<PAGE>
As filed with the Securities and Exchange Commission on April 9, 1999
Registration No. 333-70507
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-1 REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------------------
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
(Issuer with respect to the Securities)
HELLER FUNDING CORPORATION II
(Depositor of the Trust described herein)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 6189 36-4165546
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
Heller Funding Corporation II
500 West Monroe Street
Chicago, Illinois 60661
(312) 441-7246
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
Debra H. Snider, Esq.
Heller Funding Corporation II c/o Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
(312) 441-7000
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copies to:
M. David Galainena, Esq. James J. Croke, Jr., Esq.
Winston & Strawn Cadwalader, Wickersham & Taft
35 West Wacker Drive 100 Maiden Lane
Chicago, Illinois 60601 New York, New York 10038
(312) 558-5600 (212) 504-6139
----------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] ________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] ________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class of Securities Amount to Be Proposed Maximum Offering
to Be Registered Registered(1) Price Per Unit(2)
<S> <C> <C>
Class A-1 Receivable-Backed Notes $130,443,946 100%
Class A-2 Receivable-Backed Notes $ 66,165,118 100%
Class A-3 Receivable-Backed Notes $137,624,218 100%
Class A-4 Receivable-Backed Notes $ 30,656,196 100%
Class B Receivable-Backed Notes $ 9,756,635 100%
Class C Receivable-Backed Notes $ 7,825,308 100%
Title of Each Class of Securities Proposed Maximum Aggregate Amount of
to Be Registered Offering Price(2) Registration Fee(3)
<S> <C> <C>
Class A-1 Receivable-Backed Notes $130,443,946 $36,263.42
Class A-2 Receivable-Backed Notes $ 66,165,118 $18,393.90
Class A-3 Receivable-Backed Notes $137,624,218 $38,259.53
Class A-4 Receivable-Backed Notes $ 30,656,196 $ 8,522.42
Class B Receivable-Backed Notes $ 9,756,635 $ 2,712.34
Class C Receivable-Backed Notes $ 7,825,308 $ 2,175.44
</TABLE>
(1) The amount of Securities being registered represents the maximum aggregate
principal amount of Securities currently expected to be offered for sale.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(a).
(3) $1,668 was paid by the Registrant in connection with the initial filing of
this Registration Statement.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE>
Subject to Completion, dated , 1999
Preliminary Prospectus
- ----------------------
Heller Equipment Asset Receivables Trust 1999-1
Receivable-Backed Notes, Series 1999-1
Heller Funding Corporation II, Heller Financial, Inc.,
as trust depositor as servicer
-----------------------
We are offering the following six classes of Receivable-Backed Notes,
Series 1999-1:
<TABLE>
<CAPTION>
Initial
Class Aggregate Interest First Stated Price to Underwriting
of Principal Rate (per Payment Maturity Public per Discount
Notes Amount annum) Date Date Note per Note
- ---- ------ ------ ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
A-1 $129,943,946 % 5/13/99 5/13/00 % %
A-2 $ 65,665,118 % 5/13/99 4/13/01 % %
A-3 $137,124,218 % 5/13/99 7/13/03 % %
A-4 $ 30,356,196 % 5/13/99 12/13/04 % %
B $ 9,656,635 % 5/13/99 11/13/05 % %
C $ 7,725,308 % 5/13/99 4/13/06 % %
</TABLE>
The total price to the public is $[ ]. The total underwriting discount is $[ ].
The total proceeds to the trust is $[ ].
You should carefully consider the factors set forth under "Risk Factors"
on page 12 of this prospectus.
The notes are not obligations of and will not represent or interests in,
and are not guaranteed or insured by, the trust depositor, the owner trustee,
Heller Financial, Inc. or any of their respective affiliates, or any
governmental agency.
_____________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
_____________________
First Union Capital Markets Corp.
