holders of
Certificates evidencing not less than 66-2/3% of the Certificate Balance, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; 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 the Trust
Estate or distributions that shall be required to be made for the benefit of
the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Outstanding Principal Amount and the Certificate Balance
required to consent to any such amendment, without the consent of the holders
of all the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent (or, in
the
25
<PAGE>
case of the Rating Agencies, 10 days prior thereto), Trustee shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder, Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders,
Noteholders or Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Certificateholders provided
for in this Agreement or in any other Basic Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable requirements as Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, Trustee shall cause the filing of such amendment with the Secretary of
State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement and that all conditions precedent to the
execution and delivery of such amendment have been satisfied. Trustee may, but
shall not be obligated to, enter into any such amendment that affects
Trustee's own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2. No Legal Title to Trust Estate in Certificateholders.
The Certificateholders shall not have legal title to any part of the Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any
right, title or interest of Certificateholders in, to and under their
ownership interest in the Trust Estate shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting
or to the transfer to it of legal title to any part of the Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section
2.7, the provisions of this Agreement are solely for the benefit of Trustee,
Depositor, the Certificateholders, Manager and, to the extent expressly
provided herein, Indenture Trustee and the Noteholders, and nothing in this
Agreement (other than Section 2.7), 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 11.4. Notices. (a) Unless otherwise expressly specified or
26
<PAGE>
permitted by the terms hereof, all notices shall be in writing, personally
delivered or mailed by certified mail, postage prepaid and return receipt
requested, and shall be deemed to have been duly given upon receipt: (i) if to
Trustee, addressed to the Corporate Trust Office with a copy to [
], Attention: [ ]; (ii) if to Depositor, addressed
to Provident Lease Receivables Corporation, 1023 West Eighth Street, Cincinnati,
Ohio 45203, Attention: [Corporate Secretary]; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder
receives such notice.
SECTION 11.5. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 11.6. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, Depositor
and its successors, Trustee and its successors and each Certificateholder and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by an
Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.8. Covenants of Depositor. If: (a) the Certificate Balance
shall be reduced by the Cumulative Loss Amount and (b) any litigation with
claims in excess of $1,000,000 to which Depositor is a party that shall be
reasonably likely to result in a material judgment against Depositor that
Depositor will not be able to satisfy shall be commenced by a
Certificateholder during the period beginning nine months following the
commencement of such litigation and continuing until such litigation is
dismissed or otherwise terminated (and, if such litigation has resulted in a
final judgment against Depositor, such judgment has been satisfied), Depositor
shall not pay any dividend to ILC, or make any distribution on or in respect
of its capital stock to ILC, or repay the principal
27
<PAGE>
amount of any indebtedness of Depositor held by ILC, unless: (i) after giving
effect to such payment, distribution or repayment, Depositor's liquid assets
shall not be less than the amount of actual damages claimed in such litigation
or (ii) the Rating Agency Condition shall have been satisfied with respect to
any such payment, distribution or repayment. Depositor will not at any time
institute against Trust any bankruptcy proceedings under any United States
Federal or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, the Trust Agreement or any of
the Basic Documents.
SECTION 11.9. No Petition. Trustee, on behalf of Trust, by entering
into this Agreement, each Certificateholder, by accepting a Trust Certificate,
and 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 Depositor or Trust, or join in any institution against Depositor or
Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Trust Certificates, the Notes, this Agreement or any of the Basic Documents.
SECTION 11.10. No Recourse. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Certificateholder's Trust
Certificates represent beneficial interests in Trust only and do not represent
interests in or obligations of Transferor, Servicer, Manager, Trustee,
Indenture Trustee or any Affiliate thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Trust Certificates or the Basic Documents.
SECTION 11.11. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.13. Manager. Manager is authorized to execute on behalf of
Trust all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of Trust to prepare, file or deliver pursuant
to this Agreement and the Basic Documents. Upon written request, Trustee shall
execute and deliver to Manager a power of attorney appointing Manager its
agent and attorney-in-fact to execute all such documents, reports, filings,
instruments, certificates and opinions.
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized as of the day and year first above written.
[NAME OF TRUSTEE]
as Trustee
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
PROVIDENT LEASE RECEIVABLES
CORPORATION
as Depositor
By:
--------------------------------
Name:
-------------------------
Title:
------------------------
29
<PAGE>
EXHIBIT A
to Trust Agreement
FORM OF TRUST CERTIFICATES
--------------------------
REGISTERED $__________(1)
NUMBER R-___ CUSIP NO. _________
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW).
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
____% LEASE-BACKED CERTIFICATE
evidencing a fractional undivided interest in Trust, as defined below, the
property of which includes a pool of leases and leased equipment transferred
to Trust by Provident Lease Receivables Corporation.
(This Trust Certificate does not represent an interest in or obligation of
Provident Lease Receivables Corporation, Information Leasing Corporation, or
any of their respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT [Name of Holder] is the registered owner of a
_____________ DOLLAR ($___________) nonassessable, fully-paid, fractional
undivided interest in the Provident Equipment Lease Trust 1998-A ("Trust")
formed by Provident Lease Receivables Corporation, a Delaware corporation
("Transferor").
Trust was created pursuant to a Trust Agreement dated as of September 1, 1998
(the "Trust Agreement"), between Transferor and [Name of Trustee], as trustee
("Trustee"). To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Indenture dated as of
September 1, 1998, among Trust and [Name of Indenture Trustee] as Indenture
Trustee. This Certificate is one of the duly authorized Certificates
designated as "____% Lease- Backed Certificates" (herein called the "Trust
Certificates"). Issued under the Indenture are Notes designated as "___% Class
A-1 Lease-Backed Notes", "____% Class A-2 Lease-Backed Notes" and "____% Class
B Lease-Backed
- --------
(1)Denominations of $1,000,000 and integral multiples of $1,000,000 in excess
thereof.
<PAGE>
Notes" (collectively, the "Notes"). This Trust Certificate is issued under and
is subject to the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the holder of this Trust Certificate by virtue of the
acceptance hereof assents and by which holder is bound.
Each holder of this Trust Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders as described in the Pooling and
Servicing Agreement and the Indenture.
It is the intent of Transferor, Servicer, Certificateholders and the
Certificate Owners that, for purposes of Federal income, state and local
income and franchise and any other income taxes measured in whole or in part
by income, Trust will be treated as a partnership, the assets of which are the
assets held by Trust, and the Certificateholders will be treated as partners
in that partnership. Depositor and the other Certificateholders by acceptance
of a Trust Certificate (and the Certificate Owners by acceptance of a
beneficial interest in a Trust Certificate), agree to treat, and to take no
action inconsistent with the treatment of, the Trust Certificates for such tax
purposes as partnership interests in Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or a beneficial interest in a Trust Certificate,
acknowledges and agrees that Transferor is authorized to determine whether or
not to cause Trust to make the election contemplated in Internal Revenue
Service Notice 95-14 to elect that Trust be classified as a partnership for
Federal income tax purposes in the event that the ability to make such
election becomes available to Trust, and acknowledges and agrees that
Transferor is authorized to direct Trustee to take such acts or actions as may
be required to effectuate such election. Each Certificateholder or Certificate
Owner, by its acceptance of a Trust Certificate or a beneficial interest in a
Trust Certificate, agrees to take such actions (and direct Trustee to take
such acts or actions) as Transferor or Trustee shall reasonably request in
order to effectuate such election.
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or, in the case of a Certificate Owner, a beneficial
interest in a Trust Certificate, covenants and agrees that such
Certificateholder or Certificate Owner, as the case may be, will not at any
time institute against Transferor or Trust, or join in any institution against
Transferor or Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Notes, the Trust Agreement
or any of the Basic Documents.
2
<PAGE>
The Trust Certificates do not represent an obligation of, or an
interest in, Transferor, Servicer, Information Leasing Corporation, Trustee or
any affiliates of any of them and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contemplated herein
or in the Trust
Agreement or the Basic Documents.
The Certificates may not be acquired by or for the account of: (i) an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to
the provisions of Title 1 of ERISA, (ii) a plan described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended, or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (a "Benefit Plan"). By accepting and holding this
Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of Trustee, by manual signature, this Trust
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or the Pooling and Servicing Agreement or be valid for any purpose.
This Trust Certificate shall be construed in accordance with
the laws of the State of Delaware, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
3
<PAGE>
IN WITNESS WHEREOF, Trustee on behalf of Trust and not in
its individual capacity has caused this Trust Certificate to be duly executed.
PROVIDENT EQUIPMENT LEASING
TRUST 1998-A
By: [NAME OF TRUSTEE]
not in its individual capacity, but
solely as Trustee
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
4
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned
Trust Agreement.
[NAME OF TRUSTEE]
as Trustee
By:
------------------------------------
Authorized Officer
OR
By: [ ]
as Authenticating Agent
By:
------------------------------------
Authorized Officer
Date: September 1, 1998
5
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
_______________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
_______________________________________________________________________________
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
____________________________________________________________________Attorney to
transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: _____________________*
Signature Guaranteed:
_____________________*
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial
bank or trust company.
6
<PAGE>
EXHIBIT B
to Trust Agreement
CERTIFICATE OF TRUST OF
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
--------------------------------------
THIS Certificate of Trust of PROVIDENT EQUIPMENT LEASE TRUST 1998-A
(the "Trust"), dated as of September 1, 1998, is being duly executed and filed
by [NAME OF TRUSTEE], a Delaware [ ], as trustee, to form a trust under the
Delaware Business Trust Act (12 Del. Code Section 3801 et seq.).
1. Name. The name of the trust formed hereby is PROVIDENT
EQUIPMENT LEASE TRUST 1998-A.
2. Delaware Trustee. The name and business address of the trustee of
Trust in the State of Delaware is [ ], Wilmington, Delaware
[ ], Attention: Trust Department.
3. Effective Date. This Certificate of Trust will be effective
September 1, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of Trust,
has executed this Certificate of Trust as of the date first above written.
[NAME OF TRUSTEE],
not in its individual capacity, but solely as
trustee under a Trust Agreement dated as of
September 1, 1998
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
<PAGE>
EXHIBIT C
to Trust Agreement
CERTIFICATE DEPOSITORY AGREEMENT
--------------------------------
EXHIBIT 10.2
================================================================================
FORM OF
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
POOLING AND SERVICING AGREEMENT
among
PROVIDENT EQUIPMENT LEASE TRUST 1998-A,
as Issuer,
and
PROVIDENT LEASE RECEIVABLES CORPORATION,
as Transferor,
and
INFORMATION LEASING CORPORATION,
as Servicer
Dated as of September 1, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
Definitions
SECTION 1.1. Definitions.....................................................................1
SECTION 1.2. Other Definitional Provisions...................................................1
ARTICLE II
Conveyance of Leases
SECTION 2.1. Conveyance of Leases............................................................2
ARTICLE III
The Leases
SECTION 3.1. Representations and Warranties of Transferor....................................3
SECTION 3.2. Custody of Lease Files..........................................................3
SECTION 3.3. Duties of Servicer as Custodian.................................................4
SECTION 3.4. Instructions; Authority To Act..................................................5
SECTION 3.5. Custodian's Indemnification.....................................................5
SECTION 3.6. Effective Period and Termination................................................5
ARTICLE IV
Administration and Servicing of Leases
SECTION 4.1. Duties of Servicer..............................................................6
SECTION 4.2. Collection and Allocation of Lease Payments.....................................6
SECTION 4.3. Administration of Leases........................................................7
SECTION 4.4. Lease Amendments and Modifications..............................................8
SECTION 4.5. Non-Performing Leases...........................................................9
SECTION 4.6. Costs of Servicing; Servicing Fee; Administrative Expenses.....................10
SECTION 4.7. Other Transactions.............................................................11
SECTION 4.8. Monthly Status Reports; Servicing Reports......................................11
SECTION 4.9. Annual Independent Public Accountant's Report..................................12
SECTION 4.10. Access to Certain Documentation and Information Regarding Leases...............13
SECTION 4.11. Appointment of Subservicer.....................................................13
ARTICLE V
Servicer Advances and Transferor's Obligations
SECTION 5.1. Servicer Advances..............................................................14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 5.2. Transferor Repurchases; Other Payments.........................................14
SECTION 5.3. Payment Advices................................................................16
SECTION 5.4. Substitution...................................................................16
SECTION 5.5. Procedure for Substitution.....................................................17
SECTION 5.6. Objection and Repurchase.......................................................18
SECTION 5.7. Transferor's and Servicer's Subsequent Obligations.............................18
ARTICLE VI
Distributions: Trust Accounts;
Statements to Certificateholders and Noteholders
SECTION 6.1. Establishment of Trust Accounts................................................19
SECTION 6.2. Collections....................................................................21
SECTION 6.3. Distributions..................................................................22
SECTION 6.4. The Reserve Account and the Residual Account...................................25
SECTION 6.5. Payaheads
SECTION 6.6. Net Deposits...................................................................27
ARTICLE VII
Transferor
SECTION 7.1. Representations of Transferor..................................................27
SECTION 7.2. Corporate Existence............................................................28
SECTION 7.3. Liability of Transferor; Indemnities...........................................29
SECTION 7.4. Merger or Consolidation of, or Assumption of the Obligations of,
Transferor...............................................................30
SECTION 7.5. Limitation on Liability of Transferor and Others...............................31
SECTION 7.6. Transferor May Own Certificates or Notes.......................................31
ARTICLE VIII
Servicer
SECTION 8.1. Representations of Servicer....................................................31
SECTION 8.2. Indemnities of Servicer........................................................33
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer......35
SECTION 8.4. Limitation on Liability of Servicer and Others.................................35
SECTION 8.5. ILC Not to Resign as Servicer..................................................36
SECTION 8.6. Servicer to Act as Manager.....................................................36
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE IX
Default
SECTION 9.1. Servicer Events of Default.....................................................36
SECTION 9.2. Termination....................................................................38
SECTION 9.3. Trustee to Act; Appointment of Successor.......................................39
SECTION 9.4. Servicer to Cooperate..........................................................40
SECTION 9.5. Notification to Noteholders and Certificateholders.............................40
SECTION 9.6. Waiver of Past Defaults........................................................40
ARTICLE X
Termination
SECTION 10.1. Optional Purchase of All Leases................................................41
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment......................................................................41
SECTION 11.2. Security for Obligations.......................................................42
SECTION 11.3. Further Assurances; Financing Statements.......................................43
SECTION 11.5. Notices........................................................................43
SECTION 11.6. Assignment.....................................................................44
SECTION 11.7. Limitations on Rights of Others................................................44
SECTION 11.8. Severability...................................................................44
SECTION 11.9. Separate Counterparts..........................................................44
SECTION 11.10. Headings.......................................................................44
SECTION 11.11. Governing Law..................................................................44
SECTION 11.12. Assignment to Indenture Trustee................................................44
SECTION 11.13. Nonpetition Covenants..........................................................45
SECTION 11.14. Limitation of Liability of Trustee and Indenture Trustee.......................45
</TABLE>
iii
<PAGE>
SCHEDULES AND EXHIBITS
SCHEDULE 1 Leases
EXHIBIT A Form of Noteholder's Statement Pursuant to Section 5.10(a)
EXHIBIT B Form of Certificateholder's Statement Pursuant to Section 5.10(a)
EXHIBIT C Form of Servicer's Certificate
EXHIBIT D Form of Assignment
iv
<PAGE>
POOLING AND SERVICING AGREEMENT dated as of September 1, 1998 among
PROVIDENT EQUIPMENT LEASE TRUST 1998-A, a Delaware business trust (the
"Issuer"), PROVIDENT LEASE RECEIVABLES CORPORATION, a Delaware corporation
(the "Transferor"), and INFORMATION LEASING CORPORATION, an Ohio corporation
(the "Servicer").
RECITALS
WHEREAS, Transferor desires to transfer all right, title and interest
of Transferor in, to and under the Leases purchased by Transferor pursuant to
the Purchase Agreement, dated as of the date hereof, between Information
Leasing Corporation ("ILC") and Transferor.
WHEREAS, Issuer is willing to accept the transfer of such Leases from
Transferor; and
WHEREAS, ILC is willing to service such Leases.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to such terms in Appendix X to
the Indenture, dated as of the date hereof, between Provident Equipment Lease
Trust 1998-A and [Name of Indenture Trustee], as amended, supplemented or
otherwise modified from time to time (the "Indenture").
SECTION 1.2. Other Definitional Provisions. The other interpretive
provisions specified in Appendix X to the Indenture shall apply to this
Agreement.
<PAGE>
ARTICLE II
Conveyance of Leases
SECTION 2.1. Conveyance of Leases. In consideration of Issuer's
delivery to or upon the order of Transferor on the Closing Date of the net
proceeds from the sale of the Notes and the Certificates and the other amounts
to be distributed from time to time to Transferor in accordance with this
Agreement, Transferor does hereby transfer, assign, set over and otherwise
convey to Issuer, without recourse (subject to the obligations herein), all of
its right, title and interest in, to and under the following (collectively,
the "Transferred Assets"):
(a) the Leases listed in Schedule 1, as such Schedule 1 is
amended or supplemented from time to time, including all instruments,
documents, books and other records relating thereto,
(b) all Lease Payments, Casualty Payments, Termination
Payments and other amounts not collected with respect thereto on or
prior to the Cut-Off Date (other than any prepayments of rent required
pursuant to the terms of any Lease at or before the commencement of
the Lease) and all Payaheads relating to payments on the Leases due
or becoming due after the Cut-Off Date, and all Substitute Leases and
all Lease Payments, Casualty Payments, Termination Payments and other
amounts not collected prior to the effective date of their respective
substitution (other than any prepayments of rent required by the
terms of any Substitute Lease at or before the commencement of the
Substitute Lease) and all Payaheads relating to payments on the
Substitute Leases due or becoming due after the effective date of
their respective Substitution,
(c) all rights of Transferor to or under any guarantees of
or collateral (including all rights of Transferor in any security
deposits) for the Lessee's obligations under any Lease and all UCC
financing statements relating to such collateral,
(d) all interests of Transferor in the Equipment at any time
subject to any Lease, including any security interest of Transferor
in the Equipment,
(e) any proceeds with respect to the Leases from claims on
insurance policies covering the Equipment or Lessees,
(f) all moneys from time to time on deposit in any of the
Trust Accounts, including all investments and income from the
investment of such moneys,
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(g) all rights of Transferor under the Purchase Agreement,
including the right of Transferor to cause ILC to repurchase Leases
from Transferor under the circumstances described therein, and
(h) all proceeds of the foregoing, whether by voluntary or
involuntary conversion thereof.
ARTICLE III
The Leases
SECTION 3.1. Representations and Warranties of Transferor. Transferor
makes the following representations and warranties as to the Leases on which
Issuer is deemed to have relied in acquiring the Leases. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Closing Date, in the case of the Initial Leases, and as of the
applicable effective date of any substitution, in the case of the Subsequent
Leases, but shall survive the transfer and assignment of the Leases to Issuer
and the pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Title. No Lease has been transferred, assigned or pledged by
Transferor to any Person other than Issuer. Immediately prior to the transfer
and assignment herein contemplated, Transferor had good title to each Lease,
free and clear of all Liens and, immediately upon the transfer thereof, Issuer
shall have good title to each Lease, free and clear of all Liens; and the
transfer and assignment of the Leases to Issuer has been perfected under the
UCC.
(b) All Filings Made. All filings (including UCC filings) necessary
in any jurisdiction to give Issuer a first priority perfected ownership
interest in the Leases, and to give Indenture Trustee a first priority
perfected security interest therein, have been made.
SECTION 3.2. Custody of Lease Files. To assure uniform quality in
servicing the Leases and to reduce administrative costs, Issuer hereby
revocably appoints Servicer, and Servicer hereby accepts such appointment, to
act for the benefit of Issuer and Indenture Trustee as custodian of the
following documents or instruments (collectively, the "Lease Files"), which
are hereby constructively delivered to Indenture Trustee, as pledgee of Issuer
(or, in the case of the Subsequent Leases, will as of the applicable effective
date of any substitution be constructively delivered to Indenture Trustee, as
pledgee of Issuer) with respect to each Lease:
(a) the original fully executed copy of the Lease;
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(b) a record or facsimile of the original credit application
fully executed by the Lessee;
(c) the original certificate of title or file stamped copy
of the UCC financing statement or such other documents that Servicer
shall keep on file, in accordance with its customary procedures,
evidencing the security interest of ILC in the Equipment; and
(d) any and all other documents that Servicer or Transferor
shall keep on file, in accordance with its customary procedures,
relating to a Lease, a Lessee or any of the Equipment.
SECTION 3.3. Duties of Servicer as Custodian.
(a) Safekeeping. Servicer shall hold the Lease Files for the benefit
of Issuer and Indenture Trustee and maintain such accurate and complete
accounts, records and computer systems pertaining to each Lease File as shall
enable Issuer to comply with this Agreement. In performing its duties as
custodian, Servicer shall act in accordance with the Servicing Standard set
forth in Section 4.1. Servicer shall conduct, or cause to be conducted,
periodic audits of the Lease Files and the related accounts, records and
computer systems, in such a manner as shall enable Issuer or Indenture Trustee
to verify the accuracy of Servicer's record keeping. Servicer shall promptly
report to Issuer and Indenture Trustee any failure on its part to hold the
Lease Files and maintain its accounts, records and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by Issuer, Trustee or Indenture Trustee of the Lease Files.
(b) Maintenance of and Access to Records. Servicer shall maintain
each Lease File at its office in Cincinnati, Ohio, or at such other office as
shall be specified to Issuer and Indenture Trustee by written notice not later
than 60 days after any change in location. Servicer shall make available for
inspection by Transferor, Issuer and Indenture Trustee or their respective
duly authorized representatives, attorneys or auditors a list of locations of
the Lease Files and the related accounts, records and computer systems
maintained by Servicer at such times during normal business hours as
Transferor, Issuer or Indenture Trustee shall instruct. Servicer on behalf of
Noteholders shall mark conspicuously each original contractual document with a
Lessee, and its master data processing records evidencing each Lease with a
legend, acceptable to Indenture Trustee, evidencing that all right, title and
interest in the Leases has been granted to Indenture Trustee as provided in
the Indenture.
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SECTION 3.4. Instructions; Authority To Act. Servicer shall be deemed
to have received proper instructions with respect to the Lease Files upon its
receipt of written instructions signed by a Trust Officer of Indenture
Trustee.
SECTION 3.5. Custodian's Indemnification. Servicer as custodian shall
indemnify the Trust, Trustee and Indenture Trustee (and each of their
officers, directors, employees and agents) for any and all liabilities,
obligations, losses, compensatory damages, payments, costs or expenses of any
kind whatsoever that may be imposed on, incurred by or asserted against the
Trust, Trustee or Indenture Trustee (or any of their officers, directors and
agents) as the result of any improper act or omission in any way relating to
the maintenance and custody by Servicer as custodian of the Lease Files;
provided, that Servicer shall not be liable: (a) to Trustee for any portion of
any such amount resulting from the willful misfeasance, bad faith or
negligence of Trustee and (b) to Indenture Trustee for any portion of any such
amount resulting from the willful misfeasance, bad faith or negligence of
Indenture Trustee.
SECTION 3.6. Effective Period and Termination. Servicer's appointment
as custodian shall become effective as of the Cut-Off Date and shall continue
in full force and effect until terminated pursuant to this Section. If any
Servicer shall resign as Servicer in accordance with this Agreement or if all
of the rights and obligations of any Servicer shall have been terminated under
Section 9.1, the appointment of such Servicer as custodian may be terminated
by (a) Indenture Trustee, (b) Noteholders of Notes evidencing not less than
25% of the Outstanding Principal Amount of the Notes, (d) Trustee or (e)
Certificateholders evidencing not less than 25% of the Certificate Balance, in
the same manner as Indenture Trustee or such Holders may terminate the rights
and obligations of Servicer under Section 9.1. As soon as practicable after
any termination of such appointment, Servicer shall deliver the Lease Files to
Indenture Trustee or Indenture Trustee's agent at such place(s) as Indenture
Trustee may reasonably designate.
ARTICLE IV
Administration and Servicing of Leases
SECTION 4.1. Duties of Servicer. Servicer, for the benefit of Issuer,
and (to the extent provided herein and in the Indenture) Indenture Trustee,
shall manage, service, administer and make collections on the Leases from time
to time, all in accordance with (i) customary and prudent servicing procedures
for leases of a similar type, (ii) all applicable laws, rules and regulations,
and (iii) without limitation as to its obligations under the preceding clauses
(i) and (ii), no less a standard of care than that which it applies to leases
and equipment of a
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similar type it services for its own account (collectively, the "Servicing
Standard"). Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Lessees on such Leases, investigating
delinquencies, sending payment coupons to Lessees, reporting tax information
to Lessees, accounting for collections and furnishing monthly and annual
statements to Trustee and Indenture Trustee with respect to distributions.
Subject to any contrary terms of this Agreement, Servicer shall follow its
customary standards, policies and procedures in performing its duties as
Servicer. Without limiting the generality of the foregoing, Servicer is
authorized and empowered to execute and deliver, on behalf of itself, Issuer,
Trustee, Indenture Trustee, Certificateholders, Noteholders or any of them,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to
such Lease or the Equipment securing such Lease. If Servicer shall commence a
legal proceeding to enforce a Lease, Issuer shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Lease to
Servicer. If in any enforcement suit or legal proceeding it shall be held that
Servicer may not enforce a Lease on the ground that it shall not be a real
party in interest or a holder entitled to enforce such Lease, Trustee shall,
at Servicer's expense and direction, take steps to enforce such Lease,
including bringing suit in its name or the name of Issuer, Indenture Trustee,
Certificateholders or Noteholders. Trustee or Indenture Trustee shall, upon
the written request of Servicer, furnish Servicer with any powers of attorney
and other documents reasonably necessary or appropriate to enable Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 4.2. Collection and Allocation of Lease Payments. Servicer
shall provide the Lessees with appropriate invoices and such other notices as
may be required to ensure that all Lease Payments, Casualty Payments and
Termination Payments on or in respect of each Lease are remitted by the
Lessees to the address specified by Servicer. Servicer shall deposit such
payments to the Collection Account on the Required Deposit Date. Any other
amount received by Servicer from time to time from Transferor, any Lessee or
any other Person which is or is intended to be subject to the Lien of the
Indenture shall be held in trust by Servicer, as agent for Indenture Trustee
and promptly turned over to Indenture Trustee or deposited into the Collection
Account for application in accordance with the provisions of this Agreement.
SECTION 4.3. Administration of Leases. (a) Servicer shall do, and
shall have full power and authority to do, subject only to the specific
requirements and prohibitions of this Agreement, any and all things in
connection with the servicing and administration of the Leases and the
interests in the Equipment which are consistent with the Servicing Standard,
but in performing its duties hereunder, Servicer will act on behalf and for
the benefit of Issuer (and to the extent provided herein) Indenture Trustee,
subject at all times to the provisions of the
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Indenture, without regard to any relationship which Servicer or any Affiliate
of Servicer may otherwise have with a Lessee. Servicer shall at all times act
in accordance with the provisions of each Lease, and shall observe and comply
with all requirements of law applicable to it. Except as permitted by the
terms of any Lease following a default thereunder, Servicer shall not take any
action which would result in the interference with Lessee's right to quiet
enjoyment of the Equipment subject to the Lease during the term thereof.
Servicer shall exercise with respect to each item of Equipment all rights and
remedies it, Issuer or Indenture Trustee shall have against any vendor of the
Equipment, subject to the provisions of any Lease, and shall deposit all
amounts realized from such actions into the Collection Account.
(b) Without limiting the generality of the foregoing, Servicer agrees
to, in accordance with the Servicing Standard, (i) invoice each Lessee monthly
(except quarterly, semi-annually or annually in the case of Leases which
provide for quarterly, semi-annual or annual Lease Payments, respectively) for
all Lease Payments required to be paid by such Lessee, (ii) maintain with
respect to each Lease and each item of Equipment, and with respect to each
payment by each Lessee and compliance by each Lessee with the provisions of
each Lease, complete and accurate records in the form and to the extent as
required by the Servicing Standard (which records shall be at least as
complete and accurate as those maintained by Servicer as of the date of this
Agreement), and (iii) from time to time execute, deliver and file (or cause
the same to be done), and Servicer is hereby authorized and empowered to
execute, deliver, and file on behalf of Issuer and Indenture Trustee, any and
all tax returns with respect to sales, use, personal property and other taxes
(other than corporate income tax returns) and any and all reports or licensing
applications required to be filed in any jurisdiction with respect to any
Lease or any item of Equipment and any and all required Financing Statements
and assignments of Financing Statements and such additional Financing
Statements and continuation statements with respect thereto as may from time
to time be necessary because of Lease substitutions, equipment replacements in
accordance with the provisions of any Lease or otherwise so that the ownership
interest of Issuer granted hereunder and the security interest contemplated by
the Indenture in favor of Indenture Trustee in each of the Leases, at all
times will be perfected by such filings with the appropriate UCC filing
offices. Transferor and Servicer agree to file Financing Statements on Form
UCC-1 (or any similar form) to perfect the ownership interest of Issuer
granted hereunder and the security interest of Indenture Trustee in the Leases
and the Lease Payments, and to the extent provided herein, the Equipment.
(c) Servicer will maintain, or cause to be maintained, with respect
to the Leases and the Equipment casualty and liability insurance in amounts at
least as great as those described in Section 3.4(f) of the Purchase Agreement.
Each such casualty and liability policy (i) if maintained by Servicer, shall
name Issuer and
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Indenture Trustee as loss payees or additional insureds and (ii) if maintained
by Lessee, shall name Servicer or Indenture Trustee as loss payee and
additional insured; provided that Servicer shall cause all such policies to
name Indenture Trustee and Issuer as loss payees and additional insureds if
(A) ILC is no longer Servicer, (B) an Event of Default shall have occurred and
be continuing or (C) a Servicer Event of Default shall have occurred and be
continuing.
(d) On or prior to the Closing Date, Servicer will file the Financing
Statements and assignments of Financing Statements in accordance with the
Filing Requirements and thereafter will file such additional Financing
Statements and continuation statements and assignments with respect to the
Leases as may be necessary because of equipment replacements in accordance
with the provisions of any Lease, because of Lease substitutions pursuant to
Section 5.4, or otherwise so that (i) the ownership interest contemplated by
this Agreement in favor of Issuer and the security interest contemplated by
the Indenture in favor of Indenture Trustee in each of the Leases will be
perfected by such filings with the appropriate UCC filing offices and (ii) the
security interest contemplated by the Indenture in favor of Indenture Trustee
in Equipment subject to Leases having a Discounted Present Value of at least
75% of the aggregate Discounted Present Value of the Leases as of June 1 and
December 1 of each year following the Closing Date and Equipment relating to
not less than 75% of the Booked Residual Value of such Equipment as of June 1
and December 1 of each year following the Closing Date will be perfected by
such filings with the appropriate UCC filing offices.
(e) Servicer shall pay the Third Party Amounts, if any, owing to any
Person in a timely fashion.
SECTION 4.4. Lease Amendments and Modifications. In performing its
obligations hereunder, Servicer may, acting in the name of Issuer and without
the necessity of obtaining the prior consent of Issuer, Indenture Trustee,
Trustee or any Noteholder or Certificateholder, enter into and grant
modifications, waivers and amendments to the terms of any Lease except for
modifications, waivers or amendments that (a) are inconsistent with the
Servicing Standard, (b) would reduce the amount or extend the time for payment
of any Lease Payment, Casualty Payment or Termination Payment to be made under
a Lease (other than to permit termination of a Lease which does not otherwise
provide for termination by requiring the payment, in lieu of all future Lease
Payments with respect to the Lease or Equipment subject thereto, an amount
which equals or exceeds the Lease Repurchase Amount for such Lease as of such
date) or Lessee's absolute and unconditional obligation to make payment of the
same, (c) would reduce or adversely affect Lessee's obligation to maintain,
service, insure and care for the Equipment or would permit the alteration of
any item of Equipment in any way which could adversely affect its present or
future value or (d) otherwise,
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individually or in connection with all other adjustments and modifications
made pursuant to this sentence, could adversely affect the interests of any of
Issuer, Seller, Indenture Trustee, Trustee, Noteholders or Certificateholders.
Notwithstanding the foregoing, Servicer may, without obtaining the prior
written consent of Issuer, Indenture Trustee, Trustee or any Noteholder or
Certificateholder, enter into and grant modifications, waivers or amendments
in addition to those referred to in the preceding sentence if such Lease is
repurchased in accordance with Section 5.2.
SECTION 4.5. Non-Performing Leases. (a) Upon receipt of notice from
Issuer, Indenture Trustee or Trustee or any other Person, or if Servicer
otherwise learns that any Lease is a Non-Performing Lease, Servicer will take
such action as is appropriate and as is consistent with the Servicing
Standard, including such action as may be necessary to cause, or attempt to
cause, Lessee thereunder to cure such non-performance (if the same may be
cured) or to terminate or attempt to terminate such Lease and to recover, or
attempt to recover, all damages resulting from such default.
(b) Servicer will use its best efforts to sell or lease any Equipment
upon the expiration or early termination of a Lease or that is subject to a
Non-Performing Lease in a timely manner and upon the most favorable terms and
conditions available at the time.
(c) If Servicer is required to sell or lease any item of Equipment
pursuant to the provisions of this Section 4.5 at a time when Servicer has
other similar items of equipment available to it, Servicer will not favor any
such other item in its remarketing efforts.
(d) All amounts realized by Servicer in the performance of its duties
hereunder with respect to any Lease or Equipment remaining subject to the Lien
of the Indenture (net of Servicer's actual out-of-pocket expenses reasonably
incurred in such realization) shall be held in trust by Servicer, for the
benefit of Issuer and Indenture Trustee and deposited into the Collection
Account for application in accordance with the provisions of the Indenture;
provided that, if (i) Servicer has made any Servicer Advances pursuant to
Section 5.1 with respect to any Lease which thereafter became a Non-Performing
Lease, and (ii) Servicer has not otherwise been fully reimbursed for such
Servicer Advances, Servicer shall reimburse itself for such Servicer Advances
from any amounts recovered with respect to such Non-Performing Lease before
depositing any such amounts into the Collection Account.
SECTION 4.6. Costs of Servicing; Servicing Fee; Administrative
Expenses. (a) All costs of servicing each Lease in the manner required by this
Article IV shall be borne by Servicer, but Servicer shall be entitled to retain,
out
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of any amounts actually recovered by Servicer in the performance of its
obligations under Section 4.5 with respect to any Lease or the interests in
the Equipment subject thereto, Servicer's actual out-of-pocket expenses
reasonably incurred in the course of such performance with respect to such
Lease or the interests in the Equipment. (For all purposes of this Article IV
Servicer's "out-of-pocket expenses" means only those expenses incurred to
third parties (e.g., reasonable fees of outside counsel in a collection suit)
and not salaries, operating costs, overtime wages and other such "overhead"
costs or expenses of Servicer.) In addition, Servicer shall be entitled to
receive from Issuer on each Payment Date following the Closing Date a
servicing fee (the "Servicing Fee") in the amount described in paragraph (b)
and the Supplemental Servicing Fee described in paragraph (d).
(b) The amount of the Servicing Fee which Servicer shall be entitled
to receive on each Payment Date following the Closing Date shall be determined
by multiplying one-twelfth of 0.75% times the lesser of (i) the sum of the
aggregate Outstanding Principal Amount of the Notes and the Certificate
Balance, each calculated as of the preceding Payment Date, after giving effect
to all payments made on such Payment Date, and (ii) the Discounted Present
Value of the Performing Leases calculated as of the related Determination
Date.
(c) Servicer agrees to pay, out of the Servicing Fee, the Management
Fee, all Indenture Trustee's and Trustee's fees and expenses in connection
with the Notes and the Certificates (including the expenses relating to the
preparation and delivery of reports to Noteholders and Certificateholders) and
all fees of accountants in connection with the Notes and the Certificates.
(d) Servicer shall be permitted to collect and retain any late fees,
extension fees, prepayment charges and certain non-sufficient funds charges
and other administrative fees or similar charges (the "Supplemental Servicing
Fee") allowed by applicable law with respect to the Leases.
SECTION 4.7. Other Transactions. Nothing in this Agreement shall
preclude Transferor or Servicer from entering into other leases or other
financial transactions with any Lessee or selling or discounting any such
lease with any Person.
SECTION 4.8. Monthly Status Reports; Servicing Reports. (a) Within
five Business Days following each Payment Date, Servicer will send to
Indenture Trustee (copies of which Indenture Trustee shall send to each Rating
Agency and to each Noteholder and Certificateholder as provided in Section 3.4
of the Indenture a written report, signed by one of Servicer's financial
officers, (i) identifying each Lease with respect to which any Lease Payment
was 30 or more days overdue as of the end of the immediately preceding Due
Period, the
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Discounted Present Value of such Lease as of such Payment Date, the amount
advanced by Servicer with respect to such Lease pursuant to Section 4.1 since
Servicer's previous monthly report (or, in the case of the first such report,
since the Cut-Off Date), (ii) identifying each Lease with respect to which any
Lease Payment was 60 or more days overdue as of the end of the immediately
preceding Due Period, the Discounted Present Value of such Lease as of such
Payment Date, the amount advanced by Servicer with respect to such Lease
pursuant to Section 4.1 since Servicer's previous monthly report (or, in the
case of the first such report, since the Cut-Off Date), (iii) identifying each
Lease with respect to which any Lease Payment was 90 or more days overdue as
of the end of the immediately preceding Due Period, the Discounted Present
Value of such Lease as of such Payment Date, the amount advanced by Servicer
with respect to such Lease pursuant to Section 4.1 since Servicer's previous
monthly report (or, in the case of the first such report, since the Cut-Off
Date), (iv) identifying each Lease which became a Non-Performing Lease as of
the preceding Determination Date and specifying the Discounted Present Value
of such Lease as of such Determination Date (or, in the case of the first such
report, subsequent to the Cut-Off Date) and the aggregate Discounted Present
Value of all such Non-Performing Leases, (v) indicating the aggregate amount
recovered by Servicer subsequent to the preceding Payment Date (or, in the
case of the first Payment Date, subsequent to the Cut-Off Date) and on or
prior to such Payment Date with respect to Lease Payments made on Leases
referred to in clauses (i) and (ii) and Non-Performing Lease Payments
previously made by Transferor and Servicer (and the specific amounts so
recovered with respect to any Non-Performing Lease) and (vi) indicating the
Residual Realizations, the Available Residual Amount and the Utilized Residual
Amount as of the related Determination Date. Each such report shall also
describe generally what action or actions Servicer is then taking or proposes
to take to recover from the appropriate Lessees any amounts previously paid by
Servicer to Indenture Trustee pursuant to Section 4.1.
(b) On the Business Day following the Determination Date, Servicer
shall deliver to Indenture Trustee a certificate signed by an officer of
Servicer (a "Servicing Report") stating the date and in the form of Exhibit C.
(c) The Servicing Report shall include, among other items, the total
amount of all Lease Payments, Casualty Payments, Termination Payments,
Non-Performing Lease Payments and Other Lease Payments received by Servicer
and deposited in the Collection Account prior to such Determination Date and
on or subsequent to the Determination Date preceding such Determination Date
(or, in the case of the first Determination Date, on or subsequent to the
Cut-Off Date). Such report shall indicate the amount of all Lease Payments
received by Servicer and deposited in the Collection Account which are for any
Due Period other than the Due Period for such Determination Date and shall
identify each
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Lease with respect to which a Casualty Payment, Termination Payment or
Non-Performing Lease Payment was made during such time period. Such report
shall also indicate (i) the aggregate amount paid by Servicer on or subsequent
to the most recent Determination Date with respect to Non-Performing Leases
pursuant to Section 4.1, and (ii) the aggregate amount reimbursed to Servicer
prior to the most recent Determination Date and on or subsequent to the
Determination Date preceding such Determination Date (or, in the case of the
first Determination Date, on or subsequent to the Cut-Off Date) for actual
cash payments made by Servicer with respect to Non-Performing Leases pursuant
to Section 4.1. Servicer hereby represents and warrants that such calculations
will be correct and accurate, and Servicer shall be fully responsible for, and
shall reimburse and indemnify each Indemnified Party for, any loss resulting
from such Indemnified Party's reliance on any such calculations which are not
correct.
(d) If Servicer intends to withdraw any funds from the Collection
Account in accordance with Section 6.2(b) of this Agreement after the Payment
Date relating to the Determination Date for which a Servicing Report is
submitted, Servicer shall submit with such report a certificate (i) setting
forth the amounts to be withdrawn (on an item-by-item basis), (ii) stating
that none of such amounts are all or part of any Lease Payment, Non-Performing
Lease Payment, Casualty Payment or Termination Payment, and (iii) identifying
the lease or leases to which such amounts relate.
SECTION 4.9. Annual Independent Public Accountant's Report. Servicer
shall cause a firm of independent public accountants (who may also render
other services to Servicer or to Transferor) to deliver to Indenture Trustee
and Trustee, with a copy to each Rating Agency, within 135 days following the
end of each fiscal year of Servicer, beginning with Servicer's fiscal year
ending December 31, 1999, a written statement to the effect that such firm has
(a) obtained from Servicer a copy of the monthly status report pursuant to
Section 4.8 for a single month during the previous calendar year; (b) compared
the information contained in such monthly status report and in the monthly
summaries prepared by Servicer in support of such monthly status report to the
computer printouts and accounts prepared by Servicer and supporting such
reports; and (c) selected, at random, at least twenty-five Leases included in
the Trust Estate and compared the activity in the files maintained by Servicer
for such Leases to the activity as reported for those Leases to the monthly
summaries prepared by Servicer and supporting the monthly status report, and
that, on the basis of such examination and comparison, such firm is of the
opinion that Servicer has prepared such monthly status report and summaries in
agreement with the computer printouts, accounts and individual Lease files,
except in each case for (x) such exceptions as such firm shall believe to be
immaterial and (y) such other exceptions as shall be set forth in such
statement.
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SECTION 4.10. Access to Certain Documentation and Information
Regarding Leases. Servicer shall provide to Trustee and Indenture Trustee
access to the Lease Files in such cases where Trustee or Indenture Trustee
shall be required by applicable statutes or regulations to review such
documentation. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of Servicer. Nothing in this Section shall affect the obligation of
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Lessees, and the failure of Servicer to provide access to
information as a result of such obligation shall not constitute a breach of
this Section.
SECTION 4.11. Appointment of Subservicer. Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, that the Rating Agency Condition shall have been
satisfied in connection therewith; and provided further, that Servicer shall
remain obligated and be liable to Issuer, Trustee, Indenture Trustee
Certificateholders and Noteholders for the servicing and administering of the
Leases in accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such subservicer and
to the same extent and under the same terms and conditions as if Servicer
alone were servicing and administering the Leases. The fees and expenses of
the subservicer shall be as agreed between Servicer and its subservicer from
time to time and none of Issuer, Trustee, Indenture Trustee,
Certificateholders or Noteholders shall have any responsibility therefor.