Credit Suisse First Boston
Morgan Stanley Dean Witter
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Important Notice about Information
Presented in this Prospectus.................... iii
Summary.......................................... 2
Risk Factors..................................... 12
The Absence of an Existing Market for
the Notes May Limit Your Ability to
Resell the Notes................................ 12
The Price at Which You Can Resell Your
Notes May Decrease if the Ratings of
Your Notes Change............................... 12
The Subordination of the Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, Class B
Notes, the Class C Notes and the Class D
Notes is a Limited Form of Credit
Enhancement..................................... 13
Limited Assets Secure the Notes;
Noteholders Will Have No Recourse to
the Originators, Servicer or their
Affiliates in the Event Delinquencies
and Losses Deplete the Trust's Assets........... 13
Because Disproportionate Amounts of Contracts
Relate to Four States, Adverse Events in
Those Regions May Cause Increased
Defaults and Delinquencies...................... 13
Because Disproportionate Amounts of Contracts
Relate to Particular Industries, Adverse
Economic Conditions in Those Industries May
Cause Increased Defaults and Delinquencies...... 14
The Rate at which Equipment or Software
Becomes Obsolete Affects Prepayment
Rate of the Contracts and the Notes............. 15
Even if We Repossess and Sell the Equipment
Relating to a Contract After an Obligor
Defaults, Shortfalls in Amounts Available
To Pay the Notes May Occur if the Market
Value of the Equipment Has Declined............. 15
Contracts Relating to Software
or Related Support and Consulting
Services are not Secured by the
Software or Related Services.................... 19
Use of Proceeds.................................. 20
Calculation of Discounted Contract
Balance......................................... 20
Composition of the Contracts..................... 21
Distribution of Contracts by Contract
Type............................................ 23
Distribution of Contracts by State in
Which Obligors Are Located...................... 24
Distribution of Contracts by Equipment
Type............................................ 26
Distribution of Contracts by Obligor
Industry........................................ 28
Distribution of Contracts by Gross Original
Contract Balance................................ 30
Distribution of Contracts by Remaining Discounted
Contract Balance................................ 31
Distribution of Contracts by Original
Contract Term................................... 32
Distribution of Contracts by Remaining
Months to Stated Maturity....................... 32
Delinquency and Loss Information................. 33
The Contracts ................................... 37
Prepayment and Yield Considerations.............. 44
Heller Financial, Inc. and Heller
Financial Leasing, Inc.......................... 65
The Trust........................................ 72
The Trust Depositor.............................. 73
Description of the Notes and Indenture........... 74
General.......................................... 74
Interest and Principal.......................... 74
Amounts Available for Payments on the
Notes.......................................... 75
Allocations..................................... 76
Reserve Fund.................................... 84
Collection Account and Collection
Period......................................... 85
Events of Default............................... 87
Events of Default; Remedies..................... 89
The Indenture Trustee........................... 89
Governing Law................................... 90
Amendments...................................... 90
Servicing Compensation and Payment of
Expenses....................................... 91
Optional Termination............................ 91
Reports......................................... 92
List of Noteholders............................. 93
Administration Agreement........................ 94
Book-Entry Registration......................... 94
</TABLE>
i
<PAGE>
Issuance of Certificated Notes
at a Later Date....................... 98
The Class D Notes and the Certificate... 98
The Sale and Servicing Agreement........ 99
Termination of Trust................... 99
Conveyance of the Contracts............ 99
Representations and Warranties;
Definition of Eligible Contract.......100
Remedies for Breaches of
Representations and Warranties;
Definition of Ineligible Contract.....103
Concentration Amounts; Definition of
Excess Contract.......................104
Material Modifications to Contracts....105
Substitute Contracts...................106
Definition of Defaulted Contracts......106
Indemnification........................107
Servicing Standard and Servicer
Advances..............................107
Servicer Resignation...................108
Servicer Default.......................108
Evidence as to Compliance..............110
Amendments.............................110
The Owner Trustee......................111
Federal Income Tax Consequences.........112
ERISA Considerations....................119
Plan of Distribution....................120
Rating of the Notes.....................123
Legal Matters...........................123
Experts.................................123
Index of Terms..........................126
ii
<PAGE>
Important Notice About Information Presented In this Prospectus
Within the period during which there is an obligation to deliver a
prospectus, the underwriters will, at your request, promptly deliver to you, or
cause to be delivered to you, without charge, a paper copy of this prospectus.