ARTICLE V
Servicer Advances and Transferor's Obligations
SECTION 5.1. Servicer Advances. On each Determination Date, Servicer
shall be required to advance and remit to Indenture Trustee, in such manner as
will ensure that Indenture Trustee will have immediately available funds on
account thereof by 11:00 a.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 Lease Payment due during the prior Due Period but unpaid on or
prior to the Record Date for such Due Period with respect to any Lease;
provided that Servicer shall not be required to make any Servicer Advance if
it determines that such Servicer Advance may not be recoverable by it from
recoveries on the applicable Leases. In consideration of each Servicer
Advance, Servicer will be entitled to retain any late payment fees and
proceeds from the sale or re-lease of the Equipment recovered from Lessee with
respect to any Lease Payment covered by a Servicer Advance. In addition,
Servicer will be reimbursed for Servicer Advances from funds in the Collection
Account in accordance with Section 6.3
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on the second Payment Date following the Determination Date on which Servicer
made such Servicer Advance.
SECTION 5.2. Transferor Repurchases; Other Payments. (a) If (i) any
of the representations or warranties made by Transferor in Section 3.1 or 7.1
of this Agreement or ILC's representations and warranties made pursuant to
Section 3.4 of the Purchase Agreement with respect to any of the Leases or the
Equipment subject thereto proves at any time to have been inaccurate in any
material respect as of the Closing Date or related transfer date, as the case
may be, (ii) any adjustment or modification is made to any Lease pursuant to
the second sentence of Section 4.4 or (iii) any Lease shall be terminated in
whole or in part by a Lessee, or any amounts due with respect to any Lease
shall be reduced or impaired, as a result of any action or inaction by
Transferor or any claim by any Lessee against Transferor and, in the case of
clauses (i) and (iii), the event or condition causing such inaccuracy,
termination, reduction, impairment or claim shall not have been cured or
corrected within 30 days after the earlier of the date on which Transferor is
given notice thereof by Issuer or Indenture Trustee or the date on which
Transferor otherwise first has notice thereof, then Transferor will repurchase
such Lease and the Equipment subject thereto by paying to Indenture Trustee,
not later than the third Business Day after the Determination Date (A) next
following the expiration of such 30-day period with respect to the events
referenced in clause (i) or (iii), and (B) next following the date of such
event with respect to events referenced in clause (ii), an amount equal to the
Lease Repurchase Amount, and simultaneously with such repurchase, Transferor
shall reimburse Servicer for all Servicer Advances made by Servicer pursuant
to Section 5.1 with respect to such Lease; provided, that the obligation of
Transferor to repurchase any Lease solely as a result of a breach of ILC's
representations and warranties pursuant to Section 3.4 of the Purchase
Agreement is subject to the receipt by Transferor of the Lease Repurchase
Amount from ILC; provided further, that if Transferor is required to
repurchase any Lease under clause (i) or (ii), Transferor may instead
substitute a Substitute Lease if such substitution is permitted under Section
5.4. Without limiting the generality of the foregoing, it is agreed and
understood that for purposes of this Section 5.2, any inaccuracy in any
representation or warranty with respect to (i) the priority of the Lien of the
Indenture with respect to any Lease or (ii) the amount (if less than
represented) of the Lease Payments, Casualty Payments or Termination Payment
under any Lease shall be deemed to be material.
(b) By the Closing Date, Transferor agrees to obtain and provide to
Indenture Trustee UCC searches against it and ILC from the central and county
filing offices in Ohio confirming the absence of any UCC filings against
either Transferor or ILC with respect to the Leases (including the right to
receive all payments due or to become due thereunder) and the Equipment, other
than those naming Transferor as the purchaser of the Leases or Indenture
Trustee as secured
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party. If any searches delivered pursuant to this Section 5.2(b) disclose UCC
filings (which are not in the process of being released pursuant to releases
delivered on the Closing Date) against ILC or Transferor with respect to
Leases of Equipment the Discounted Present Value of which (i) is greater than
2% but less than 5% of all the Leases, then Transferor shall cause searches to
be made in additional states within 30 days following such disclosure so that
the Discounted Present Value of Leases of Equipment in states where searches
have been performed exceeds 75% of the aggregate Discounted Present Value of
all Leases and 75% of the Booked Residual Value of Equipment or (ii) is equal
to or greater than 5% of all the Leases then Transferor shall cause searches
to be made in additional states within 30 days following such disclosure so
that the Discounted Present Value of Leases of Equipment in states where such
searches have been performed equals 100% of the aggregate Discounted Present
Value of all Leases. Without limiting the provisions of Section 5.2(a) or this
Section 5.2(b), if Transferor fails to provide any such searches required by
the preceding sentences of this Section 5.2(b) within the required time period
or any search reveals the existence of any conflicting Liens (which are not
removed within 30 days of receipt of such search), Transferor shall be
required to repurchase not later than the third Business Day after the
Determination Date following the expiration of the time period during which
such search was to be obtained or such Lien released, as the case may be, any
Lease or Equipment in any such state for which such searches are not provided
or with respect to which conflicting Liens are found to exist at the Lease
Repurchase Amount for such Lease.
(c) Transferor's obligations under this Section 5.2 are the full
recourse obligations of Transferor and shall in no way be limited or
discharged by the application of any funds constituting part of the Trust
Estate.
(d) With respect to all Leases repurchased by Transferor pursuant to
this Agreement, Issuer shall transfer, assign, set over and otherwise convey
to Transferor, without recourse, representation or warranty, all of Issuer's
right, title and interest in, to and under such Leases, and all security and
documents relating thereto.
SECTION 5.3. Payment Advices. Each payment by Transferor or Servicer
to Indenture Trustee pursuant to any of the provisions of this Agreement shall
be accompanied by written advice containing sufficient information to identify
the Lease and/or Equipment to which such payment relates, the Section of this
Agreement pursuant to which such payment is made, and the proper application
pursuant to the provisions of the Indenture of the amounts being paid.
SECTION 5.4. Substitution. (a) Subject to the satisfaction of the
requirements set forth in paragraph (b) and in lieu of repurchasing any Lease if
required pursuant to clause (i) or (ii) of Section 5.2, Transferor will have the
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right (but not the obligation) at any time to substitute one or more Eligible
Leases and the Equipment subject thereto (each, a "Substitute Lease") for such
Lease (for purposes of this Section 5.4, a "Predecessor Lease") and the
Equipment subject thereto if:
(i) such Predecessor Lease became a Warranty Lease or was
adjusted pursuant to the second sentence of Section 4.4 during the
immediately preceding Due Period; and
(ii) the aggregate Discounted Present Value of the
Predecessor Leases shall not exceed 10% of the Discounted Present
Value of the Leases on the Cut-off Date.
(b) Each transfer of Substitute Leases will be subject to the
satisfaction of the following conditions precedent:
(i) after giving effect to such substitutions, the aggregate
Booked Residual Value of such Leases must be not less than 90% of the
Booked Residual Value of the Leases substituted since the Closing
Date;
(ii) either the final payment on such Substitute Lease must
be on or prior to [final scheduled maturity month/year] or, if the
final payment on such Lease is due subsequent to [final scheduled
maturity month/year], only scheduled payments due on or prior to such
date may be included in the Discounted Present Value of such Lease
for the purpose of making any calculation under this Agreement and
the other Basic Documents;
(iii) after giving effect to such substitutions, the
aggregate amount of Lease Payments through the term of the Leases
(including the Substitute Leases) will not be more than 5% less than
the aggregate scheduled Lease Payments of the Leases prior to such
substitution; and
(iv) after giving effect to such substitutions, the
Discounted Present Value of the Performing Leases must not be less
than the Discounted Present Value of the Performing Leases prior to
such substitution.
(c) Each substitution pursuant to this Section 5.4 shall include the
right to receive all amounts not collected under each Substitute Lease prior
to being substituted and any security deposits paid by the related Lessee to
Transferor in connection therewith (other than any prepayments of rent
required pursuant to the terms thereof at or before the commencement of such
Lease), all Payaheads relating to payments on such Substitute Leases due or
becoming due after the
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effective date of such substitution and all other related assets referred to
in Section 2.1.
SECTION 5.5. Procedure for Substitution. (a) By 11:00 a.m. on the
third Business Day following each Determination Date, Transferor shall give
written notice to Servicer of any substitution of Substitute Leases for
Predecessor Leases. By 11:00 a.m. on the fourth Business Day following each
Payment Date, Transferor shall deliver to Servicer and Indenture Trustee and,
to the extent not included in the Monthly Servicer Report, Indenture Trustee
shall promptly deliver to each Rating Agency (i) a supplement to Schedule 1
setting forth the information shown thereon for each such Substitute Lease,
(ii) an Officer's Certificate (A) certifying that each such Substitute Lease
is an Eligible Lease, (B) specifying each Predecessor Lease for which a
substitution has been made and the amount of each periodic Lease Payment and
the Booked Residual Value under each such Predecessor Lease and the amount of
each periodic Lease Payment and the Booked Residual Value under each
Substitute Lease being transferred thereby and (C) that all conditions
precedent to such substitution have been satisfied and (iii) such additional
information concerning such Substitute Leases or Predecessor Leases as may be
needed for Servicer to prepare its monthly reports pursuant to Section 4.8 and
to otherwise carry out its duties as Servicer hereunder.
(b) Subject to the provisions of Section 5.6, the delivery of any
Officer's Certificate and supplement to Schedule 1 pursuant to Section 5.4(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Due Period (i) Transferor assigned to Issuer pursuant to
Section 2.1 all of Transferor's right title and interest in and to the
Substitute Leases identified in such supplement and the related rights
described in Section 2.1, (ii) Transferor transferred to Issuer, all of
Transferor's right, title and interest in and to the Equipment subject to such
Substitute Leases (to the extent of Transferor's interest in such Equipment,
including Transferor's security interest in any Equipment which is not owned
by Transferor), and (iii) Issuer assigned and transferred to Transferor,
without representation or warranty, all of Issuer's right, title and interest
in and to the Predecessor Leases identified in such Officer's Certificate and
the Equipment subject thereto (to the extent of Issuer's interest in such
Equipment, including Issuer's security interest in any Equipment which is not
owned by Issuer). Transferor shall promptly deliver to Indenture Trustee (or a
custodian on its behalf) the original executed counterpart of each Substitute
Lease assigned to Issuer in accordance with Section 5.4 and Issuer shall
promptly request Indenture Trustee to deliver to Transferor the original
executed counterpart of each Predecessor Lease for which substitution has been
made pursuant to Section 5.4.
SECTION 5.6. Objection and Repurchase. If any holder of the Notes or
the Certificates objects to any substitution of Leases within ten days of
receipt of
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Servicer's monthly report providing notice thereof pursuant to Section 4.8, on
the grounds either that any Substitute Lease is not an Eligible Lease within
the meaning of the definition thereof or that such substitution is otherwise
not permitted under the provisions of Section 5.4, Transferor shall be
entitled to present such additional information as it deems appropriate in an
effort to demonstrate that such Lease is an Eligible Lease and that such
substitution is permitted under the provisions of Section 5.4. Following such
presentation, the substitution shall remain effective if each Person
originally objecting to the substitution withdraws his objection. If the
conditions specified in the preceding sentence are not satisfied, or if at any
time it is established that any lease was not, at the time of substitution, an
Eligible Lease, then Transferor shall be required to repurchase such Lease in
accordance with the provisions of Section 5.2.
SECTION 5.7. Transferor's and Servicer's Subsequent Obligations. Upon
any substitution of Leases in accordance with the provisions of this Article
V, Transferor's and Servicer's obligations hereunder with respect to the
related Predecessor Lease shall cease, but Transferor and Servicer shall each
thereafter have the same obligations with respect to the Substitute Lease
substituted as it has with respect to all other Leases subject to the terms
hereof.
ARTICLE VI
Distributions: Trust Accounts;
Statements to Certificateholders and Noteholders
SECTION 6.1. Establishment of Trust Accounts. (a)(i) Servicer, for
the benefit of Noteholders and Certificateholders, shall establish
and maintain in the name of Indenture Trustee an Eligible Account
(the "Collection Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of
Noteholders and Certificateholders.
(ii) Servicer, for the benefit of Noteholders, shall
establish and maintain in the name of Indenture Trustee an Eligible
Account (the "Note Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of Noteholders.
(iii) Servicer, for the benefit of Noteholders and
Certificateholders, shall establish and maintain in the name of
Indenture Trustee an Eligible Account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of Noteholders.
(iv) Servicer, for the benefit of Noteholders and
Certificateholders, shall establish and maintain in the name of
Indenture Trustee an Eligible
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Account (the "Residual Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
Noteholders and Certificateholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account, the Reserve Account and the Residual Account (collectively, the
"Trust Accounts") shall be invested or reinvested by Indenture Trustee in
Eligible Investments selected by and as directed in writing by Servicer (which
written direction may be in the form of standing instructions); provided, it
is understood and agreed that Indenture Trustee shall not be liable for the
selection of, or any loss arising from such investment in, Eligible
Investments. All such Eligible Investments (other than Investment Earnings
attributable to security deposits of Lessees on deposit in the Collection
Account ("Security Deposit Earnings")) shall be held by Indenture Trustee for
the benefit of Noteholders and Certificateholders; provided, that on each
Transfer Date, all Investment Earnings on funds on deposit therein shall be
deposited into the Collection Account and shall be deemed to constitute a
portion of the Available Funds for the related Due Period and all Security
Deposit Earnings shall be paid to ILC. Funds on deposit in the Trust Accounts
shall be invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Transfer Date preceding the
following Payment Date. Funds deposited in a Trust Account on the Transfer
Date that precedes a Payment Date upon the maturity of any Eligible
Investments are not required to be invested overnight.
No investment of any amount held in any Trust Account shall mature
later than the Business Day immediately preceding the Payment Date which is
scheduled to occur immediately following the date of investment. All income or
other gains (net of losses) from the investment of moneys deposited in the
Trust Accounts shall be deposited by Indenture Trustee in such account
immediately upon receipt.
(c)(i) Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts and
in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust
Estate. The Trust Accounts shall be under the sole dominion and
control of Indenture Trustee for the benefit of Noteholders and
Certificateholders. If, at any time, any of the Trust Accounts ceases
to be an Eligible Account, Indenture Trustee (or Servicer on its
behalf) shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent)
establish a new Trust Account as an Eligible Account and shall
transfer any cash and/or any investments held in the no-longer
Eligible Account to such new Trust Account.
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(ii) With respect to the Trust Account Property, Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in
deposit accounts shall be held solely in Eligible Accounts,
subject to the last sentence of Section 6.1(c)(i); and each
such Eligible Account shall be subject to the exclusive
custody and control of Indenture Trustee, and Indenture
Trustee shall have sole signature authority with respect
thereto;
(B) any Trust Account Property that constitutes a
Certificated Security shall be delivered to Indenture
Trustee in accordance with paragraph (a) of the definition
of "Delivery" and shall be held, pending maturity or
disposition, solely by Indenture Trustee;
(C) any such Trust Account Property that
constitutes an Uncertificated Security (including any
investments in money market mutual funds, but excluding any
Federal Book Entry Security) shall be delivered to Indenture
Trustee in accordance with paragraph (a) of the definition
of "Delivery" and shall be maintained, pending maturity or
disposition, through continued registration of Indenture
Trustee's (or its nominee's) ownership of such security; and
(D) with respect to any Trust Account Property that
constitutes a Federal Book Entry Security, Indenture Trustee
shall maintain and obtain Control over such property.
(iii) Servicer shall have the power, revocable by Indenture
Trustee or by Trustee, with the consent of Indenture Trustee, to
instruct Indenture Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting Servicer or Trustee to
carry out its respective duties hereunder or permitting Indenture
Trustee to carry out its duties under the Indenture.
(d) All Trust Accounts will initially be established at Indenture
Trustee.
SECTION 6.2. Collections. (a) On or before the Closing Date, Servicer
shall designate an address for the receipt directly from Lessees of all Lease
Payments, Casualty Payments and Termination Payments on or in respect of each
Lease. Servicer shall, on each Required Deposit Date, deposit any payment in
the Collection Account. All Lease Payments, Casualty Payments, Termination
Payments and other payments relating to a Lease received at such designated
address and so deposited in the Collection Account shall constitute part of
the Trust Estate. Any Other Lease Payments from time to time received at such
designated address or
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otherwise received by Servicer or deposited in the Collection Account shall
not constitute part of Trust Estate.
(b) Indenture Trustee shall from time to time, in accordance with
instructions of Servicer withdraw from the Collection Account and pay as
instructed by Servicer any amounts in the Collection Account which Servicer
advises Indenture Trustee are Other Lease Payments or otherwise not part of
the Trust Estate. Prior to such payment, Indenture Trustee shall have rights
to and an interest in such amounts to the extent (but only to the extent) it
is determined that such amounts actually constitute Transaction Payment
Amounts.
(c) Not later than the Required Deposit Date, Servicer shall deposit
the following funds, as received, into the Collection Account:
(i) Lease Payments (net of any Third Party Amounts);
(ii) Residual Realizations up to the Residual Amount Cap;
(iii) recoveries from Non-Performing Leases (net of amounts
retained by Servicer in accordance with the Pooling and Servicing
Agreement);
(iv) proceeds from repurchases by Transferor or ILC of
Leases if Transferor or ILC has not substituted Substitute Leases for
such Leases;
(v) proceeds from investment of funds in the Trust Accounts
(other than Security Deposit Earnings);
(vi) Casualty Payments;
(vii) Servicer Advances;
(viii) Termination Payments; and
(ix) payments from Servicer to effect a redemption pursuant
to Section 2.1(b) of the Indenture.
SECTION 6.3. Distributions. (a) On each Determination Date, Servicer
shall calculate all amounts required to determine the amounts to be deposited in
the Note Distribution Account, the Certificate Distribution Account, the Reserve
Account and the Residual Account.
(b) On each Payment Date other than a Payment Date referred to in
paragraph (c), Servicer shall instruct Indenture Trustee (based on the
information contained in the Servicer's Report related to such Payment Date
delivered pursuant
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to Section 4.8(b)) to make the following deposits and distributions for
receipt by Servicer or deposit into the applicable Trust Account or
Certificate Distribution Account, as applicable, by 10:00 a.m. (New York
time), to the extent of the Available Funds on deposit in the Collection
Account, in the following order of priority:
(i) to Servicer, the Servicing Fee and all unpaid Servicing
Fees owed to such Servicer from prior Due Periods;
(ii) to Servicer, to reimburse unreimbursed Servicer
Advances in respect of a prior Payment Date;
(iii) to the Note Distribution Account, concurrently: (A) to
make Interest Payments on the Class A-1 Notes; and (B) to make
Interest Payments on the Class A-2 Notes;
(iv) to the Note Distribution Account, to make Interest
Payments on the Class B Notes;
(v) to the Certificate Distribution Account, to make
Interest Payments on the Certificates;
(vi) to the Note Distribution Account, to make the Class A
Principal Payment (i) to the Class A-1 Noteholders only, until the
Outstanding Principal Amount of the Class A-1 Notes is reduced to
zero, then (ii) to the Class A-2 Noteholders only, until the
Outstanding Principal Amount of the Class A-2 Notes is reduced to
zero;
(vii) to the Note Distribution Account, to pay the Class B
Principal Payment to the Class B Noteholders;
(viii) to the Certificate Distribution Account, to pay the
Certificate Principal Payment to Certificateholders;
(ix) to the Note Distribution Account, to pay the Additional
Principal, if any, as an additional reduction of principal, first to
the Class A Noteholders receiving the Class A Principal Payment as
provided in clause (vi) until the Outstanding Principal Amount of
the Class A Notes has been reduced to zero, second to the Class B
Noteholders as an additional reduction of principal until the
Outstanding Principal Amount of the Class B Notes has been reduced to
zero and, thereafter to the Certificate Distribution Account, until
the Certificate Balance been reduced to zero;
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(x) to make a deposit into the Reserve Account in an amount
equal to the excess of the Required Reserve Amount over the Available
Reserve Amount;
(xi) during such time as a Residual Event has occurred and
is continuing, to make a deposit into the Residual Account in an
amount equal to the balance of the remaining Residual Realizations on
deposit in the Collection Account and included in Available Funds up
to the Residual Amount Cap after giving effect to the allocations in
clauses (i) through (x) above on such Payment Date; and
(xii) to Transferor, the balance, if any.
Notwithstanding the foregoing, Indenture Trustee shall retain in the
Collection Account an amount equal to all Payaheads (except as contemplated by
Section 6.6), and all Casualty Payments and Termination Payments received by
Indenture Trustee after the Determination Date for such Payment Date and shall
not distribute any such amounts on such Payment Date. If at any time any
amount or portion thereof previously distributed pursuant to this Section
5.5(a) shall have been recovered, or shall be subject to recovery, in any
proceeding with respect to Issuer or otherwise, then for purposes of
determining future distributions pursuant to this Section 5.5(a) such amount
or portion thereof shall be deemed to have not been previously so distributed.
(c) On any Payment Date on and after the occurrence and continuation
of an Event of Default and acceleration of the Notes, Servicer shall instruct
Indenture Trustee (based on the information contained in the Servicer's Report
related to such Payment Date delivered pursuant to Section 4.8) to make the
following deposits and distributions for receipt by Servicer or other
applicable Persons or deposit into the Trust Accounts or Certificate
Distribution Account, as applicable, by 10:00 a.m. (New York time), to the
extent of the Available Funds on deposit in the Collection Account, in the
following order of priority:
(i) to the appropriate Person, for the payment of all costs
and expenses of collection incurred by Indenture Trustee and the
Noteholders (including the reasonable fees and expenses of any
counsel to Indenture Trustee and the Noteholders);
(ii) to Servicer, if the person then acting as Servicer
under the Pooling and Servicing Agreement is not ILC or an Affiliate
of ILC, for the payment of all Servicer's Fees then due to such
person;
(iii) to the Note Distribution Account or Certificate
Distribution Account, as applicable; first, pro-rata to the payment
of all accrued and
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unpaid interest on the Outstanding Class A-1 Principal Amount,
Outstanding Class A-2 Principal Amount, respectively, to the date of
payment thereof, including (to the extent permitted by applicable
law) interest on any overdue installment of interest and principal
from the maturity of such installment to the date of payment thereof
at the rate per annum equal to the Class A-1 Note Interest Rate,
Class A-2 Note Interest Rate, respectively, second, to the payment of
all accrued and unpaid interest on the Outstanding Class B Principal
Amount to the date of payment thereof, including (to the extent
permitted by applicable law) interest on any overdue installment of
interest and principal from the maturity of such installment to the
date of payment thereof at the rate per annum equal to the Class B
Note Interest Rate, third, to the payment of all accrued and unpaid
interest on the Certificate Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of
such installment to the date of payment thereof at the rate per annum
equal to the Certificate Rate, fourth, to the payment of the
Outstanding Class A-1 Principal Amount, fifth, to the payment of the
Outstanding Class A-2 Principal Amount, sixth, to the payment of the
Outstanding Class B Principal Amount and seventh, to the payment of
the Certificate Balance; provided, that the Noteholders may allocate
such payments for interest, principal and premium at their own
discretion, except that no such allocation shall affect the
allocation of such amounts or future payments received by any other
Noteholder;
(iv) to Indenture Trustee, for the payment of amounts then
due Indenture Trustee hereunder and the Trustee under the Trust
Agreement;
(v) to Servicer, if the person then acting as Servicer is
ILC or an Affiliate of ILC, to the payment of all Servicer's Fees
then due to such Person; and
(vi) to the payment of the remainder, if any, to Transferor
or any other Person legally entitled thereto.
(d) The total amount of Residual Realizations which are required to
be deposited into the Collection Account on any day, is an amount up to the
Available Residual Amount on such date.
SECTION 6.4. The Reserve Account and the Residual Account. (a) On
each Payment Date, Servicer shall instruct Indenture Trustee to transfer (i)
to the Reserve Account from the Collection Account such amounts as shall be
required by Section 6.3(b)(x) and (ii) to the Residual Account from the
Collection Account such amounts as shall be required by Section 6.3(b)(xi).
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(b) If by 12:00 noon, New York City time, on the third Business Day
preceding any Payment Date, the amount of collected funds on deposit in the
Collection Account available for distribution under Section 6.3 is
insufficient to permit on such Payment Date all distributions required by
Sections 6.3(b)(i) through 6.3(b)(ix) or Section 6.3(c)(iii) (such payments,
the "Required Payments" and such shortfall, an "Available Funds Shortfall"),
then, to the extent of the Available Reserve Amount on deposit in the Reserve
Account, Servicer shall instruct Indenture Trustee to transfer, not later than
the end of such Business Day, from the Reserve Account to the Collection
Account such amount as shall be necessary to make on such Payment Date all
Required Payments. In addition, in the event that the Available Funds
Shortfall is greater than the Available Reserve Amount, then, Indenture
Trustee shall transfer, not later than the end of such Business Day, from the
Residual Account to the Collection Account, an amount equal to the lesser of
(i) the remaining Available Funds Shortfall and (ii) the amount, if any, on
deposit in the Residual Account and available therefore.
(c) If after giving effect to all the disbursements required to be
made on any Payment Date, the Available Reserve Amount exceeds the Required
Reserve Amount, Servicer shall instruct Indenture Trustee to transfer, not
later than the end of business on such Payment Date, an amount equal to such
excess to Transferor.
(d) If there are funds on deposit in the Residual Account, Servicer
shall instruct Indenture Trustee to transfer, not later than the close of
Business on such Payment Date after making required withdrawals, if any, on
such Payment Date pursuant to Section 6.3(b) or (c), an amount equal to the
amount on deposit in the Residual Account to the Reserve Account to the extent
that the amount on deposit in the Reserve Account is less than the Required
Reserve Amount and thereafter, to Transferor. Funds on deposit in the Residual
Account shall only be available for allocation pursuant to Section 6.3(b) or
(c) during such time as a Residual Event has occurred and is continuing.
(e) Upon termination of this Indenture, any balance remaining in the
Reserve Account and the Residual Account, after all obligations to Noteholders
and Certificateholders have been fully satisfied, shall be paid to reimburse
Indenture Trustee for any amounts owing to it arising from the performance of
its obligations under the Indenture and, then, to Transferor.
SECTION 6.5. Payaheads. Payaheads received with respect to any Lease
shall be retained in the Collection Account until: (i) with respect to each
Lease for which the payments made by or on behalf of the Lessee for the
related Due Period are less than the scheduled payment for the related Due
Period, the amount of prior Payaheads, if any, made with respect to such Lease
which, when added to the amount of such payments, is equal to the amount of
such scheduled payment, shall be treated as a part of such scheduled payment;
and (ii) with respect to each Lease for which
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prepayments insufficient to prepay the Lease in full have been made by or on
behalf of the Lessee for the related Due Period, the amount of prior
Payaheads, if any, made with respect to such Lease which, when added to the
amount of such prepayments, is equal to an amount sufficient to prepay such
Lease in full, shall be treated as part of the Termination Payment for such
Lease; and (iii) the amount of all Payaheads, if any, made with respect to any
Lease repurchased by Transferor shall be returned to Transferor after such
repurchase.
SECTION 6.6. Net Deposits. As an administrative convenience, unless
Servicer is required to remit collections daily, Servicer will be permitted to
make the deposit of collections net of distributions, if any, to be made to
Servicer with respect to any Due Period. Servicer, however, will account to
Trustee, Indenture Trustee, Noteholders and Certificateholders as if all
deposits, distributions and transfers were made individually.
ARTICLE VII
Transferor
SECTION 7.1. Representations of Transferor. Transferor makes the
following representations on which Issuer is deemed to have relied in
acquiring the Leases. The representations speak as of the execution and
delivery of this Agreement and shall survive the transfer of the Leases to
Issuer and the pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Transferor is duly
organized and validly existing as a corporation in good standing
under the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently
conducted (except where the failure to have such licenses and permits
would not have a material adverse effect on the Trust Estate or the
business or condition (financial or otherwise) of Transferor or
impair the enforceability of any Lease), and had at all relevant
times, and has, the corporate power, authority and legal right to
acquire, own and transfer the Leases.
(b) Due Qualification. Transferor is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business
shall require such qualifications (except where the failure to have
such licenses and permits would not have a material adverse effect on
the Trust Estate or the business or condition
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(financial or otherwise) of Transferor or impair the enforceability of
any Lease).
(c) Power and Authority. Transferor has the power and
authority to execute and deliver this Agreement and to carry out its
terms; Transferor has full power and authority to transfer and assign
the property to be transferred and assigned to and deposited with
Issuer and has duly authorized such transfer and assignment to Issuer
by all necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by Transferor
by all necessary corporate action.
(d) Binding Obligation. This Agreement and each other Basic
Document to which Transferor is a party constitute a legal, valid and
binding obligation of Transferor enforceable in accordance with their
terms.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which
Transferor is a party and the fulfillment of the terms hereof and
thereof do not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or
by-laws of Transferor, or any indenture, agreement or other
instrument to which Transferor is a party or by which it shall be
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 or other instrument (other than the Liens contemplated by
Basic Documents); or violate any law or any order, rule or regulation
applicable to Transferor of any court or of any Federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Transferor or its
properties.
(f) No Proceedings. There are no proceedings or
investigations pending or, to Transferor's best knowledge (after due
inquiry), threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over Transferor or its properties: (i) asserting the
invalidity of this Agreement, the Indenture or any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any
of the transactions contemplated by this Agreement, the Indenture or
any of the other Basic Documents, (iii) seeking any determination or
ruling that involve the possibility of materially and adversely
affecting the performance by Transferor of its obligations under, or
the validity or enforceability of, this Agreement, the Indenture, any
of the other Basic Documents, the Notes or the Certificates or (iv)
that might adversely affect the Federal or state income tax
attributes of the Notes or the Certificates.
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SECTION 7.2. Corporate Existence. (a) During the term of this
Agreement, Transferor will keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, Transferor shall observe the
applicable legal requirements for the recognition of Transferor as a legal
entity separate and apart from ILC and its other Affiliates, including as
follows:
(i) Transferor shall maintain corporate records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement and
similar arrangements relating to other securitizations, Transferor
shall not commingle its assets and funds with those of its
Affiliates;
(iii) Transferor shall hold such appropriate meetings or
obtain such appropriate consents of its Board of Directors as are
necessary to authorize all Transferor's corporate actions required by
law to be authorized by the Board of Directors, shall keep minutes of
such meetings and of meetings of its stockholder(s) and observe all
other customary corporate formalities (and any successor Transferor
not a corporation shall observe similar procedures in accordance with
its governing documents and applicable law);
(iv) Transferor shall at all times hold itself out to the
public under Transferor's own name as a legal entity separate and
distinct from its Affiliates; and
(v) all transactions and dealings between Transferor and its
Affiliates will be conducted on an arm's-length basis.
SECTION 7.3. Liability of Transferor; Indemnities. (a) Transferor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by Transferor under this Agreement.
(b) Transferor shall indemnify, defend and hold harmless Issuer,
Trustee and Indenture Trustee (and their officers, directors, employees and
agents) from and against any taxes that may at any time be asserted against
any of them with respect to the transfer of the Leases to Issuer or the
issuance and original sale of the Certificates and the Notes, including any
sales, gross receipts, general corporation,
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tangible personal property, privilege or license taxes (but, in the case of
Issuer, not including any taxes asserted with respect to ownership of the
Leases or Federal or other income taxes arising out of the transactions
contemplated by this Agreement) and costs and expenses in defending against
the same.
(c) Transferor shall indemnify, defend and hold harmless Issuer,
Trustee and Indenture Trustee (and their officers, directors, employees and
agents) from and against any loss, liability or expense (including costs of
defense and legal fees and expenses) incurred or suffered by reason of: (i)
Transferor's willful misfeasance, bad faith or negligence in the performance
of its duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) Transferor's or Issuer's
violation of Federal or State securities laws in connection with the offering
and sale of the Notes and the Certificates.
Indemnification under this Section shall survive the resignation or
removal of Trustee or Indenture Trustee or the termination of this Agreement
and the Indenture and shall include reasonable fees and expenses of counsel
and expenses of litigation. If Transferor shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to Transferor, without interest.
SECTION 7.4. Merger or Consolidation of, or Assumption of the
Obligations of, Transferor. Any Person: (a) into which Transferor may be
merged or consolidated, (b) that may result from any merger or consolidation
to which Transferor shall be a party or (c) that may succeed to the properties
and assets of Transferor substantially as a whole, which Person (in any of the
foregoing cases) executes an agreement of assumption to perform every
obligation of Transferor under this Agreement (or is deemed by law to have
assumed such obligations), shall be the successor to Transferor hereunder
without the execution or filing of any document or any further act by any of
the parties to this Agreement; provided, that: (i) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 7.1 shall have been breached and no Servicer Event of Default, and no
event that, after notice or lapse of time, or both, would become a Servicer
Event of Default shall have occurred and be continuing, (ii) Transferor shall
have delivered to Trustee and Indenture Trustee an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section and that
all conditions precedent, if any, provided for in this Agreement relating to
such transaction have been complied with, (iii) the Rating Agency Condition
shall have been satisfied with respect to such transaction and (iv) Transferor
shall have delivered to Trustee and Indenture Trustee an Opinion of Counsel
either: (A) stating that, in the opinion of such counsel, all financing
statements, continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect
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the interest of Trustee and Indenture Trustee, respectively, in the Leases and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c).
SECTION 7.5. Limitation on Liability of Transferor and Others.
Transferor and any director, officer, employee or agent of Transferor may rely
in good faith on the advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. Transferor shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 7.6. Transferor May Own Certificates or Notes. Transferor and
any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of the Notes with the same rights as it would have if it were
not Transferor or an Affiliate thereof, except as expressly provided herein or
in any other Basic Document.
ARTICLE VIII
Servicer
SECTION 8.1. Representations of Servicer. Servicer makes the
following representations on which Issuer is deemed to have relied in
acquiring the Leases. The representations speak as of the execution and
delivery of the Agreement and as of the Closing Date, in the case of the
Leases, and as of the applicable effective date of any substitution, in the
case of the Substitute Leases, and shall survive the transfer of the Leases to
Issuer and the pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Servicer is duly
organized and validly existing as a corporation in good standing
under the laws of the state of its incorporation, with the corporate
power and authority to own its properties and to conduct its business
as such properties are currently owned and such business is presently
conducted, and had at all relevant times, and has, the power,
authority and legal right to acquire, own, sell and service the
Leases and to hold the Lease Files as custodian.
(b) Due Qualification. Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses
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and approvals, in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing
of the Leases as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. Servicer has the corporate power
and authority to execute and deliver this Agreement and to carry out
its terms; and the execution, delivery and performance of this
Agreement have been duly authorized by Servicer by all necessary
corporate action.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of Servicer enforceable against Servicer
in accordance with its terms.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms
hereof shall not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or
by-laws of Servicer, or any indenture, agreement or other instrument
to which Servicer is a party or by which it shall be 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 or other
instrument (other than this Agreement); or violate any law or, to the
best of Servicer's knowledge, any order, rule or regulation
applicable to Servicer of any court or of any Federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Servicer or its properties.
(f) No Proceedings. There are no proceedings or
investigations pending, or, to Servicer's best knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over Servicer or its
properties: (i) asserting the invalidity of this Agreement, the
Indenture, any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or
the Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or ruling that could
reasonably be expected to materially and adversely affect the
performance by Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other
Basic Documents, the Notes or the Certificates or (iv) relating to
Servicer and that might adversely affect the Federal or state income
tax attributes of the Notes or the Certificates.
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(g) No Insolvent Lessees. As of the Initial Cutoff Date or,
in the case of the Subsequent Leases, as of the related Subsequent
Cutoff Date, no Lessee is shown on the Lease Files as the subject of
a bankruptcy proceeding.
SECTION 8.2. Indemnities of Servicer. Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Servicer under this Agreement.
(a) Servicer shall defend, indemnify and hold harmless
Issuer, Trustee, Indenture Trustee, Noteholders, Certificateholders
and Transferor (and any of their officers, directors, employees and
agents) from and against any and all costs, expenses, losses,
damages, claims and liabilities, arising
out of or resulting from:
(i) the use, ownership or operation by Servicer or
any Affiliate thereof of any of the Equipment;
(ii) any taxes that may at any time be asserted
against any such Person with respect to the transactions
contemplated herein, including any sales, gross receipts,
general corporation, tangible personal property, privilege
or license taxes (but, in the case of Issuer, not including
any taxes asserted with respect to, and as of the date of,
the transfer of the Leases to Issuer or the issuance and
original sale of the Certificates, the Notes, or asserted
with respect to ownership of the Leases, or Federal or other
income taxes arising out of distributions on the
Certificates or the Notes) and costs and expenses in
defending against the same; and
(iii) the negligence, willful misfeasance or bad
faith of Servicer in the performance of its duties under
this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(b) Servicer shall indemnify, defend and hold harmless
Trustee and Indenture Trustee (and their respective officers,
directors, employees and agents) from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the
trusts and duties herein and, in the case of Trustee, in the Trust
Agreement contained, and, in the case of Indenture Trustee, in the
Indenture contained, except to the extent that such cost, expense,
loss, claim, damage or liability:
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(i) shall be due to the willful misfeasance, bad
faith or negligence (except for errors in judgment) of
Trustee or Indenture Trustee as applicable; or
(ii) shall arise from the breach by Trustee of any
of its representations or warranties set forth in Section
7.3 of the Trust Agreement.
(c) Servicer shall pay any and all taxes levied or assessed
upon all or any part of the Trust Estate.
(d) Servicer shall pay Indenture Trustee and Trustee from
time to time reasonable compensation for all services rendered by
Indenture Trustee under the Indenture or by Trustee under the Trust
Agreement (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express
trust).
(e) Servicer shall, except as otherwise expressly provided
in the Indenture or the Trust Agreement, reimburse either Indenture
Trustee or Trustee, respectively, upon its request for all reasonable
expenses, disbursements and advances incurred or made in accordance
with the Indenture or the Trust Agreement, respectively, (including
the reasonable compensation, expenses and disbursements of its agents
and either in-house counsel or outside counsel, but not both), except
any such expense, disbursement or advance as may be attributable to
Indenture Trustee's or Trustee's, respectively negligence, bad faith
or willful misfeasance.
For purposes of this Section, in the event of the termination of the
rights and obligations of Servicer pursuant to Section 9.1, or a resignation
by Servicer pursuant to this Agreement, Servicer shall be deemed to be
Servicer pending appointment of a successor Servicer pursuant to Section 9.2.
Indemnification under this Section shall survive the resignation or
removal of Trustee or Indenture Trustee or the termination of this Agreement,
the Trust Agreement and the Indenture and shall include reasonable fees and
expenses of counsel and expenses of litigation. If Servicer shall have made
any indemnity payments pursuant to this Section and the Person to or on behalf
of whom such payments are made thereafter collects any of such amounts from
others, such Person shall promptly repay such amounts to Servicer, without
interest.
SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person: (a) into which Servicer may be merged or
consolidated, (b) that may result from any merger or consolidation to which
Servicer shall be a party, or (c) that may succeed to the properties and assets
of Servicer
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substantially as a whole, which Person (in any of the foregoing circumstances)
executes an agreement of assumption to perform every obligation of Servicer
hereunder (or is deemed by law to have assumed such obligations), shall be the
successor to Servicer under this Agreement without further act on the part of
any of the parties to this Agreement; provided, that: (i) immediately after
giving effect to such transaction, no Servicer Event of Default, and no event
that, after notice or lapse of time, or both, would become a Servicer Event of
Default shall have occurred and be continuing, (ii) Servicer shall have
delivered to Trustee and Indenture Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, (iii) the Rating Agencies shall have
received at least ten days' prior written notice of such transaction and (iv)
Servicer shall have delivered to Trustee and Indenture Trustee an Opinion of
Counsel either: (A) stating that, in the opinion of such counsel, all
financing statements, continuation statements and amendments thereto have been
executed and filed that are necessary fully to preserve and protect the
interest of Trustee and Indenture Trustee, respectively, in the Leases and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c).
SECTION 8.4. Limitation on Liability of Servicer and Others. Neither
Servicer nor any of the directors, officers, employees or agents of Servicer
shall be under any liability to Issuer, Noteholders or Certificateholders,
except as provided under this Agreement, for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement with respect to any Lease (including any Non-Performing Lease) or
the Equipment subject thereto; provided, that this provision shall not protect
Servicer or any such Person against any breach of warranties, representations
or covenants made by Servicer herein or in any certificate delivered in
conjunction with the sale of the Notes or for any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of its duties under this Agreement. Servicer and any
director, officer, employee or agent of 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 hereunder.
SECTION 8.5. ILC Not to Resign as Servicer. Subject to Section 8.3,
ILC shall not resign from the obligations and duties imposed on it as Servicer
under this Agreement except upon determination that the performance of its
duties under this Agreement shall no longer be permissible under applicable
law. Notice of any such determination shall be communicated to Trustee and
Indenture Trustee at the earliest
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practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to Trustee and Indenture Trustee concurrently with or promptly after
such notice. No such resignation shall become effective until Indenture
Trustee or a successor Servicer shall have assumed the responsibilities and
obligations of ILC in accordance with Section 9.2.
SECTION 8.6. Servicer to Act as Manager. In the event of the
resignation or removal of Manager and the failure of a successor Manager to
have been appointed and to have accepted such appointment as successor
Manager, Servicer shall become the successor Manager and shall be bound by the
terms of the Management Agreement.
ARTICLE IX
Default
SECTION 9.1. Servicer Events of Default. The following events and
conditions shall constitute a "Servicer Event of Default" hereunder:
(a) failure on the part of Servicer to deposit into the
Collection Account or other applicable account within three Business
Days following the receipt thereof any monies received by Servicer
(including any Lease Payments and any Non-Performing Lease Payments)
and required to be deposited hereunder;
(b) so long as ILC is Servicer hereunder, failure on the
part of ILC to pay to Indenture Trustee on the date when due in
accordance with the terms hereof, any payment required to be made by
Transferor pursuant to Section 5.1.
(c) failure on the part of either Servicer or (so long as
ILC is Servicer) ILC to observe or perform in any material respect
any other of their respective covenants or agreements in this
Agreement which failure continues unremedied for a period of 30 days
after the earlier of (A) the date it first becomes known to any
officer of Transferor or Servicer, as the case may be, and (B) the
date on which written notice thereof requiring the same to be
remedied shall have been given to Transferor or Servicer, as the case
may be, by Indenture Trustee or Trustee, or to Transferor or
Servicer, as the case may be, and Indenture Trustee by any Holder of
the Notes or the Certificates;
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(i) if any representation or warranty made by
Transferor in this Agreement or in any certificate or other
writing delivered pursuant hereto or made by any successor
Servicer in connection with such successor Servicer's
assumption of the duties of Servicer shall prove to be
incorrect in any material respect as of the time when the
same shall have been made; provided, that the breach of any
representation or warranty made by Transferor or Servicer in
this Agreement will be deemed to be "material" only if it
affects Noteholders or the Certificateholders, the
enforceability of the Indenture or of the Notes or the
enforceability of the Trust Agreement or the Certificates;
and provided, further, that a material breach of any
representation or warranty made by Transferor in this
Agreement with respect to any of the Leases or the Equipment
subject thereto will not constitute a Servicer Event of
Default if Transferor repurchases such Lease and Equipment
in accordance with this Agreement.