No dealer, salesman or other person is authorized to give any information
or to make any representation not contained in this prospectus. If anyone makes
such a representation to you, you should not rely on it.
This prospectus does not constitute an offer to sell or a solicitation of
any offer to buy any security other than the notes offered by this prospectus,
nor does it constitute an offer to sell or a solicitation of any offer to buy
any of the notes to any person in any jurisdiction in which the person making
such offer or solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such an offer or solicitation to such person.
<PAGE>
Summary
The following is only a summary of the terms of the notes. It does not
contain all the information that may be important to you. You should therefore
read this entire prospectus. In addition, you may wish to read the principal
documents governing the sale of the contracts, the formation of the trust and
the issuance of notes. Those documents have been filed as exhibits to the
registration statement of which this prospectus is a part.
There are material risks associated with an investment in the notes. See
"Risk Factors" on page 12 for a discussion of factors you should consider before
making an investment in the notes.
The Trust................. Heller Equipment Asset Receivables Trust 1999-1. The
trust's principal offices will be in care of
Wilmington Trust Company, as owner trustee, at
Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, telephone number (302)
651-1000.
The Originators........... Heller Financial, Inc. and Heller Financial Leasing,
Inc.
The Trust Depositor....... Heller Funding Corporation II. The trust depositor
is a wholly owned, limited purpose subsidiary of
Heller Financial, Inc. The trust depositor's
principal executive offices are located at 500 West
Monroe Street, Chicago, Illinois 60661, telephone
(312) 441-7246.
The Servicer.............. Heller Financial, Inc. with Heller Financial
Leasing, Inc. acting as a sub-servicer.
The Indenture Trustee..... Norwest Bank Minnesota, National Association
The Trust's Assets
A. The Contracts........ The trust's assets will primarily consist of the
contracts.
The contracts consist of:
. conditional sale agreements
. leases
. secured promissory notes
. installment payment agreements
. financing agreements
2
<PAGE>
Most of the contracts are end-user contracts. End-
user contracts relate to the financing by end-users
of equipment or software and related support and
consulting services. The obligors on the end-user
contracts are the actual end-users. The other
contracts are limited recourse loan obligations of
equipment manufacturers, dealers or distributors or
computer software distributors which are secured by
one or more end-user contracts. We refer to these
other contracts as vendor loans.
The contracts have been originated by either Heller
Financial, Inc. or Heller Financial Leasing, Inc. or
vendors of equipment or software. Those vendors
assigned contracts originated by them to Heller
Financial, Inc. or Heller Financial Leasing, Inc.
Heller Financial, Inc. and Heller Financial Leasing,
Inc. have sold the contracts to the trust depositor.
On or about April 15, 1999, the trust depositor will
transfer the contracts and security interests in the
related equipment to the trust. The contracts have
been selected based on criteria specified in the
sale and servicing agreement.
Frequently, information about the contracts is
expressed in terms of the discounted contract
balance. The discounted contract balance of a
contract is the present value of scheduled payments
to be paid on the contract calculated at a discount
rate of [ ]%. For a more specific description of how
the discounted contract balance is calculated see
"Discounted Contract Balance". Where noted in this
prospectus, we used a statistical discount rate of
5.977% to calculate the discounted contract balances
of the contracts. The statistical discount rate is
based on an average of the estimated interest rates
of the notes weighted by the estimated initial
average life and initial principal amounts of the
notes.
None of the obligors on the contracts are located
outside of the United States and its territories. No
more than 21.80% (calculated using the statistical
discount rate) of the aggregate discounted contract
balance of the contracts relates to obligors located
in the same state. All of the contracts are
commercial contracts and, as of the date hereof, no
contract has any scheduled payments which are:
. more than 60 days delinquent; and
. are in aggregate equal to or greater than:
(A) $10 or
(B) 10% or more of any scheduled payment due on
the contract
See "The Sale and Servicing Agreement-
Representations and Warranties; Definition of
Eligible Contract" and "The Contracts Pool".