(ii) the entry by a court having jurisdiction in
the premises of (A) a decree or order for relief in respect
of Servicer in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (B) a decree or
order adjudging Servicer bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of
Servicer under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of Servicer
or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a
period of 60 consecutive days;
(iii) the commencement by Servicer of a voluntary
case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law
or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of
a decree or order for relief in respect of Servicer in an
involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by
it of a petition or answer or consent seeking reorganization
or relief under any applicable federal or state law, or the
consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian,
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receiver, liquidator, assignee, trustee, sequestrator, or
similar official of Servicer or of any substantial part of
its property, or the making by it of an assignment for the
benefit of creditors, or the failure by Servicer to pay its
debts generally as they become due, or the taking of
corporate action by Servicer in furtherance of any such
action;
(iv) the failure of Servicer to make one or more
payments due with respect to aggregate recourse debt or
other obligations exceeding $1,000,000, or the occurrence of
any event or the existence of any condition, the effect of
which event or condition is to cause (or permit one or more
persons to cause) more than $1,000,000 of aggregate recourse
debt or other obligations of Servicer to become due before
its (or their) stated maturity or before its (or their)
regularly scheduled dates of payment so long as such
failure, event or condition shall be continuing and shall
not have been waived by the Person or Persons entitled to
performance; or
(v) a final judgment or judgments (or decrees or
orders) for the payment of money aggregating in excess of
$1,000,000 and any one of such judgments (or decrees or
orders) has remained unsatisfied and in effect for any
period of 60 consecutive days without a stay of execution.
SECTION 9.2. Termination. So long as a Servicer Event of Default
shall be continuing, Indenture Trustee shall, upon the instructions of the
Holders of Notes representing at least 66-2/3% of the Outstanding Principal
Amount of the Notes (or, if no Notes are Outstanding, Holders of Certificates
representing at least 66-2/3% of the Certificate Balance), by notice in writing
to Servicer terminate all of the rights and obligations of Servicer under this
Agreement. On the receipt by Servicer of such written notice, all authority
and power of Servicer under this Agreement to take any action with respect to
any Lease or Equipment shall cease and the same shall pass to and be vested in
Indenture Trustee pursuant to and under this Section and the Indenture; and,
Indenture Trustee is hereby authorized and empowered to execute and deliver,
on behalf of Servicer, as attorney-in-fact or otherwise, any and all other
acts or things necessary or appropriate to effect the purposes of such notice
of termination, whether to complete the transfer and assignment of any Lease
and the related Equipment, or otherwise.
SECTION 9.3. Trustee to Act; Appointment of Successor. On and after
the time Servicer receives a notice of termination pursuant to Section 9.2,
Indenture Trustee, subject to the terms of Section 5.2 of the Indenture, shall
be the successor in all respects to Servicer in its capacity as servicer of
the Leases under this Agreement and, to such extent, shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on
Servicer by the terms and provisions hereof and
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shall be entitled to receive the Servicing Fee and other amounts payable
pursuant to Section 4.6; provided that Indenture Trustee shall in no way be
responsible or liable for any action or actions of Servicer before the time
Servicer receives such a notice of termination.
(a) Notwithstanding the above, Indenture Trustee may, if it
shall be unwilling to so act, or shall, if it is unable to so act,
give notice of such fact to each Holder of the Notes and (i) appoint
an established institution satisfactory to the Holders of Notes
evidencing at least 66-2/3% of the Outstanding Principal Amount of the
Notes (or, if no Notes are Outstanding, Holders of Certificates
representing at least 66-2/3% of the Certificate Balance) as the
successor to Servicer hereunder to assume all of the rights and
obligations of Servicer hereunder, including Servicer's right
hereunder to receive the Servicing Fee and Supplemental Servicing Fee
or (ii) if no such institution satisfactory to the Holders of Notes
evidencing at least 66-2/3% of the Outstanding Principal Amount of the
Notes (or, if no Notes are Outstanding, Holders of Certificates
representing at least 66-2/3% of the Certificate Balance) is so
appointed within 60 days following the giving of such notice, appoint
a bank or other established institution, which has experience in
servicing lease contracts and equipment similar to the Leases and
Equipment and as to which the Rating Agency Condition has been
satisfied with respect to the appointment of such Person as the
successor to Servicer, or (iii) if no such institution is so
appointed, petition a court of competent jurisdiction to appoint an
institution meeting such criteria as Servicer hereunder. Pending
appointment of a successor to Servicer hereunder, Indenture Trustee
shall act in such capacity as provided in this Agreement. In
connection with such appointment and assumption, Indenture Trustee
shall cause such successor to Servicer to enter into a servicing
agreement substantially in the form of this Agreement except that
such agreement shall not include any of Transferor's representations,
warranties or obligations and Indenture Trustee may make arrangements
for the compensation of such successor out of payments on Leases as
it and such successor shall agree; provided, that no such
compensation shall be in excess of that provided for a successor to
Servicer in Section 4.6.
SECTION 9.4. Servicer to Cooperate. Servicer hereby agrees to
cooperate with Indenture Trustee or any successor to Servicer appointed in
accordance with Section 9.3, as applicable, in effecting the termination and
transfer of the responsibilities and rights of Servicer hereunder to Indenture
Trustee or any successor to Servicer, including the execution and delivery of
assignments of Financing Statements, and the transfer to Indenture Trustee or
the successor to Servicer for administration by it of all cash amounts which
shall at the time be held by Servicer or thereafter received with respect to
the Leases. Servicer hereby agrees to transfer to any successor to Servicer
its electronic records and all other records,
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<PAGE>
correspondence and documents relating to the Leases and Equipment in the
manner and at such times as the successor to Servicer shall reasonably
request. Servicer hereby designates Indenture Trustee and any successor to
Servicer its agent and attorney-in-fact to execute transfers of Financing
Statements (including any and all Financing Statements naming an individual
Lessee as debtor and Servicer as secured party) and any other filings or
instruments which may be necessary or advisable to effect such transfer of
Servicer's responsibilities and rights hereunder.
SECTION 9.5. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, Servicer pursuant to
this Article IX, Trustee shall give prompt written notice thereof to
Certificateholders and Indenture Trustee shall give prompt written notice
thereof to Noteholders and the Rating Agencies.
SECTION 9.6. Waiver of Past Defaults. Holders of Notes evidencing at
least 66-2/3% of the Outstanding Principal Amount of the Notes (or the Holders
of Certificates evidencing not less than a majority of the Certificate
Balance, in the case of any default that does not adversely affect Indenture
Trustee or Noteholders) may, on behalf of all Noteholders and
Certificateholders, waive in writing any default by Servicer in the
performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from any of the Trust
Accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto.
ARTICLE X
Termination
SECTION 10.1. Optional Purchase of All Leases. (a) As of any Payment
Date as of which the Discounted Present Value of the Performing Leases (after
giving effect to all Principal Payments on such Payment Date) is less than or
equal to 5% of the Discounted Present Value of Performing Leases as of the
Cut-Off Date, Servicer shall have the option to purchase all of the Trust
Estate, other than the Trust Accounts, if after giving effect to all payments
required to be made on such Payment Date, the Notes and Certificates shall
have been paid in full. To exercise such option, Servicer shall deposit,
pursuant to Section 6.2, into the Collection Account an amount equal to the
aggregate Lease Repurchase Amount for the Leases, and shall succeed to all
interests in, to and under the Trust Estate, other than the Trust Accounts.
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(b) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes,
Certificateholders will succeed to the rights of Noteholders hereunder and
Trustee will succeed to the rights of, and assume the obligations of,
Indenture Trustee pursuant to this Agreement.
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment. The Agreement may be amended from time to
time by a written amendment duly executed and delivered by Transferor,
Servicer and Issuer, with the written consent of Indenture Trustee, but
without the consent of any of Noteholders or Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of Noteholders or Certificateholders; provided, that such
action shall not, as evidenced by an Opinion of Counsel delivered to Trustee
and Indenture Trustee, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by Transferor,
Servicer and Issuer, with the written consent of Indenture Trustee and Trustee,
but without the consent of any of Noteholders or Certificateholders, to: (x)
replace the Reserve Account with another form of credit enhancement as long as
such substitution will not result in a reduction or withdrawal of the rating
of any Class of the Notes or the Certificates or (y) add credit enhancement
for the benefit of any Class of the Notes or the Certificates.
This Agreement may also be amended from time to time by Transferor,
Servicer and Issuer, with the written consent of (a) Indenture Trustee, (b)
Holders of Notes evidencing not less than 66-2/3% of the Outstanding Principal
Amount of the Notes, and (c) the Holders of Certificates evidencing not less
than evidencing not less than 66-2/3% of the Certificate Balance, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the
rights of Noteholders or Certificateholders; 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 Leases or distributions that
shall be required to be made for the benefit of Noteholders or
Certificateholders or (b) reduce the aforesaid percentage of the Notes and the
Certificates that are required to consent to any such amendment, without the
consent of the holders of all the outstanding Notes and Certificates.
40
<PAGE>
Promptly after the execution of any such amendment or consent (or, in
the case of the Rating Agencies, 10 days prior thereto), Trustee shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder, Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, Trustee
and Indenture Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to such
execution and delivery by Trustee and Indenture Trustee have been satisfied.
Trustee and Indenture Trustee may, but shall not be obligated to, enter into
any such amendment that affects Trustee's or Indenture Trustee's, as
applicable, own rights, duties or immunities under this Agreement or
otherwise.
SECTION 11.2. Security for Obligations. As security for the full and
timely performance by Transferor of each of its obligations hereunder,
Transferor hereby pledges and grants to Issuer (as a precaution in the event
that, contrary to the intent of the parties to the transactions contemplated
hereby, it is contended that Transferor has any continuing interest in any
Lease or item of Equipment) a first priority Lien on and security interest in
all right, title and interest of Transferor now or hereafter acquired in and
to each Lease (including the right to receive all payments due or to become
due thereunder), each item of Equipment and each other Transferred Asset at
any time subject to this Agreement. The foregoing security interest is granted
upon and is subject to the same terms and provisions as are set forth in the
Indenture and shall continue in full force and effect until the same is
discharged in accordance with the terms therein, notwithstanding any waiver or
modification of any of the terms hereof or thereof or of any of the Notes,
whether with or without the consent of Transferor.
SECTION 11.3. Further Assurances; Financing Statements. Transferor
agrees that at any time and from time to time, at its expense, it shall
promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable or that Issuer or
Indenture Trustee may request to perfect and protect the assignments and
ownership and security interests granted or purported to be granted herein or
therein with respect to the Leases and other Transferred Assets or to enable
Issuer or Indenture Trustee to exercise and enforce its rights and remedies
under this Agreement and the Indenture with respect to any Leases and other
Transferred Assets. Without limiting the generality of the foregoing,
Transferor shall execute and file such financing or continuation
41
<PAGE>
statements, or amendments thereto, and such other instruments or notices as
may be necessary or desirable or that Issuer or Indenture Trustee may request
to protect and preserve the assignments and ownership and security interests
granted by this Agreement with respect to the Leases.
SECTION 11.4. Registration. Transferor shall, to the extent required
by applicable law, cause the Certificates and the Notes to be registered with
the Commission pursuant to Section 12(b) or Section 12(g) of the Exchange Act
within the time periods specified in such sections.
SECTION 11.5. Notices. All demands, notices, directions, instructions
and communications upon or to Transferor, Servicer, Issuer, Trustee, Indenture
Trustee or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested,
and shall be deemed to have been duly given upon receipt: (a) in the case of
Transferor, to Provident Lease Receivables Corporation, 1023 West Eighth
Street, Cincinnati, Ohio 45203, Attention of: [Name] (telephone (513) 579-2867
and facsimile (513) [___-____]), (b) in the case of Servicer, to Information
Leasing Corporation, 1023 West Eighth Street, Cincinnati, Ohio 45203,
Attention: [Name] (telephone (513) [___-____] and facsimile (513) [___-____]),
(c) in the case of Issuer or Trustee, at the Corporate Trust Office, (d) in
the case of Indenture Trustee, at the Corporate Trust Office, (e) in the case
of each of the Rating Agencies, [_____________]; or, as to each of the
foregoing, at such other address as shall be designated by written notice to
the other parties.
SECTION 11.6. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.8 and 8.3 and as provided
in the provisions of this Agreement concerning the resignation of Servicer,
this Agreement may not be assigned by Transferor or Servicer, without the
prior written consent of Issuer and Indenture Trustee (acting upon the
instructions of Holders of at least 66-2/3% of the Outstanding Principal Amount
of the Notes.
SECTION 11.7. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of Transferor, Servicer, Issuer, Trustee,
Certificateholders, Indenture Trustee and Noteholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.8. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any
42
<PAGE>
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.9. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.12. Assignment to Indenture Trustee. Transferor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by Issuer to Indenture Trustee pursuant to the Indenture for
the benefit of Noteholders of all right, title and interest of Issuer in, to
and under the Leases and/or the assignment of any or all of Issuer's rights
and obligations hereunder to Indenture Trustee.
SECTION 11.13. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, Servicer and Transferor shall not, prior to the
date that is one year and one day after the termination of this Agreement,
with respect to Issuer, acquiesce, petition or otherwise invoke or cause
Issuer to invoke the process of any court or governmental authority for the
purpose of commencing or sustaining a case against Issuer under any Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of Issuer or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of Issuer. The foregoing shall not
limit the right of Servicer and Transferor to file any claim in or otherwise
take any action with respect to any such insolvency proceeding that was
instituted against Issuer by any Person other than Servicer or Transferor.
(b) Notwithstanding any prior termination of this Agreement, Servicer
shall not, prior to the date that is one year and one day after the
termination of this Agreement, with respect to Transferor, acquiesce, petition
or otherwise invoke or cause Transferor to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against Transferor under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of Transferor or any
43
<PAGE>
substantial part of its property, or ordering the winding up or liquidation of
the affairs of Transferor. The foregoing shall not limit the right of Servicer
to file any claim in or otherwise take any action with respect to any such
insolvency proceeding that was instituted against Transferor by any Person
other than Servicer.
SECTION 11.14. Limitation of Liability of Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by [Name of Trustee], not in its individual
capacity but solely in its capacity as Trustee of Issuer, and in no event
shall [Name of Trustee], in its individual capacity or, except as expressly
provided in the Trust Agreement, any beneficial owner of Issuer have any
liability for the representations, warranties, covenants, agreements or other
obligations of Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of Issuer.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by [Name of Indenture Trustee], not in its
individual capacity but solely as Indenture Trustee, and in no event shall
[Name of Indenture Trustee] have any liability for the representations,
warranties, covenants, agreements or other obligations of Issuer hereunder or
in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers as of the day and year first
above written.
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
By: [NAME OF TRUSTEE]
not in its individual capacity but solely
as Trustee of the Provident Equipment Lease
Trust 1998-A
By: _____________________________________
Name: _____________________________________
Title:_____________________________________
PROVIDENT LEASE RECEIVABLES
CORPORATION,
as Transferor
By: _____________________________________________
44
<PAGE>
Name: _________________________________________
Title: ________________________________________
INFORMATION LEASING CORPORATION,
as Servicer
By: _____________________________________
Name: _____________________________________
Title:_____________________________________
Acknowledged and Accepted:
[NAME OF INDENTURE TRUSTEE]
not in its individual capacity
but solely as Indenture Trustee
By: ___________________________________
Name: ______________________________
Title: _____________________________
45
EXHIBIT 10.3
================================================================================
INFORMATION LEASING CORPORATION,
Seller,
and
PROVIDENT LEASE RECEIVABLES CORPORATION,
as Purchaser
---------------------------
FORM OF
PURCHASE AGREEMENT
Dated as of September 1, 1998
---------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
Section 1.1 SECTION 1.2 Definitions; Interpretive Provisions.............................1
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase of Leases............................................................1
Section 2.2 Consideration and Payment.....................................................2
Section 2.3 Capital Contribution..........................................................2
Section 2.4 Transfer of Leases; Grant of Security Interest................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.1 Corporate Organization and Authority..........................................3
Section 3.2 Business and Property.........................................................4
Section 3.3 Financial Statements..........................................................4
Section 3.4 Equipment and Leases..........................................................4
Section 3.5 Payments......................................................................8
Section 3.6 Full Disclosure...............................................................8
Section 3.7 Pending Litigation............................................................8
Section 3.8 Title to Properties...........................................................9
Section 3.9 Transactions Legal and Authorized.............................................9
Section 3.10 Governmental Consent..........................................................9
Section 3.11 Taxes.........................................................................9
Section 3.12 Compliance with Law..........................................................10
Section 3.13 ERISA........................................................................10
Section 3.14 Ability to Perform...........................................................10
Section 3.15 Ordinary Course; No Insolvency...............................................11
Section 3.16 Assets and Liabilities.......................................................11
Section 3.17 Fair Consideration...........................................................11
Section 3.18 Ability to Pay Debts.........................................................11
Section 3.19 Bulk Transfer Provisions.....................................................11
Section 3.20 Transfer Taxes...............................................................11
Section 3.21 Principal Executive Office...................................................12
Section 3.22 Nonconsolidation.............................................................12
Section 3.23 Sale Treatment...............................................................12
Section 3.24 Leases are Chattel Paper.....................................................12
</TABLE>
-i-
<PAGE>
ARTICLE IV
SELLER'S OBLIGATONS
<TABLE>
<S> <C> <C>
Section 4.1 Indemnification..............................................................12
Section 4.2 Repurchases; Other Payments..................................................13
Section 4.3 Substitution.................................................................14
Section 4.4 Procedure for Substitution...................................................15
Section 4.5 Objection and Repurchase.....................................................16
Section 4.6 Seller's Subsequent Obligations..............................................17
Section 5.1 Merger or Consolidation of Seller............................................17
Section 5.2 Inspection...................................................................17
Section 5.3 Books and Records............................................................18
Section 5.4 Communications...............................................................18
ARTICLE VI
ASSIGNMENT
Section 6.1 Assignment to Indenture Trustee..............................................18
Section 6.2 Assignment by Seller.........................................................18
ARTICLE VII
NATURE OF SELLER'S OBLIGATIONS AND SECURITY THEREFOR
Section 7.1 Seller's Obligations Absolute................................................18
Section 7.2 Security for Obligations.....................................................19
Section 7.3 Further Assurances; Financing Statements.....................................19
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Continuing Obligations.......................................................20
Section 8.2 GOVERNING LAW................................................................20
Section 8.3 Successors and Assigns.......................................................20
Section 8.4 Modification.................................................................20
Section 8.5 Notices......................................................................21
Section 8.6 Counterparts.................................................................21
Section 8.7 Nonpetition Covenant.........................................................21
Schedule 1 - Schedule of Leases and Equipment
</TABLE>
-ii-
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT is made and dated as of September 1, 1998, between
PROVIDENT LEASE RECEIVABLES CORPORATION, a Delaware corporation ("Purchaser"),
and INFORMATION LEASING CORPORATION ("ILC"), an Ohio corporation ("Seller").
R E C I T A L S
A. Seller wishes to sell and assign to Purchaser, and Purchaser
wishes to purchase from Seller, all right, title and interest of Seller in, to
and under the Leases originated by Seller from time to time.
B. Seller and Purchaser wish to set forth certain representations,
warranties, covenants and indemnities of Seller with respect to the Leases for
the benefit of Purchaser, Issuer, the Noteholders and the Certificateholders.
Now, therefore, in consideration of the foregoing, other good and
valuable consideration and the mutual terms and covenants contained herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 SECTION 1.2 Definitions; Interpretive Provisions. (a)
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to such terms in Appendix X to the Indenture, dated as of
the date hereof, between Provident Equipment Lease Trust 1998-A and [Name of
Indenture Trustee], as amended, supplemented or otherwise modified from time
to time (the "Indenture").
(b) The other interpretive provisions specified in Appendix X to the
Indenture shall apply to this Agreement.
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase of Leases. By their execution and delivery of
this Agreement, Seller hereby sells and assigns to Purchaser, and Purchaser
hereby purchases from Seller without recourse (except to the extent of
Seller's repurchase obligations as set forth herein), all of Seller's right,
title and interest in, to and under the following (collectively, with the
Contributed Assets, the "Seller Assets"):
<PAGE>
(a) the Leases listed in Schedule 1, as such Schedule 1 is
amended or supplemented from time to time, including all instruments,
documents, books and other records relating thereto,
(b) all Lease Payments, Casualty Payments, Termination
Payments and other amounts not collected with respect thereto prior
to the Cut-Off Date (other than any prepayments of rent required
pursuant to the terms of any Lease at or before the commencement of
the Lease), all Payaheads relating to payments on Leases due or
becoming due after the Cut-Off and all Substitute Leases and all
Lease Payments, Casualty Payments, Termination Payments and other
amounts not collected prior to the effective date of their respective
substitution (other than any prepayments of rent required by the
terms of any Substitute Lease at or before the commencement of the
Substitute Lease) and all Payaheads relating to payments on the
Substitute Leases due or becoming due after the effective date of
their respective substitution,
(c) all rights of Seller to or under any guarantees of or
collateral (including all rights of Seller in any security deposits)
for the Lessee's obligations under any Lease and all UCC financing
statements relating to such collateral,
(d) any proceeds with respect to the Leases from claims on
insurance policies covering the Equipment or Lessees,
(e) all moneys from time to time on deposit in any of the
Trust Accounts, including all investments and income from the
investment of such moneys,
(f) all proceeds of the foregoing, whether by voluntary or
involuntary conversion thereof.