As of April 1, 1999, the contracts had the
following characteristics calculated using the
statistical discount rate:
3
<PAGE>
Number of Contracts................................... 1,603
Aggregate Discounted Contract Balance ......... $386,265,403
Average Discounted Contract Balance of a Contract.. $240,964
Weighted Average Original Term to Maturity..... 56.53 months
Range ........................................ 18-114 months
Weighted Average Remaining Term to Maturity ... 40.58 months
Range .......................................... 2-81 months
Changes in the characteristics of the contracts between April
1, 1999 and the closing date will not affect more than 5.00%
of the aggregate discounted principal balance of the
contracts.
For further information regarding the contracts, see "The
Contracts Pool" and "The Contracts", as well as "The Sale and
Security Agreement--Representations and Warranties;
Definition of Eligible Contract" and "--Concentration
Amounts; Definition of Excess Contract".
We may replace a contract that is part of the trust's assets
with a substitute contract:
. if we subsequently determine that a contract was not
eligible to be sold to the trust at the time of its sale
to the trust;
. in the event that if we did not remove and replace that
contract, the obligor or equipment concentrations of
contracts would exceed the limits described in "The Sale
and Servicing Agreement--Concentration Amounts;
Definition of Excess Contracts"; or
. if such contract is prepaid.
See "The Sale and Service Agreement--Substitute
Contracts". The substitute contracts will have been
originated under the same credit criteria and policies as the
contracts they replace.
B. Reserve Fund.. On the closing date of the transfer of the contracts to the
trust, the trust depositor will establish a reserve fund in
the name of the indenture trustee. The reserve fund provides
you with limited protection in the event collections from
obligors on the contracts are insufficient to make payments
on the notes. We cannot assure you, however, that this
protection will be adequate to prevent shortfalls in amounts
available to make payment on the notes. The initial balance
of the reserve fund will be $386,265.40. If, on any payment
date, the amounts available for distribution exceed the
amounts needed to pay amounts owed to the servicer and to pay
interest and principal on the notes, the excess will be
deposited into the reserve fund. However, the amount
deposited in the reserve fund shall not exceed the amount
needed to increase the reserve fund balance to an amount
equal to 0.70% of the aggregate discounted contract balance
of the
4
<PAGE>
contracts. Investment earnings on amounts held in
the reserve fund will be available for
distribution to you.
If on any payment date, collections on the
contracts are less than the amount needed to pay
interest on the notes, the indenture trustee will
withdraw funds from the reserve fund to pay the
interest. Additionally, if collections on the
contracts are sufficient to pay interest but not
principal on the notes, we will withdraw amounts
in excess of 0.70% of the aggregate discounted
contract balance of the contracts. The conditions
under which we will withdraw amounts from the
reserve fund are more specifically described in
"Description of the Notes and Indenture--
Allocations" and "--Reserve Fund".
Securities not Offered
by this Prospectus........... We will also issue $3,862,654 aggregate principal
amount of Class D [ ]% Receivable-Backed Notes,
Series 1999-1 and a certificate with a $1,931,328
certificate balance, neither of which are offered
by this prospectus.
Terms of the Notes........... The basic terms of the notes will be as described
below. See "Description of the Notes and
Indenture". We will pay principal and interest
due on the notes using:
. collections of payments due under the
contracts held by the trust;
. earnings on amounts held in the collection
account;
. late charges relating to a contract if the
late charges were included in the contract's
terms as of the date the contract was
purchased by the trust;
. amounts earned on funds held in the reserve
fund;
. amounts received upon the prepayment or
purchase of contracts or liquidation of the
contracts and disposition of the related
equipment upon defaults under the contracts;
. amounts received from vendor recourse, if
any; and
. amounts in the reserve fund more specifically
described in "Description of Notes and
Indenture--Reserve Fund".
See "Amounts Available for Payments on the
Notes".
You may purchase the offered notes in minimum
denominations of $1,000, and in integral
multiples of $1,000 in excess of the minimum
denominations. We will offer the notes only in
book-entry form.
A. Events of Default......... Events of default with respect to the notes
include:
. failure to pay accrued interest on any payment
date,
5
<PAGE>
. failure to pay outstanding principal on the maturity date,
. breach of representations and warranties with
respect to the contracts which are materially
incorrect and which have material adverse effect on
the noteholders and
. the occurrence of insolvency events with respect
to the originators, the trust depositor, the trust
or the servicer.
See "Description of the Notes and Indenture--Events of Default".
B. Interest On a payment date, we will first repay any outstanding
servicer advances. Second, we will pay the servicer's
monthly servicing fee, but only if the servicer is not
Heller Financial, Inc. or one of its affiliates. Third, we
will pay interest on the notes at the rates specified
on the cover of this prospectus in the following order:
Class of Securities Receiving Interest Payment
Notes Prior to Specified Class
----- ------------------------
A-1, A-2,
A-3, A-4.. None
B......... Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes
C......... Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes,
Class B Notes
D......... Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes,
Class B Notes, Class C Notes
See "Description of the Notes and Indenture--Allocations".
We will calculate interest with respect to the Class A-1 Notes
on the basis of actual days elapsed over a year of 360 days.
We will calculate interest with respect to all other notes on
the basis of a year of 360 days consisting of twelve 30 day
months.
6
<PAGE>
C. Principal... On a payment date, after we pay interest on the notes, we will
pay principal on the notes in the following order:
Class of Securities Receiving Interest Payment
Notes Prior to Specified Class
----- ------------------------
A-1 None
A-2 Class A-1 Notes
A-3 Class A-1 Notes, Class A-2 Notes, Class B Notes,
Class C Notes and Class D Notes will receive
principal payments prior to Class A-3 Notes on any
payment date on which the outstanding principal
amount of the Class A-2 Notes is greater than $0
A-4 Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class B Notes, Class C Notes and Class D Notes will
receive principal payments prior to Class A-4 Notes
on any payment date on which the outstanding
principal amount of the Class A-3 Notes is greater
than $0
B Class A-1 Notes, Class A-2 Notes
Class A-3 Notes will receive principal payments
prior to the Class B Notes after the outstanding
principal amount of the Class A-1 Notes and Class A-
2 Notes is reduced to $0
Class A-4 Notes will receive principal payments
prior to the Class B Notes only after the
outstanding principal amount of the Class A-1 Notes,
Class A-2 Notes and Class A-3 Notes is reduced to $0
7
<PAGE>
Class of Securities Receiving Interest Payment
Notes Prior to Specified Class
----- ------------------------
C Class A-1 Notes, Class A-2 Notes, Class B Notes
Class A-3 Notes will receive principal payments
prior to the Class C Notes only after the
outstanding principal amount of the Class A-1 Notes
and Class A-2 Notes is reduced to $0
Class A-4 Notes will receive principal payments
prior to the Class C Notes only after the
outstanding principal amount of the Class A-1 Notes,
Class A-2 Notes and Class A-3 Notes is reduced to $0
D Class A-1 Notes, Class A-2 Notes, Class B Notes,
Class C Notes
Class A-3 Notes will receive principal payments
prior to the Class D Notes only after the
outstanding principal amount of the Class A-1 Notes
and Class A-2 Notes is reduced to $0
Class A-4 Notes will receive principal payments
prior to the Class C Notes only after the
outstanding principal amount of the Class A-1 Notes,
Class A-2 Notes and Class A-3 Notes is reduced to $0
See "Description of the Notes and Indenture--Allocations".
The amount of principal paid on a Class A-1 Note prior to its
stated maturity date will be based on the amount that the
aggregate discounted contract balance of the contracts has
declined during the most recent full collection period. Each
collection period is approximately a month.
After the Class A-1 Notes have been paid in full, the amount of
principal paid on any other class of notes will be the amount
necessary to reduce the outstanding principal of that class of
notes to the greater of:
8
<PAGE>
(1) a percentage of the aggregate discounted
contract balance of the contracts as of the
last day of the most recent full collection
period or
(2) an amount which is intended to maintain 31% of
the credit enhancement provided by the classes
of notes subordinate to such class after taking
into account cumulative losses on the
contracts.
The percentage used in clause (1) using the ratio
of the initial principal amount of such class of
notes to the aggregate discounted contract balance
of all classes of notes of the contracts less than
initial principal amount of the Class A-1 Notes.