Section 2.2 Consideration and Payment. The purchase price of Seller
Assets is $[__________].
Section 2.3 Capital Contribution. Seller and Purchaser each
acknowledge and confirm that contemporaneously with the sale and purchase of
Seller Assets referred to in Section 2.1, ILC, as the sole stockholder of
Seller, is contributing and transferring to Seller, and in connection with
each sale, transfer and assignment of Substitute Leases, ILC will contribute
and transfer to Seller, without recourse, all right, title and interest of ILC
in and to each item of Equipment subject to each Lease and Substitute Lease
(collectively, the "Contributed Assets"). After such contribution and transfer
by ILC to Seller, all right, title and interest
2
<PAGE>
of ILC in and to each item of Equipment subject to each Lease shall be vested
in Seller.
Section 2.4 Transfer of Leases; Grant of Security Interest. It is the
intention of the parties hereto that the transfer of the Seller Assets being
made hereunder shall constitute a sale or contribution, as applicable, and not
a loan. Seller shall take no action inconsistent with Purchaser's ownership of
the Seller Assets, Seller shall indicate in its records that ownership of each
of the Lease is held by Purchaser, and Seller shall respond to any inquiries
from third parties by indicating that its ownership in the Leases, Substitute
Leases, and all other Seller Assets is held by Purchaser and pledged to
Indenture Trustee. If a court of competent jurisdiction were to hold that any
transaction evidenced hereby constitutes a loan and not a sale or a
contribution, it is the intention of the parties hereto that this Agreement
shall constitute a security agreement under applicable law and that Seller
shall be deemed to have granted to Purchaser a first priority security
interest in the Seller Assets.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants as follows:
Section 3.1 Corporate Organization and Authority. Seller:
(a) is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation,
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry
on its business as now conducted (except where the failure to have
such licenses and permits would not have a material adverse effect on
the Trust Estate or the business or condition (financial or
otherwise) of Seller or impair the enforceability of any Lease) and
to enter into and perform its obligations under this Agreement, and
the transactions contemplated hereby, including performance of
Seller's support obligations hereunder, and
(c) has duly qualified and is authorized to do business and
is in good standing as a foreign corporation in each jurisdiction
where the character of its properties or the nature of its activities
makes such qualification necessary (except where the failure to be so
qualified or in good standing would not have a material adverse
effect on the Trust Estate or the business or condition (financial or
otherwise) of Seller or impair the enforceability of any Lease).
3
<PAGE>
Section 3.2 Business and Property. The Prospectus and the Private
Placement Memorandum, accurately describe in all material respects the general
nature of the business of Seller.
Section 3.3 Financial Statements. (a) The consolidated balance sheet
of Provident Financial Group, Inc. and its consolidated subsidiaries,
including ILC and PLRC, for the fiscal periods ended December 31, 1997 and
December 31, 1996 and the related consolidated statements of income, retained
earnings and cash flow for the respective period and fiscal years ended on
such dates, all accompanied by reports thereon containing opinions without
qualification, except as therein noted, by Ernst & Young, independent
certified public accountants, and the unaudited interim consolidated balance
sheet of Provident Financial Group, Inc. and its consolidated subsidiaries as
of June 30, 1998 and the related consolidated statements of income, retained
earnings and cash flow for the three months ended on such date have been
prepared in accordance with generally accepted accounting principles
consistently applied, and present fairly the financial position of Provident
Financial Group, Inc. and its subsidiaries as of such dates and the results of
their operations for such periods.
(b) Except as disclosed in the Prospectus, the Private Placement
Memorandum and the financial statements referred to in paragraph (a), since
December 31, 1997, there has been no change in the business, condition or
prospects (financial or otherwise) of Seller except changes in the ordinary
course of business, none of which individually or in the aggregate has been
materially adverse. Neither Seller nor any of its subsidiaries has any
material liabilities or obligations not incurred in the ordinary course of
business other than those disclosed in the financial statements referred to in
paragraph (a) or for which adequate reserves are reflected in such financial
statements.
Section 3.4 Equipment and Leases. (a) Prior to the date of each
transfer of any Leases and other Seller Assets in accordance with Section 2.1
and the contribution of the Contributed Assets pursuant to Section 2.3, Seller
purchased each item of Equipment from either (i) the manufacturer or other
supplier following receipt of an invoice from such manufacturer or supplier or
(ii) a Lessee following confirmation that such item of equipment was on such
Lessee's premises. Seller has paid in full, to the manufacturer, supplier or
Lessee, as applicable, the purchase price and any related charges in
connection with the acquisition of the Equipment. The sale and contribution to
Purchaser of the Seller Assets, including all of Seller's right, title and
interest in each item of Equipment does not violate the terms or provisions of
any Lease or any other agreement to which Seller is a party or by which it is
bound.
(b) Upon payment of the consideration described in Section 2.2 and
concurrent contribution described in Section 2.3, Purchaser will (i) be the
legal
4
<PAGE>
owner of the Leases, (ii) have good title to each item of the Equipment
subject to any Lease other than a Nominal Buy-Out Lease, and (iii) have a
perfected security interest in each item of Equipment with a purchase price in
excess of $10,000 to a Nominal Buy-Out Lease. At such time, the Leases and
Seller's interest in the Equipment will be free and clear of all Liens other
than the rights of each Lessee under the Lease to which such Lessee is a party
and the Liens contemplated by this Agreement and the other Basic Documents;
and there will be no delinquent taxes or other outstanding charges affecting
the Equipment which are or may be Liens prior to, or equal or coordinate with,
the Lien of Purchaser hereunder or Indenture Trustee under the Indenture.
(c) At the time of each transfer of a Lease hereunder, each such
Lease (i) is or will be a triple-net lease and (ii) is or will be a legal,
valid and binding full recourse obligation of the Lessee thereunder,
enforceable by Purchaser (and by Indenture Trustee as assignee of Purchaser)
against such Lessee in accordance with the terms thereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
similar laws relating to or affecting the enforcement of creditors' rights and
by general equity principles, is noncancellable by the Lessee and is in full
force and effect, and any and all requirements of any federal, state or local
law, including usury, truth-in-lending and equal credit opportunity laws
applicable to each Lease have been complied with; and Seller has no knowledge
(after due inquiry) of any challenge, dispute or claim by or against the
Lessee under or affecting any Lease or of the bankruptcy or insolvency of any
such Lessee. As of the initial Determination Date, or the effective date of
the transfer of any Substitute Lease, each Lessee has paid at least one
installment of rent under its respective Lease.
(d) At the time that any item of Equipment (including Seller's
security interest in any item not owned by it) is transferred hereunder,
Seller will have no knowledge that any item of the Equipment has suffered any
loss or damage which has not been repaired.
(e) Each Lease requires the Lessee thereunder to maintain insurance
on the Equipment subject thereto in an amount at least equal to the fair
market value thereof.
(f) In addition to the insurance maintained by the Lessees with
respect to the Equipment, Seller (or an Affiliate of Seller) maintains (i) one
or more casualty insurance policies which, in the aggregate, are in an amount
not less than the aggregate Outstanding Principal Amount of the Notes, (ii) a
general liability insurance policy in the aggregate amount of [$1,000,000] and
(iii) an excess liability insurance policy in umbrella form in the aggregate
amount of [$10,000,000]. Each of such policies is in full force and effect and
covers all equipment owned by Seller and transferred to Purchaser. All
premiums in respect
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of such policies have been paid. Each of Purchaser and Indenture Trustee are
named as loss payees and additional insureds, as their interests may appear,
on such casualty and liability policies maintained by Seller.
(g) At the time of each transfer of a Lease hereunder, no Lease had
outstanding rent which was 63 or more days past due as of the Cut-Off Date.
(h) Each Lease was originated by Seller in accordance with Seller's
regular credit approval process described in the Prospectus, and no selection
procedures adverse to the credit quality of the Leases were employed in
selecting the Leases for sale under this Agreement.
(i) The obligation of each Lessee to pay rent under each of the
Leases throughout the term thereof is and will be unconditional, without any
right of setoff by such Lessee and without regard to any event affecting the
Equipment, the obsolescence of any Equipment, any claim of such Lessee against
Issuer, Purchaser, Seller or Servicer or any change in circumstance of such
Lessee or any other circumstance whatsoever except to the extent that in the
event of a casualty of any item of Equipment, the Lessee is obligated to pay,
in lieu of the future Lease Payments with respect to such item, an amount
which equals or exceeds the Discounted Present Value of the Lease as of the
Payment Date next succeeding the making of such payment.
(j) In the case of each Lease which consists of a master lease and
one or more exhibits or schedules thereto, Seller has neither assigned such
master lease in its entirety, nor delivered physical possession of such master
lease, to any Person other than Purchaser or Indenture Trustee.
(k) As of the time of each transfer of Leases and Equipment
hereunder, there are no facts or circumstances which give rise, or would give
rise at any time in the future, to any right of rescission, setoff,
counterclaim or defense, including the defense of usury, to obligations of any
Lessee, including the obligation of such Lessee to pay all amounts due with
respect to any Lease to which such Lessee is a party, and neither the
operation of any of the terms of any Lease or the exercise of any right
thereunder will render such Lease unenforceable in whole or in part or subject
to any right of rescission, setoff, counterclaim or defense, including the
defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
(l) As of the time of each transfer of Leases and Equipment
hereunder, no Lease has been amended, altered or modified in any respect,
except in writing and copies of all such writings are attached to the Lease
delivered to Indenture Trustee.
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(m) As of the time of each transfer of Leases and Equipment
hereunder, no Lessee will have been released, in whole or in part, from any of
its obligations in respect of any Lease; no Lease will have been satisfied,
cancelled or subordinated, in whole, or in part, or rescinded, and no
Equipment covered by any Lease will have been released from such Lease, in
whole or in part, nor has any instrument been executed that would effect any
such satisfaction, release, cancellation, subordination or rescission.
(n) As of the time of each transfer of Leases and Equipment
hereunder, each Lease was purchased or originated by Seller for value and
taken into possession prior to the Cut-Off Date or, in the case of Substitute
Leases, the related date of transfer in the ordinary course of its business.
(o) No Lease was originated in or is subject to the laws of any
jurisdiction whose laws would make the transfer and sale thereof under this
Agreement unlawful.
(p) All parties to each Lease had authority and capacity to execute
such Lease.
(q) None of the Leases is a consumer lease and each Lessee has
accepted the Equipment leased to it.
(r) The Booked Residual Value of the Equipment as of the Cut-Off Date
equals $[__________].
(s) All parties to each Lease had all requisite authority and
capacity to execute such Lease.
(t) As of the Cut-Off Date, the Final Lease Payment on each Lease was
due and payable on or prior to [month/year].
(u) There is only one original of each Lease for purposes of the UCC
as in effect in Ohio and in New York and such counterpart will be delivered to
Indenture Trustee (or a custodian on its behalf) on or before the Closing
Date.
Section 3.5 Payments. (a) The aggregate amount of Lease Payments
payable by the Lessees under the Leases during each Due Period, including
amounts on deposit in the Reserve Account, is sufficient to cover the
Servicing Fee and pay the principal and interest on the Notes, as such
payments become due and payable.
(b) The portfolio detail delivered or to be delivered to Indenture
Trustee on or prior to the Closing Date: (i) accurately sets forth, as of the
Cut-Off Date,
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the amount of each Lease Payment due under each of the Leases and the month in
which such Lease Payment is to be paid in accordance with the terms of the
Lease under which the same is to be paid, (ii) accurately sets forth, as of
the Cut-Off Date, the information with respect to certain other
characteristics of the Leases and the Equipment described in such portfolio
detail and (iii) is otherwise true and correct in all respects.
Section 3.6 Full Disclosure. The Prospectus and the Private Placement
Memorandum (including the statistical and descriptive information with respect
to the initial Leases, Lessees and Equipment), as of their respective dates,
do not contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
peculiar to Seller or any Affiliate of Seller or, to the knowledge of Seller,
any Lease, Lessee or item of Equipment, which Seller has not disclosed in the
Prospectus or the Private Placement Memorandum which materially affects
adversely nor, so far as Seller can now reasonably foresee, will materially
affect adversely the ability of Seller to perform the transactions
contemplated by this Agreement and the other Basic Documents.
Section 3.7 Pending Litigation. There are no proceedings or
investigations pending, or to the knowledge (after due inquiry) of Seller
threatened, against or affecting Seller or any subsidiary in or before any
court, governmental authority or agency or arbitration board or tribunal,
including any such proceeding or investigation with respect to any
environmental or other liability resulting from the ownership or use of any of
the Equipment, which, individually or in the aggregate, involve the
possibility of materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of Seller, or the
ability of Seller to perform its obligations under this Agreement or any other
Basic Document to which Seller is a party. Seller is not in default with
respect to any order of any court, governmental authority or agency or
arbitration board or tribunal.
Section 3.8 Title to Properties. Immediately following the transfer
by Seller to Purchaser of the Leases and Seller's interest in the Equipment,
the Leases and the interest in the Equipment will be free and clear of all
Liens, except the Liens contemplated by this Agreement and the other Basic
Documents.
Section 3.9 Transactions Legal and Authorized. The transfer by Seller
of all of its right, title and interest in and to the Seller Assets and
compliance by Seller with all of the provisions of this Agreement and the
other Basic Documents to which Seller is a party:
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(a) have been duly authorized by all necessary corporate action on
the part of Seller, and do not require any stockholder approval, or approval
or consent of any trustee or holders of any indebtedness or obligations of
Seller except such as have been duly obtained;
(b) are within the corporate powers of Seller; and
(c) are legal and will not conflict with, result in any breach in any
of the provisions of, constitute a default under, or result in the creation of
any Lien upon any property of Seller under the provisions of, any agreement,
charter instrument, by-law or other instrument to which Seller is a party or
by which it or its property may be bound or result in the violation of any
law, regulation, rule, order or judgment applicable to Seller or its
properties, or any order to which Seller or its properties is subject, of or
by any government or governmental agency or authority.
Section 3.10 Governmental Consent. No consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority is necessary or required on the part of Seller in
connection with the execution and delivery of this Agreement and the other
Basic Documents or the transfer of the Leases and other Seller Assets.
Section 3.11 Taxes. (a) All tax returns required to be filed by
Seller in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon Seller, or upon any of
its properties, income or franchises, shown to be due and payable on such
returns have been paid. To the best of Seller's knowledge all such tax returns
were true and correct and Seller knows of no proposed additional tax
assessment against it in any material amount nor of any basis therefor.
(b) The provisions for taxes on the books of Seller are in accordance
with generally accepted accounting principles.
Section 3.12 Compliance with Law.
Seller:
(a) is not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject;
(b) has not failed to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its property
or to the conduct of its business; and
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(c) is not in violation in any material respect of any term of any
agreement, charter instrument, by-law or other instrument to which it is a
party or by which it may be bound,
which violation or failure to obtain would have a material adverse affect on
the Trust Estate or the business or condition (financial or otherwise) of
Seller or impair the enforceability of any Lease.
Section 3.13 ERISA. (a) The present value of all benefits vested
under all "employee pension benefit plans," as such term is defined in Section
3 of ERISA, maintained by or contributed to by Seller and its Related Persons
(other than multi-employer plans as such term is defined in Section 3 of
ERISA), as from time to time in effect (herein called the "Pension Plans"),
does not exceed the value of the assets of the Pension Plans allocable to such
vested benefits;
(b) No Prohibited Transactions, Accumulated Funding Deficiencies,
Withdrawals or Reportable Events have occurred with respect to any Pension
Plans that, in the aggregate, could subject Seller to any material tax,
penalty or other liability; and
(c) No notice of intent to terminate a Pension Plan under a distress
termination has been filed, nor has the PBGC instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no event has
occurred or condition exists which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan.
Section 3.14 Ability to Perform. At the date hereof, Seller does not
believe, nor does it have any reasonable cause to believe, that it cannot
perform each and every covenant contained in this Agreement and the other
Basic Documents to which Seller is a party.
Section 3.15 Ordinary Course; No Insolvency. The transactions
contemplated by this Agreement and the other Basic Documents are being
consummated by Seller in furtherance of Seller's ordinary business purposes
and constitute a practical and reasonable course of action by Seller designed
to improve the financial position of Seller, with no contemplation of
insolvency and with no intent to hinder, delay or defraud any of its present
or future creditors. Seller will not, either as a result of the transactions
contemplated by this Agreement, or immediately before or after such
transactions, be insolvent or have an unreasonably small capital for the
conduct of its business and the payment of anticipated obligations.
Section 3.16 Assets and Liabilities. (a) Both immediately before and
after any transfer of Leases and the interests in the Equipment contemplated by
this
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Agreement, the present fair salable value of Seller's assets was or will be in
excess of the amount that will be required to pay Seller's probable
liabilities as they then exist and as they become absolute and matured; and
(b) Both immediately before and after any transfer of Leases, the
transfer of the interests in the Equipment contemplated by this Agreement, the
sum of Seller's assets was or will be greater than the sum of Seller's debts,
valuing Seller's assets at a fair salable value.
Section 3.17 Fair Consideration. The consideration received by
Seller, in exchange for the Seller Assets, is fair consideration having value
equivalent to or in excess of the value of the assets being transferred by
Seller.
Section 3.18 Ability to Pay Debts. Neither as a result of the
transaction contemplated by this Agreement nor otherwise does Seller believe
that it will incur debts beyond its ability to pay or which would be
prohibited by its charter documents or by-laws. Seller's assets and cash flow
enable it to meet its present obligations in the ordinary course of business
as they become due.
Section 3.19 Bulk Transfer Provisions. The sale, transfer, assignment
and conveyance of the Seller Assets by Seller pursuant to this Agreement is
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction.
Section 3.20 Transfer Taxes. The sale, transfer, assignment and
conveyance of the Seller Assets by Seller pursuant to this Agreement is not
subject to and will not result in any tax, fee or governmental charge payable
by Seller to any federal, state or local government ("Transfer Taxes"). If
Purchaser receives actual notice of any Transfer Taxes arising out of the
transfer, assignment and conveyance of the Seller Assets, on written demand by
Purchaser, or upon Seller otherwise being given notice thereof, Seller shall
pay, and otherwise indemnify and hold Purchaser, Indenture Trustee, Owner
Trustee, Noteholders and Certificateholders and the holders of the Notes
harmless, on an after-tax basis, from and against any and all such Transfer
Taxes (it being understood that Indenture Trustee, Owner Trustee, Noteholders
and Certificateholders shall have no obligation to pay such Transfer Taxes).
Section 3.21 Principal Executive Office. The principal executive office
of Seller is located at 1023 West Eighth Street, Cincinnati, Ohio 45203.
Section 3.22 Nonconsolidation. Seller shall not take any action which
would cause Purchaser to breach Section 7.2(b) of the Pooling and Servicing
Agreement.
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Section 3.23 Sale Treatment. Seller will treat the transfer to
Purchaser of the Seller Assets (other than the Contributed Assets) as a sale
for reporting and accounting purposes and will treat the transfer of the
Contributed Assets as a contribution for reporting and accounting purposes.
Section 3.24 Leases are Chattel Paper. Each Lease agreement is
"chattel paper" within the meaning of the Uniform Commercial Code in the
states of New York and Ohio.
ARTICLE IV
SELLER'S OBLIGATONS
Section 4.1 Indemnification. Seller agrees to indemnify and hold
harmless Purchaser, Servicer, Indenture Trustee, Owner Trustee, the
Noteholders and the Certificateholders (each an "Indemnified Party") against
any and all liabilities, losses, damages, penalties, costs and expenses
(including costs of defense and legal fees and expenses) which may be incurred
or suffered by such Indemnified Party (except to the extent arising out of the
gross negligence or willful misconduct on the part of the Indemnified Party)
as a result of claims, actions, suits or judgments asserted or imposed against
it and arising out of the transactions contemplated hereby or by the
Indenture, including any claims resulting from any use, operation,
maintenance, repair, storage or transportation of any item of Equipment,
whether or not in Seller's possession or under its control pursuant to this
Agreement, and any tort claims and any fines or penalties arising from any
violation of the laws or regulations of the United States or any state or
local government or governmental authority; provided that the foregoing
indemnity shall in no way be deemed to impose on Seller any obligation, other
than to the extent specifically set forth in this Article IV, to make any
payment with respect to principal or interest on the Notes or Certificates or
to reimburse Purchaser for any payments on account of the Notes or
Certificates.