Following an event of default with respect to the
notes all outstanding principal on the respective
classes of notes will be paid in the following
order of priority:
. outstanding principal of Class A-1 Notes
. outstanding principal of Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes
. outstanding principal of Class B Notes
. outstanding principal of Class C Notes
. outstanding principal of Class D Notes
See "Description of the Notes and Indenture--
Allocations" and "--Events of Default."
D. Payment Dates........... You will receive distributions of interest and
principal on the 13th day of each month, or if that
day is not a business day, the next business day.
E. Stated Maturity Date.... The notes will mature on the date shown on the
cover of this prospectus, except that if the day is
not a business day, then the stated maturity date
will be the next business day.
F. Optional Redemption..... If the aggregate discounted contract balance of the
contracts at the time is less than 10% of the
initial aggregate discounted contract balance of
the contracts as of April 1, 1999, the trust
depositor may redeem any outstanding notes. If the
trust depositor does redeem any outstanding notes,
the redemption price will be equal to the unpaid
principal amount of the notes plus accrued and
unpaid interest through the date of redemption.
Servicing; Servicing Fee... The servicer will be responsible for servicing,
managing and
9
<PAGE>
administering the contracts and related interests,
and enforcing and making collections on the
contracts. Additionally, the servicer and the sub-
servicer have in some cases delegated servicing and
collection functions to a vendor with respect to
end-user contracts originated through that vendor.
In such instances, the servicer retains the right
to determine or veto some servicing decisions
and/or to replace or take over servicing and
collection functions from the vendor. Although
Heller Financial, Inc. may delegate its servicing
duties, it remains liable for the performance or
non-performance of those duties. See "The Sale and
Servicing Agreement--Servicing Standard and
Servicer Advances".
The servicer will be entitled to receive a monthly
fee equal to the product of:
(1) one-twelfth of 0.40% and
(2) the aggregate discounted contract balance
of the contracts in the trust as of the
second day of the immediately preceding
calendar month.
The fee is payable out of amounts we receive with
respect to the contracts. The servicer will pay any
servicing fees to be paid to any sub-servicers
(including vendor sub-servicers) from the
servicer's monthly servicing fee.
The servicing fee is paid after making payments of
interest and principal on the notes as long as
Heller Financial, Inc. or any affiliate is the
servicer.
See "Description of the Notes and Indenture--
Servcing Compensation and Expenses" and "The Sale
and Servicing Agreement".
Federal Income Tax
Considerations............. In the opinion of Winston & Strawn, federal tax
counsel to the trust depositor, for federal income
tax purposes, the notes offered by this prospectus
will be characterized as debt, and the trust will
not be characterized as an association or a
publicly traded partnership taxable as a
corporation. You, by accepting a note, agree to
treat the note as indebtedness. See "Federal
Income Tax Considerations".
ERISA Considerations....... Subject to the considerations discussed under
"ERISA Considerations", the notes will be eligible
for purchase by some employee benefit plans. Any
benefit plan fiduciary considering purchase of the
notes should, however, consult with its counsel
10
<PAGE>
regarding the consequences of its purchase under
ERISA and the Internal Revenue Code. See "ERISA
Considerations".
Rating..................... We will not issue the notes unless they receive
ratings from the following rating agencies as set
forth below:
<TABLE>
<CAPTION>
Class Moody's Duff & Phelps
of Investors Fitch Credit Rating
Note Service IBCA, Inc. Co.
---- ------- ---------- ---
<S> <C> <C> <C>
A-1 P-1 F1+/AAA D-1+
A-2 Aaa AAA AAA
A-3 Aaa AAA AAA
A-4 Aaa AAA AAA
B A1 A+ A+
C Baa2 BBB BBB
</TABLE>
A rating is not a recommendation to purchase, hold
or sell notes since a rating does not comment as to
market price or suitability for a particular
investor. See "Rating of the Notes".
11
<PAGE>
Risk Factors
You should carefully consider the following risk factors before you invest
in the notes.
The Absence of an Existing Market for the Notes May Limit Your Ability to Resell
the Notes
There is currently no public market for the notes and we cannot assure you
that one will develop. Thus, you may not be able to resell your notes at all,
or may be able to do so only at a substantial discount. The underwriters may
assist in resales of the notes but they are not obligated to do so. We do not
intend to apply for listing of the notes on any securities exchange or for the
inclusion of the notes on any automated quotation system. Even if a secondary
market does develop, it may not continue.