Section 4.2 Repurchases; Other Payments. (a) If (i) any of the
representations or warranties made by Seller in Sections 3.4 and 3.5 with
respect to any of the Leases or the Equipment subject thereto proves at any
time to have been inaccurate in any material respect as of the Closing Date or
related transfer date in the case of Subsequent Leases, as the case may be,
(ii) any adjustment or modification is made to any Lease pursuant to the
second sentence of Section 4.4 of the Pooling and Servicing Agreement or (iii)
any Lease shall be terminated in whole or in part by a Lessee, or any amounts
due with respect to any Lease shall be reduced or impaired, as a result of any
action or inaction by Seller (other than any such action or inaction of
Seller, when acting as Servicer, in connection with the enforcement of any
Lease in a manner consistent with the provisions of the Pooling and Servicing
Agreement) or any claim by any Lessee against Seller and, in the case of
clauses (i) and (iii), the event or condition causing such inaccuracy,
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termination, reduction, impairment or claim shall not have been cured or
corrected within 30 days after the earlier of the date on which Seller is
given notice thereof by Purchaser or Indenture Trustee or the date on which
Seller otherwise first has notice thereof, Seller will repurchase such Lease
and the Equipment subject thereto by paying to Purchaser, not later than the
third Business Day after the Determination Date (A) next following the
expiration of such 30-day period with respect to any such event referred to in
clauses (i) and (iii), and (B) next following the date of such event with
respect to any such event referred to in clause (ii), an amount equal to the
Lease Repurchase Amount, and simultaneously with such repurchase, Seller shall
reimburse Servicer for all amounts, if any, theretofore advanced by Servicer
pursuant to the Pooling and Servicing Agreement with respect to such Lease;
provided, that if Seller is required to repurchase any Lease under clause (i)
or (ii), Seller may instead substitute a Substitute Lease if such substitution
is permitted under Section 4.3. Without limiting the generality of the
foregoing, it is agreed and understood that for purposes of this Section 4.2,
any inaccuracy in any representation or warranty with respect to (i) the
priority of the Lien of the Indenture with respect to any Lease or (ii) the
amount (if less than represented) of the Lease Payments, Casualty Payments or
Termination Payment under any Lease shall be deemed to be material.
(b) By the Closing Date, Seller agrees to obtain and provide to
Indenture Trustee UCC searches against it and Purchaser from the central and
county filing offices in Ohio confirming the absence of any UCC filings
against either Seller or Purchaser with respect to the Leases (including the
right to receive all payments due or to become due thereunder) and the
Equipment, other than those naming Purchaser as Purchaser of the Leases or
Indenture Trustee as secured party. If any searches delivered pursuant to this
Section 4.1(b) disclose UCC filings (which are not in the process of being
released pursuant to releases delivered on the Closing Date) against Purchaser
or Seller with respect to Leases of Equipment the Discounted Present Value of
which (i) is greater than 2% but less than 5% of all the Leases, then Seller
shall cause searches to be made in additional states within 30 days following
such disclosure so that the Discounted Present Value of Leases of Equipment in
states where searches have been performed exceeds 75% of the aggregate
Discounted Present Value of all Leases and 75% of the Booked Residual Value of
Equipment or (ii) is equal to or greater than 5% of all the Leases then Seller
shall cause searches to be made in additional states within 30 days following
such disclosure so that the Discounted Present Value of Leases of Equipment in
states where such searches have been performed equals 100% of the aggregate
Discounted Present Value of all Leases. Without limiting the provisions of
Section 4.2(a) or this Section 4.2(b), if Seller fails to provide any such
searches required by the preceding sentences of this Section 4.2(b) within the
required time period or any search reveals the existence of any conflicting
Liens (which are not removed within 30 days of receipt of such search), Seller
shall be required to repurchase not later than the third Business Day
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after the Determination Date following the expiration of the time period
during which such search was to be obtained or such Lien released, as the case
may be, any Lease of Equipment in any such state for which such searches are
not provided or with respect to which conflicting Liens are found to exist at
the Lease Repurchase Amount for such Lease.
(c) Seller's obligations under this Section 4.2 are the full recourse
obligations of Seller and shall in no way be limited or discharged by the
application of any funds constituting part of the Trust Estate.
Section 4.3 Substitution.
(a) Subject to the satisfaction of the requirements set forth in
paragraph (b), and in lieu of repurchasing any Lease if required pursuant to
clause (i) or (ii) of Section 4.2, Seller will have the right (but not the
obligation) at any time to substitute one or more Eligible Leases and the
Equipment subject thereto (each, a "Substitute Lease") for such Lease (for
purposes of this Section 4.3, a "Predecessor Lease") and the Equipment subject
thereto if:
(i) such Predecessor Lease became a Warranty Lease or was
adjusted pursuant to the second sentence of Section 4.4 of the
Pooling and Servicing Agreement during the immediately preceding Due
Period; and
(ii) the aggregate Discounted Present Value of the
Predecessor Leases shall not exceed 10% of the Discounted Present
Value of the Leases on the Cut-off Date.
(b) Each transfer of Substitute Leases will be subject to the
satisfaction of the following conditions precedent:
(i) after giving effect to such substitutions, the aggregate
Booked Residual Value of such Leases must be not less than 90% of the
Booked Residual Value of the Leases substituted since the Closing
Date;
(ii) either the final payment on such Substitute Lease must
be on or prior to [final scheduled maturity month/year] or, to the
extent the final payment on such Lease is due subsequent to [final
scheduled maturity month/year], only scheduled payments due on or
prior to such date may be included in the Discounted Present Value of
such Lease for the purpose of making any calculation under the Basic
Documents;
(iii) after giving effect to such substitutions, the
aggregate amount of Lease Payments through the term of the Leases
(including the
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Substitute Leases) will not be materially less than the aggregate
scheduled Lease Payments of the Leases prior to such substitution;
and
(iv) after giving effect to such substitutions, the
Discounted Present Value of the Performing Leases must not be less
than the Discounted Present Value of the Performing Leases prior to
such substitution.
(c) Each substitution pursuant to this Section 4.3 shall include the
right to receive all amounts not collected under each Substitute Lease prior
to being substituted and any security deposits paid by the related Lessee to
Seller in connection therewith (other than any prepayments of rent required
pursuant to the terms thereof at or before the commencement of such Lease, all
Payaheads relating to payments on such Substitute Leases due or becoming due
after the effective date of such substitution and all other related assets
referred to in Section 2.1.
Section 4.4 Procedure for Substitution. (a) By 11:00 a.m. on the
third Business Day following each Determination Date, Seller shall give
written notice to Purchaser and Servicer of any substitution of Substitute
Leases for Predecessor Leases. By 11:00 a.m. on the fourth Business Day
following each Payment Date, Seller shall deliver to Purchaser, Servicer and
Indenture Trustee and, to the extent not included in the Monthly Servicer
Report, Indenture Trustee shall promptly deliver to each Rating Agency (i) a
supplement to Exhibit A setting forth the information shown thereon for each
such Substitute Lease, (ii) an Officer's Certificate (A) certifying that each
such Substitute Lease is an Eligible Lease, (B) specifying each Predecessor
Lease for which a substitution has been made and the amount of each periodic
Lease Payment and the Booked Residual Value under each such Predecessor Lease
and the amount of each periodic Lease Payment and the Booked Residual Value
under each Substitute Lease being transferred thereby and (C) that all
conditions precedent to such substitution have been satisfied and (iii) such
additional information concerning such Substitute Leases or Predecessor Leases
as may be needed for Servicer to prepare its monthly reports pursuant to
Section 4.8 of the Pooling and Servicing Agreement and to otherwise carry out
its duties as servicer thereunder.
(b) Subject to the provisions of Section 4.5, the delivery of any
Officer's Certificate and supplement to Schedule 1 pursuant to Section 4.3(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Due Period (i) Seller assigned to Purchaser pursuant to
Section 2.1 all of Seller's right, title and interest in and to the Substitute
Leases identified in such supplement and the related rights described in
Section 2.1, (ii) Seller transferred to Purchaser, as a contribution to
capital, all of Seller's right, title and interest in and to the Equipment
subject to such Substitute Leases (to the extent of Seller's interest in such
Equipment, including Seller's security interest in any Equipment
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which is not owned by Seller), and (iii) Purchaser assigned and transferred to
Seller, without representation or warranty, all of Purchaser's right, title
and interest in and to the Predecessor Leases identified in such Officer's
Certificate and the Equipment subject thereto (to the extent of Purchaser's
interest in such Equipment, including Purchaser's security interest in any
Equipment which is not owned by Purchaser). Seller shall promptly deliver to
Indenture Trustee (or a custodian on its behalf) on behalf of Purchaser the
original executed counterpart of each Substitute Lease assigned to Purchaser
in accordance with Section 4.3 and Purchaser shall promptly request Indenture
Trustee to deliver to Seller the original executed counterpart of each
Predecessor Lease for which substitution has been made pursuant to Section
4.3.
Section 4.5 Objection and Repurchase. If any Noteholder or
Certificateholder objects to any substitution of Leases within ten days of
receipt of Servicer's monthly report providing notice thereof pursuant to
Section 4.8 of the Pooling and Servicing Agreement, on the grounds either that
any Substitute Lease is not an Eligible Lease within the meaning of the
definition thereof or that such substitution or addition is otherwise not
permitted under the provisions of Section 4.3 Seller shall be entitled to
present such additional information as it deems appropriate in an effort to
demonstrate that such Lease is an Eligible Lease and that such substitution is
permitted under the provisions of Section 4.3. Following such presentation,
the substitution shall remain effective if each person originally objecting to
the substitution withdraws his objection. If the conditions specified in the
preceding sentence are not satisfied, or if at any time it is established that
any lease was not, at the time of substitution, an Eligible Lease, then Seller
shall be required to repurchase such Lease in accordance with the provisions
of Section 4.2.
Section 4.6 Seller's Subsequent Obligations. Upon any substitution of
Leases in accordance with the provisions of this Article IV, Seller's
obligations hereunder with respect to the related Predecessor Lease shall
cease but Seller shall thereafter have the same obligations with respect to
the Substitute Lease substituted as it has with respect to all other Leases
subject to the terms hereof.
ARTICLE V
SELLER
Section 5.1 Merger or Consolidation of Seller. (a) Seller will keep
in full force and effect its existence, rights and franchise as a corporation
under the laws of its jurisdiction of incorporation and will preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is necessary to protect the validity and
enforceability of any of the Leases or to permit performance of Seller's
duties under this Agreement and the other Basic Documents to which Seller is a
party.
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(b) Seller shall not merge or consolidate with any other Person
unless (i) the entity surviving such merger or consolidation is a corporation
organized under the laws of the United States or any jurisdiction thereof and
(ii) the surviving entity, if not Seller, shall execute and deliver to
Purchaser, Servicer and Indenture Trustee, in form and substance satisfactory
to each of them, (a) an instrument expressly assuming all of the obligations
of Seller hereunder and (b) an Opinion of Counsel to the effect that such
Person is a corporation of the type described in the preceding clause (i) and
has effectively assumed the obligations of Seller hereunder.
Section 5.2 Inspection. Seller will permit, on reasonable prior
notice, the representatives of Purchaser, Servicer, Indenture Trustee, Owner
Trustee or any Noteholder or Certificateholder evidencing not less than 25% of
the Outstanding Principal Amount of any class of Notes or the Certificate
Balance, as applicable, to examine all of the books of account, records,
reports and other papers of Seller, to make copies and extracts therefrom, and
to discuss Seller's affairs, finances and accounts with its officers,
employees and independent public accountants (and by this provision Seller
authorizes said accountants to discuss the finances and affairs of Seller) all
at such reasonable times and as often as may be reasonably requested for the
purpose of reviewing or evaluating the financial condition or affairs of
Seller or Seller's performance of its duties and obligations hereunder. Any
expense incident to the exercise by Purchaser, Indenture Trustee, Owner
Trustee or any Noteholder or Certificateholder during the continuance of any
default by Seller in any of its obligations hereunder of any right under this
Section 7.05 shall be borne by Seller.
Section 5.3 Books and Records. Seller will clearly mark its books and
records to reflect each sale of a Lease and contribution of the Equipment
subject thereto to Purchaser.
Section 5.4 Communications. Seller will reply to all inquiries by
third parties with respect to the transactions contemplated by this Agreement
by indicating that it has sold to Purchaser the Leases and contributed to
Purchaser its right, title and interest in the related Equipment.
ARTICLE VI
ASSIGNMENT
Section 6.1 Assignment to Indenture Trustee. It is understood that
this Agreement and all rights of Purchaser hereunder will be assigned by
Purchaser to Indenture Trustee pursuant to the Indenture, for the benefit of
Indenture Trustee and the Noteholders as provided in the Indenture, and may be
subsequently assigned by Indenture Trustee to any successor Indenture Trustee
or as otherwise provided in the Indenture. Seller hereby expressly agrees to
each such assignment
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<PAGE>
and agrees that all of its duties, obligations, representations and warranties
hereunder shall be for the benefit of, and may be enforced by, Indenture
Trustee, the Noteholders, and any successor to or assignee of any thereof.
Section 6.2 Assignment by Seller. None of the respective rights or
obligations of Seller hereunder may be assigned without the prior written
consent of Purchaser, Indenture Trustee (acting upon the instructions of the
Holders of Notes representing 662/3% of the then aggregate unpaid Outstanding
Principal Amount of the Notes) and the Holders of Notes representing 662/3% of
the Certificate Balance.
ARTICLE VII
NATURE OF SELLER'S OBLIGATIONS AND SECURITY THEREFOR
Section 7.1 Seller's Obligations Absolute. The obligations of Seller
hereunder, and the rights of Indenture Trustee, as assignee of Purchaser, in
and to all amounts payable by Seller hereunder, shall be absolute and
unconditional and shall not be subject to any abatement, reduction, setoff,
defense, counterclaim or recoupment whatsoever, including abatements,
reductions, setoffs, defenses, counterclaims or recoupments due or alleged to
be due to, or by reason of, any past, present or future claims which Seller
may have against Servicer, Purchaser, Indenture Trustee, Owner Trustee and any
Noteholder or Certificateholder or any other Person for any reason whatsoever;
nor, except as otherwise expressly provided herein, shall this Agreement
terminate, or the obligations of Seller be otherwise affected, by reason of
any defect in any Lease or in any unit of Equipment or in the respective
rights and interests of Purchaser, Seller and Indenture Trustee therein, or by
reason of any Liens, encumbrances, security interests or rights of others with
respect to any Lease or any unit of Equipment, or any failure by Purchaser to
perform any of its obligations herein contained, or by reason of any other
indebtedness or liability, howsoever and whenever arising, of Purchaser,
Servicer, Indenture Trustee, or any Noteholder or Certificateholder to Seller
or any other Person or by reason of any insolvency, bankruptcy, or similar
proceedings by or against Seller, Servicer, Purchaser, Indenture Trustee or
any other Person or for any other cause whether similar or dissimilar to the
foregoing, any present or future law to the contrary notwithstanding, it being
the intention of the parties hereto that all obligations of Seller hereunder
and all amounts payable by Seller hereunder shall continue to be due and
payable in all events and in the manner and at the times herein provided
unless and until the obligation to perform or pay the same shall be terminated
or limited pursuant to the express provisions of this Agreement.
Section 7.2 Security for Obligations. As security for the full and
timely performance by Seller of each of its obligations hereunder, Seller hereby
pledges and grants to Purchaser (as a precaution in the event that, contrary to
the intent of
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<PAGE>
the parties to the transactions contemplated hereby, it is contended that
Seller has any continuing interest in any Lease or item of Equipment subject
to the Indenture) a first priority Lien on and security interest in all right,
title and interest of Seller now or hereafter acquired in and to each Lease
(including the right to receive all payments due or to become due thereunder)
and each item of Equipment at any time subject to this Agreement. The
foregoing security interest is granted upon and is subject to the same terms
and provisions as are set forth in the Indenture and shall continue in full
force and effect until the same is discharged in accordance with the terms
therein, notwithstanding any waiver or modification of any of the terms hereof
or thereof or of any of the Notes or the Certificates, whether with or without
the consent of Seller.
Section 7.3 Further Assurances; Financing Statements. Seller agrees
that at any time and from time to time, at its expense, it shall promptly
execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable or that Purchaser or
Indenture Trustee may request to perfect and protect the assignments and
security interests granted or purported to be granted herein with respect to
the Leases and the Lease Payments or to enable Purchaser or Indenture Trustee
to exercise and enforce its rights and remedies under this Agreement and the
other Basic Documents with respect to any Leases and the Lease Payments.
Without limiting the generality of the foregoing, Seller shall execute and
file such financing or continuation statements, or amendments thereto, and
such other instruments or notices as may be necessary or desirable or that
Purchaser or Indenture Trustee may request to protect and preserve the
assignments and security interests granted by this Agreement and the other
Basic Documents with respect to the Leases.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Continuing Obligations. This Agreement shall continue in
full force and effect until each of the Notes and any other amounts due to any
holder of the Notes have been paid in full and all other obligations, if any,
secured by the Lien of the Indenture have been fully satisfied.
Section 8.2 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE LAWS OF THE STATE OF NEW YORK. IF ANY PROVISION OF THIS AGREEMENT IS
DEEMED INVALID, IT SHALL NOT AFFECT THE BALANCE OF THIS AGREEMENT.
Section 8.3 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of Purchaser,
Seller,
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Servicer and Indenture Trustee and shall inure to the benefit of the
successors and assigns of the holders, from time to time, of the Notes.
Section 8.4 Modification. The Agreement may be amended from time to
time by a written amendment duly executed and delivered by Seller and
Purchaser, with the written consent of Indenture Trustee, but without the
consent of any of Noteholders or Certificateholders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of
Noteholders or Certificateholders; provided, that such action shall not, as
evidenced by an Opinion of Counsel delivered to Trustee and Indenture Trustee,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
This Agreement may also be amended from time to time by Seller and
Purchaser, with the written consent of (a) Indenture Trustee, (b) Noteholders
holding Notes evidencing not less than 662/3% of the Outstanding Principal
Amount of the Notes, and (c) the Holders of Certificates evidencing not less
than 662/3% of the Certificate Balance, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of Noteholders or
Certificateholders; 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 Leases or distributions that shall be required to
be made for the benefit of Noteholders or Certificateholders or (b) reduce the
aforesaid percentage of the Notes and the Certificates that are required to
consent to any such amendment, without the consent of the holders of all the
outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent (or, in
the case of the Rating Agencies, 10 days prior thereto), Seller and Purchaser
shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, Trustee
and Indenture Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to such
execution and delivery by Trustee and Indenture Trustee have been satisfied.
Trustee and Indenture Trustee may, but shall not be obligated to, enter into
any such amendment that affects
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Trustee's or Indenture Trustee's, as applicable, own rights, duties or
immunities under this Agreement or otherwise.
Section 8.5 Notices. All notices and other communications given in
connection with this Agreement shall be sufficient for every Person hereunder
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid or certified mail return receipt requested, or
sent by private courier or confirmed telecopy, in case of Seller, to 1023 West
Eighth Street, Cincinnati, Ohio 45203, Attention: [Name] (telecopy:
513/579-____), and in the case of Purchaser, to 1023 West Eighth Street,
Cincinnati, Ohio 45203, Attention: [Name] (telecopy: 513/579-____), or to such
other address as either party may specify to the other from time to time in
accordance with this Section 8.5.
Section 8.6 Counterparts. This Agreement may be executed in any number
of counterparts, each counterpart constituting an original, but all together
constituting only one Agreement.
Section 8.7 Nonpetition Covenant. Seller shall not petition or
otherwise invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against 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
Purchaser or any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of Purchaser so long as there shall
not have elapsed one year plus one day since the latest maturing Notes have
been paid in full in cash.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Pooling and
Servicing Agreement as of the date and year first written above.
PROVIDENT LEASE RECEIVABLES
CORPORATION
By: __________________________________________
Name:
Title:
INFORMATION LEASING
CORPORATION
By: __________________________________________
Name:
Title:
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<PAGE>
SCHEDULE 1
SCHEDULE OF LEASES AND EQUIPMENT
ON FILE AT INDENTURE TRUSTEE
A-1
<PAGE>
EXHIBIT 10.4
==============================================================================
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
FORM OF
MANAGEMENT AGREEMENT
among
PROVIDENT EQUIPMENT LEASE TRUST 1998-A,
as Issuer,
and
INFORMATION LEASING CORPORATION,
as Manager,
and
[NAME OF INDENTURE]
as Indenture Trustee.
Dated as of September 1, 1998
==============================================================================
<PAGE>
||
|| TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
1. Duties of Manager......................................................... 2
(a) Duties with Respect to the Indenture and the Depository Agreement.. 2
(b) Duties with Respect to Trust....................................... 5
(c) Non-Ministerial Matters............................................ 6
2. Records................................................................. 7
3. Compensation............................................................ 7
4. Additional Information To Be Furnished to Issuer........................ 7
5. Independence of Manager................................................. 7
6. No Joint Venture........................................................ 7
7. Other Activities of Manager............................................. 7
8. Term of Agreement; Resignation and Removal of Manager................... 8
9. Action upon Termination, Resignation or Removal........................ 10
10. Notices................................................................ 10
11. Amendments............................................................. 11
12. Successors and Assigns................................................. 12
13. Governing Law.......................................................... 12
14. Headings............................................................... 12
15. Counterparts........................................................... 12
16. Severability........................................................... 12
17. Not Applicable to Information Leasing Corporation in Other Capacities.. 12
18. Limitation of Liability of Trustee and Indenture Trustee............... 13
19. Third-Party Beneficiary................................................ 13
20. Indemnification........................................................ 13
||
||
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MANAGEMENT AGREEMENT dated as of September 1, 1998, among PROVIDENT
EQUIPMENT LEASE TRUST 1998-A, a Delaware business trust ("Issuer"),
INFORMATION LEASING CORPORATION, an Ohio corporation, as Manager ("Manager"),
and [NAME OF INDENTURE TRUSTEE], a [ ], not in its individual capacity but
solely as Indenture Trustee ("Indenture Trustee").
RECITALS
WHEREAS Issuer is issuing [ ]% Class A-1 Lease-Backed Notes, [ ]%
Class A-2 Lease-Backed Notes and Class B Lease-Backed Notes (collectively, the
"Notes") pursuant to the Indenture, dated as of September 1, 1998 (as amended
and supplemented from time to time in accordance with the provisions thereof,
"Indenture"), between Issuer and Indenture Trustee (capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned such
terms in Appendix X to the Indenture);
WHEREAS Issuer has entered into certain agreements in connection with the
issuance of the Notes and of certain beneficial ownership interests of the
Issuer, including: (i) the Pooling and Servicing Agreement, (ii) a Depository
Agreement, dated September __, 1998 (the "Depository Agreement"), among
Issuer, Indenture Trustee, Manager and The Depository Trust Company,(iii) the
Indenture, and (iv) the Trust Agreement (the Pooling and Servicing Agreement,
the Depository Agreement, the Indenture and the Trust Agreement being
hereinafter referred to collectively as the "Related Agreements");
WHEREAS pursuant to the Related Agreements, Issuer and Trustee are
required to perform certain duties in connection with: (a) the Notes and the
collateral therefor pledged pursuant to the Indenture (the "Collateral") and
(b) the beneficial ownership interests in Issuer (the registered Holders of
such interests being referred to herein as the "Owners");
WHEREAS Issuer and Trustee desire to have Manager perform certain of the
duties of Issuer and Trustee referred to in the preceding clause, and to
provide such additional services consistent with this Agreement and the
Related Agreements as Issuer and Trustee may from time to time request;
WHEREAS Manager has the capacity to provide the services required hereby
and is willing to perform such services for Issuer and Trustee on the terms
set forth herein;
<PAGE>
NOW, THEREFORE, in consideration of the mutual terms and covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. Duties of Manager.
(a) Duties with Respect to the Indenture and the Depository Agreement.
Manager shall perform all of its duties as Manager and the duties of Issuer
and Trustee under the Depository Agreement. In addition, Manager shall consult
with Trustee regarding the duties of Issuer and Trustee under the Indenture
and the Depository Agreement. Manager shall monitor the performance of Issuer
and shall advise Trustee when action is necessary to comply with Issuer's or
Trustee's duties under the Indenture and the Depository Agreement. Manager
shall prepare for execution by Issuer or shall cause the preparation by other
appropriate persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of Issuer or Trustee to
prepare, file or deliver pursuant to the Indenture or the Depository
Agreement. In furtherance of the foregoing, Manager shall take all appropriate
action that is the duty of Issuer or Trustee to take pursuant to the Indenture
or the Depository Agreement, including, without limitation, such of the
foregoing as are required with respect to the following matters (references in
this Section are to sections of the Indenture):
(i) the preparation of all Officer's Certificates and Opinions of
Counsel with respect to any requests by Issuer to Indenture Trustee to
take any action under the Indenture (Section 1.2);
(ii) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes and delivery of the
same to Indenture Trustee (Section 2.2);
(iii) the duty to cause the Note Register to be kept and to give
Indenture Trustee notice of any appointment of a new Note Registrar and
the location, or change in location, of the Note Register (Section 2.3);
(iv) the review of evidence of the destruction, loss or theft of
any Notes and the preparation or obtaining of documents or instruments
required for the authentication of replacement Notes and the delivery of
same to Indenture Trustee (Section 2.4);
(v) the furnishing to Indenture Trustee with the names and
addresses of Noteholders during any period when Indenture Trustee is not
the Note Registrar (Section 2.11);
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(vi) the preparation of Issuer Orders and all other actions
necessary with respect to investment and reinvestment of funds in the
Trust Accounts (Section 3.1(c));
(vii) the preparation and delivery of Issuer Requests for the
release of Leases and interests in the related Equipment from the lien of
the Indenture (Section 4.3);
(viii) the compliance with any written directive of Indenture
Trustee with respect to the sale of the Trust Estate in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Sections 6.3 and 6.16);
(ix) the delivery of any Noteholder waiver of an Event of Default
to Indenture Trustee (Section 6.13);
(x) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to Noteholders of notices with respect to such
supplemental indentures (Sections 7.8, 7.9, 7.10, 9.1, 9.2 and 9.3);
(xi) the determination of the need to appoint a co-trustee or
separate trustee, the selection of such trustee, the preparation of all
instruments and agreements necessary or proper for the appointment of
such trustee and the preparation of all instruments and agreements
necessary to accept the resignation or removal such trustee (Section
7.12);
(xii) the notification of Indenture Trustee if the Notes become
listed on any exchange (Section 7.15);
(xiii) the maintenance of an office for registration of transfer or
exchange of Notes (Section 8.2);
(xiv) the duty to cause newly appointed Paying Agents, if any, to
deliver to Indenture Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 8.3);
(xv) the direction to the Paying Agents to deposit moneys with
Indenture Trustee (Section 8.3);
(xvi) the obtaining and preservation of 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
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<PAGE>
Notes, the Collateral and each other instrument and agreement included in
the Trust Estate (Section 8.4);
(xvii) the preparation and delivery of all documents, agreements,
approvals, notices, Officer's Certificates, and Opinions of Counsel
necessary for any merger or consolidation of Issuer (Section 8.4);
(xviii) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and
other instruments, in accordance with Section 8.5 of the Indenture, neces
sary to protect the Trust Estate (Section 8.5);
(xix) the notification of Indenture Trustee and the Noteholders of
a Servicer Default pursuant to the Pooling and Servicing Agreement
(Section 8.7(d));
(xx) the delivery of notice to Indenture Trustee and the Rating
Agencies of each Event of Default under the Indenture and each default by
Servicer or Transferor under the Pooling and Servicing Agreement and each
default by ILC under the Purchase Agreement (Section 8.9);
(xxi) the preparation, execution and filing with the Commission and
Indenture Trustee of documents required to be filed on a periodic basis
with, and summaries thereof as may be required by rules and regulations
prescribed by, the Commission and the transmission of such summaries, as
necessary, to the Noteholders (Section 8.12);
(xxii) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.5);
(xxiii) the monitoring of Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate and the obtaining of the Opinion of Counsel
relating thereto (Section 10.1);
(b) Duties with Respect to Trust. (i) In addition to the duties of
Manager set forth above, Manager shall perform such calculations, and shall
prepare for execution by Issuer or Trustee or shall cause the preparation by
other appropriate persons of all such documents, reports, filings,
instruments, certificates and opinions, as it shall be the duty of Issuer or
Trustee to perform, prepare, file or deliver pursuant to the Related
Agreements, and at the request of Trustee shall take all appropriate action
that it is the duty of Issuer or Trustee to take pursuant to the Related
Agreements. Subject to Section 5 of this Agreement, and in accordance with the
directions of Trustee, Manager shall administer,
4
<PAGE>
perform or supervise the performance of such other activities in connection
with the Collateral (including the Related Agreements) as are not covered by
any of the foregoing and as are expressly requested by Trustee and are
reasonably within the capability of Manager.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, Manager shall be responsible for promptly
notifying Trustee in the event that any withholding tax is imposed on
Trust's payments (or allocations of income) to an Owner as contemplated
in Section 5.2(c) of the Trust Agreement. Any such notice shall specify
the amount of any withholding tax required to be withheld by Trustee
pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, Manager shall be responsible for performance
of the duties of Trustee set forth in Sections 5.5(a), (b), (c) and (d),
the penultimate sentence of Section 5.5, and 5.6(a) of the Trust
Agreement with respect to, among other things, accounting and reports to
Owners; provided, however, that Trustee shall retain responsibility for
the distribution of the Schedule K-1s necessary to enable each Owner to
prepare its Federal and state income tax returns.
(iv) Manager shall satisfy its obligations with respect to clauses
(ii) and (iii) by retaining, at the expense of the Trust payable by
Servicer, a firm of independent certified public accountants (the
"Accountants") acceptable to Trustee, which Accountants shall perform the
obligations of Manager thereunder. In connection with clause (ii),
Accountants will provide prior to ________, 1998, a letter in form and
substance satisfactory to Trustee as to whether any tax withholding is
then required and, if required, the procedures to be followed with
respect thereto to comply with the requirements of the Code. Accountants
shall be required to update the letter in each instance that any
additional tax withholding is subsequently required or any previously
required tax withholding shall no longer be required.
(v) Manager shall perform the duties of Manager specified in
Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of Trustee, and any other
duties expressly required to be performed by Manager under the Trust
Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, Manager may enter into transactions
with or otherwise deal with any of its affiliates; provided, however,
that
5
<PAGE>
the terms of any such transactions or dealings shall be in accordance
with any directions received from Issuer and shall be, in Manager's
opinion, no less favorable to Issuer than would be available from
unaffiliated parties.
(vii) Manager hereby agrees to execute on behalf of Issuer all such
documents, reports, filings, instruments, certificates and opinions as it
shall be the duty of Issuer to prepare, file or deliver pursuant to the
Basic Documents or otherwise by law.
(c) Non-Ministerial Matters. (i) With respect to matters that in the
reasonable judgment of Manager are non-ministerial, Manager shall not take any
action unless within a reasonable time before the taking of such action
Manager shall have notified Trustee of the proposed action and 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 Issuer and the
compromise of any action, claim or lawsuit brought by or against
Issuer (other than in connection with the collection of the Trust
Estate);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or
the appointment of successor Managers or successor Servicers, 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 Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement,
Manager shall not be obligated to, and shall not, (x) make any payments
to the Noteholders under the Related Agreements, (y) sell the Trust
Estate pursuant to Section 6.3 of the Indenture or (z) take any other
action that Issuer directs Manager not to take on its behalf.
6
<PAGE>
2. Records. Manager 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 Issuer, Indenture Trustee and
Depositor at any time during normal business hours.
3. Compensation. As compensation for the performance of Manager's
obligations under this Agreement and as reimbursement for its expenses related
thereto, Manager shall be entitled to $500 per quarter payable in arrears on
each Payment Date, which payment shall be solely an obligation of Servicer.
4. Additional Information To Be Furnished to Issuer. Manager shall
furnish to Issuer from time to time such additional information regarding the
Collateral as Issuer shall reasonably request.
5. Independence of Manager. For all purposes of this Agreement, Manager
shall be an independent contractor and shall not be subject to the supervision
of Issuer or Trustee with respect to the manner in which it accomplishes the
performance of its obligations hereunder. Unless expressly authorized by
Issuer, Manager shall have no authority to act for or represent Issuer or
Trustee in any way (other than as permitted hereunder) and shall not otherwise
be deemed an agent of Issuer or Trustee.
6. No Joint Venture. Nothing contained in this Agreement: (i) shall
constitute Manager and either of Issuer or 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.
7. Other Activities of Manager. Nothing herein shall prevent Manager or
its Affiliates from engaging in other businesses or, in its sole discretion,
from acting in a similar capacity as an Manager for any other Person even
though such Person may engage in business activities similar to those of
Issuer, Trustee or Indenture Trustee.
8. Term of Agreement; Resignation and Removal of Manager.
(a) This Agreement shall continue in force until the dissolution of
Issuer, upon which event this Agreement shall automatically terminate.
(b) Subject to Section 8(e), Manager may resign its duties hereunder by
providing Issuer, Indenture Trustee and Servicer with at least 60 days' prior
written notice.
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<PAGE>
(c) Subject to Section 8(e), Issuer may remove Manager without cause by
providing Manager, Indenture Trustee and Servicer with at least 60 days' prior
written notice.
(d) Subject to Section 8(e), at the sole option of Issuer, Manager may be
removed immediately upon written notice of termination from Issuer to Manager,
Indenture Trustee and Servicer if any of the following events shall occur:
(i) Manager 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 Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of Manager in any involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for Manager or any
substantial part of its property or order the winding-up or liquidation
of its affairs; or
(iii) Manager shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar
official for Manager or any substantial part of its property, shall
consent to the taking of possession by any such official of any
substantial part of its property, shall make any general assignment for
the benefit of creditors or shall fail generally to pay its debts as they
become due.
Manager agrees that if any of the events specified in clauses (ii) or
(iii) of this Section shall occur, it shall give written notice thereof to
Issuer, Servicer and Indenture Trustee within seven days after the happening
of such event.
(e) Upon Manager's receipt of notice of termination, pursuant to Sections
8(c) or (d), or Manager's resignation in accordance with this Agreement, the
predecessor Manager shall continue to perform its functions as Manager under
this Agreement, in the case of termination, only until the date specified in
such termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the later of: (x) the date 45 days from the delivery to Issuer,
Indenture Trustee and Servicer of
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<PAGE>
written notice of such resignation (or written confirmation of such notice) in
accordance with this Agreement and (y) the date upon which the predecessor
Manager shall become unable to act as Manager, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of Manager's
termination hereunder, Issuer shall appoint a successor Manager acceptable to
Indenture Trustee, and the successor Manager shall accept its appointment by a
written assumption in form acceptable to Indenture Trustee. In the event that
a successor Manager has not been appointed at the time when the predecessor
Manager has ceased to act as Manager in accordance with this Section,
Indenture Trustee without further action shall automatically be appointed the
successor Manager and Indenture Trustee shall be entitled to the compensation
specified in Section 3. Notwithstanding the above, Indenture Trustee shall, if
it shall be unable so to act, appoint or petition a court of competent
jurisdiction to appoint any established institution having a net worth of not
less than $50,000,000 and whose regular business shall include the performance
of functions similar to those of Manager, as the successor to Manager under
this Agreement.
(f) Upon appointment, the successor Manager (including Indenture Trustee
acting as successor Manager) shall be the successor in all respects to the
predecessor Manager and shall be subject to all the responsibilities, duties
and liabilities arising thereafter relating thereto placed on the predecessor
Manager and shall be entitled to the compensation specified in Section 3 and
all the rights granted to the predecessor Manager by the terms and provisions
of this Agreement.
(g) Except when and if Indenture Trustee is appointed successor Manager,
Manager may not resign unless it is prohibited from serving as such by law as
evidenced by an Opinion of Counsel to such effect delivered to Indenture
Trustee. No resignation or removal of Manager pursuant to this Section shall
be effective until: (i) a successor Manager shall have been appointed by
Issuer and (ii) such successor Manager shall have agreed in writing to be
bound by the terms of this Agreement in the same manner as Manager is bound
hereunder.
(h) The appointment of any successor Manager shall be effective only
after satisfaction of the Rating Agency Condition with respect to the proposed
appointment.
9. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a), or
the resignation or removal of Manager pursuant to Section 8(b) or (c),
respectively, Manager shall be entitled to be paid all fees and reimbursable
expenses accruing to it to the date of such termination, resignation or
removal. Manager shall forthwith upon such termination pursuant to Section
8(a) deliver to Issuer all property and documents of or relating to the
Collateral then in the
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<PAGE>
custody of Manager. In the event of the resignation or removal of Manager
pursuant to Section 8(b) or (c), respectively, Manager shall cooperate with
Issuer and Indenture Trustee and take all reasonable steps requested to assist
Issuer and Indenture Trustee in making an orderly transfer of the duties of
Manager.
10. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to Issuer or Trustee , to
Provident Equipment Lease Trust 1998-A
c/o [Name of Trustee]
Wilmington, Delaware
Attn: [Trust Department]
[with a copy to
Attn: ]
(b) if to Manager, to
Information Leasing Corporation
1023 West Eight Street
Cincinnati, Ohio 45203
Attention: [ ]
(c) if to Indenture Trustee, to
[Name of Indenture Trustee]
[address]
Attention: Indenture Trust Department]
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed
given if such notice is mailed by certified mail, postage prepaid, or
hand-delivered to the address of such party as provided above.
11. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by Issuer, Manager and Indenture
Trustee, with the written consent of Trustee, but without the consent of any
of the Noteholders or the Certificateholders, to cure any ambiguity, to
10
<PAGE>
correct or supplement provisions of this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that such amendment
shall not, as evidenced by an Opinion of Counsel satisfactory to Indenture
Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
This Agreement may also be amended from time to time by Issuer, Manager
and Indenture Trustee with the written consent of Trustee, Noteholders holding
Notes evidencing not less than 66 2/3% of the Outstanding Principal Amount of
the Notes and the Holders of Certificates evidencing not less than 66 2/3% of
the Certificate Balance, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; 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 the Trust Estate or distributions that
are required to be made for the benefit of the Noteholders or the
Certificateholders or (ii) reduce the aforesaid percentage of the holders of
Notes and Certificates that are required to consent to any such amendment,
without the consent of the holders of all the outstanding Notes and
Certificates. Notwithstanding the foregoing, Manager may not amend this
Agreement without the permission of the Depositor, which permission shall not
be unreasonably withheld.
Promptly after the execution of any such amendment or consent (or, in the
case of the Rating Agencies, 10 days prior thereto), Manager shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder, Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of the Certificateholders or
the 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.
12. Successors and Assigns. This Agreement may not be assigned by Manager
unless such assignment is previously consented to in writing by Issuer and
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 Manager
is bound hereunder. Notwithstanding the foregoing, this Agreement may be
assigned by Manager without the consent of Issuer or Trustee to a corporation or
other organization that is a successor (by merger, consolidation or purchase of
assets) to Manager, provided that such successor organization executes and
delivers to Issuer, Trustee and Indenture Trustee an agreement in which such
11
<PAGE>
corporation or other organization agrees to be bound hereunder by the terms of
said assignment in the same manner as Manager is bound hereunder. Subject to
the foregoing, this Agreement shall bind any successors or assigns of the
parties hereto.
13. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
14. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts, all of
which when so executed shall together constitute but one and the same
agreement.
16. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17. Not Applicable to Information Leasing Corporation in Other
Capacities. Nothing in this Agreement shall affect any obligation Information
Leasing Corporation may have in any other capacity.
18. Limitation of Liability of Trustee and Indenture Trustee. (a)
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by [Name of Trustee], not in its individual capacity but
solely in its capacity as Trustee of Issuer, and in no event shall [Name of
Trustee], in its individual capacity, or any beneficial owner of Issuer have
any liability for the representations, warranties, covenants, agreements or
other obligations of Issuer hereunder, as to all of which recourse shall be
had solely to the assets of Issuer. For all purposes of this Agreement, in the
performance of any duties or obligations of Issuer thereunder, Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by [Name of Indenture Trustee], not in its
individual capacity but solely as Indenture Trustee, and in no event shall
[Name
12
<PAGE>
of Indenture Trustee] have any liability for the representations, warranties,
covenants, agreements or other obligations of Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all
of which recourse shall be had solely to the assets of Issuer.
19. Third-Party Beneficiary. Trustee is a third-party beneficiary to this
Agreement and is entitled to the rights and benefits hereunder and may enforce
the provisions hereof as if it were a party hereto.
20. Indemnification. Manager shall indemnify Trustee and Indenture
Trustee (and their officers, directors, employees and agents) for, and hold
them harmless against, any losses, liability or expense, including attorneys'
fees reasonably incurred by them, incurred without negligence or bad faith on
their part, arising out of or in connection with (i) actions taken by either
of them pursuant to instructions given by Manager pursuant to this Agreement
or (ii) the failure of Manager to perform its obligations hereunder. The
indemnities contained in this Section shall survive the termination of this
Agreement and the resignation or removal of Manager, Trustee or Indenture
Trustee.
13
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
By: [NAME OF TRUSTEE],
not in its individual capacity but solely as
Trustee on behalf of Issuer and on its own
behalf as Trustee under the Trust Agreement,
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[NAME OF INDENTURE TRUSTEE],
not in its individual capacity but solely as
Indenture Trustee,
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
INFORMATION LEASING CORPORATION,
as Manager,
By:
-------------------------------------------
Name:
Title:
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<PAGE>
EXHIBIT 25
Filing pursuant to Registration
Statement number 333-58909
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-----------------------------
__ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. National Banking Association 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Name,address and telephone number of Agent for Service)
-----------------------------
Provident Equipment Lease Trust 1998-A
(Exact name of obligor as specified in its charter)
New York Not applicable
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o First Union Trust Company, N.A.
Attn: Corporate Trust Administration
One Rodney Square
920 King Street
Wilmington, DE 19801
(Address of principal executive offices) (Zip code)
Asset Backed Notes of Provident Equipment Lease Trust 1998-A
(Title of the indenture securities)
===============================================================================
<PAGE>
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1, pursuant to General
Instruction B, because the obligor is not in default as provided under Item
13.
Item 15. Foreign Trustee. Not applicable.
Item 16. List of Exhibits. List below all exhibits filed as a part of this
Statement of Eligibility.
Exhibit 1. a. A copy of the Articles of Association of the trustee
now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28, 1872,
by the Comptroller of the Currency to The
Northwestern National Bank of Minneapolis.*
b. A copy of the certificate of the
Comptroller of the Currency dated January
2, 1934, approving the consolidation of
The Northwestern National Bank of
Minneapolis and The Minnesota Loan and
Trust Company of Minneapolis, with the
surviving entity being titled Northwestern
National Bank and Trust Company of
Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January
12, 1943, as to change of corporate title
of Northwestern National Bank and Trust
Company of Minneapolis to Northwestern
National Bank of Minneapolis.*
<PAGE>
d. A copy of the letter dated May 12, 1983
from the Regional Counsel, Comptroller of
the Currency, acknowledging receipt of
notice of name change effective May 1,
1983 from Northwestern National Bank of
Minneapolis to Norwest Bank Minneapolis,
National Association.*
e. A copy of the letter dated January 4, 1988
from the Administrator of National Banks
for the Comptroller of the Currency
certifying approval of consolidation and
merger effective January 1, 1988 of
Norwest Bank Minneapolis, National
Association with various other banks under
the title of "Norwest Bank Minnesota,
National Association."*
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the
Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b) of
the Act.
Exhibit 7. Consolidated Reports of Condition and Income of the
trustee as of June 30, 1998.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to the corresponding numbered
exibits to the form T-1 filed as Exhibit 25 to registration
statement number 33-66026.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 8th day of September, 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s Marianna C. Stershic
-----------------------
Marianna C. Stershic
Assistant Vice-President
<PAGE>
EXHIBIT 6
September 8, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to
the Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s Marianna C. Stershic
-----------------------
Marianna C. Stershic
Assistant Vice-President