Prepayments on the Contracts May Cause an Earlier Repayment of the Notes
than You Expect and You May Not Be Able to Find Investments with the Same Yield
as the Notes at the Time of the Repayment.
A higher than anticipated level of prepayments may cause us to pay
principal on the notes sooner than you expected. Similarly, upon the occurrence
of an event of default, you may also receive principal of the notes sooner than
you expected. See "Description of the Notes and Indenture -- Events of Default"
and "Prepayment and Yield Consideration". You may not be able to reinvest those
distributions of principal at yields equivalent to the yield on the notes;
therefore, the ultimate return you receive on your investment in the notes may
be less than the return you expected on the notes.
The rate of early terminations of contracts due to prepayments,
including defaults, is influenced by various factors including:
. technological change;
. changes in customer requirements;
. the level of interest rates;
. the level of casualty losses; and
. the overall economic environment.
We cannot assure you that prepayments on the contracts held by the trust
will conform to any historical experience. We cannot predict the actual rate of
prepayments which will be experienced on the contracts.
The Price at Which You Can Resell Your Notes May Decrease if the Ratings of Your
Notes Change
Moody's Investors Service, Fitch IBCA, Inc. and Duff & Phelps Credit Rating
Co. are the rating agencies rating the notes. A rating is not a recommendation
to purchase, hold or sell notes since a rating does not comment as to market
price or suitability for a particular investor. Ratings of notes will address
the likelihood of the payment of principal and interest thereon pursuant to
their terms. The ratings of notes will not address the likelihood of an early
return of invested principal. In addition, ratings do not address the
possibility of the occurrence of an event of default with respect to the notes.
At any time, a rating may be lowered or withdrawn entirely by a rating agency
rating the notes. In the event that the rating initially assigned to any note is
subsequently lowered or withdrawn for any reason, you may not be able to resell
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your notes without a substantial discount. For more detailed information
regarding the ratings assigned to any class of the notes, see "Rating of the
Notes."
The Subordination of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes,
Class B Notes, the Class C Notes and the Class D Notes is a Limited Form of
Credit Enhancement
We will pay interest and principal on some classes of notes prior to paying
interest and principal on other classes of notes. See "Description of the
Notes and Indenture--Allocations". The subordination of some classes of notes to
others means that the subordinated classes of notes are more likely to suffer
the consequences of delinquent payments and defaults on the contracts than the
notes which receive payments prior to those subordinated classes.
The more senior classes of notes could lose the credit enhancement provided
by the more subordinate classes and the reserve fund if delinquencies and
defaults on the contracts increase and if the collections on the contracts and
amounts in the reserve fund are insufficient to pay even the more senior classes
of notes.
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Limited Assets Secure the Notes; Noteholders Will Have No Recourse to the
Originators, Servicer or their Affiliates in the Event Delinquencies and Losses
Deplete the Trust's Assets
The trust is a limited purpose trust with limited assets. Moreover, you have
no recourse to the general credit of the servicer, originator or their
affiliates. Therefore, you must rely solely upon the contracts for payment of
principal and interest on the notes. Furthermore, in respect of vendor loans,
you must rely solely upon the end-user contracts securing the vendor
loans, since most vendor loans are non-recourse to the vendors. You are
limited to recovering amounts due under vendor loans solely from the end-user
contracts and related security. If payments on the contracts are delinquent or
are insufficient to make payments on the notes, no assets other than the reserve
fund will be available to make payments on the notes. Similarly, in the event
that contracts becomes defaulted contracts, the proceeds from the sale of the
equipment securing the contracts may be insufficient to make payments on the
notes and no other assets will be available for the payment of the deficiency.
There can be no assurance that the delinquency and loss experience of the
contracts will be comparable to the information set forth in "Delinquency and
Loss Information".
Because Disproportionate Amounts of Contracts Relate to Four States, Adverse
Events in Those Regions May Cause Increased Defaults and Delinquencies.
If adverse events or economic conditions were particularly severe in the
specific geographic regions in which there is a substantial concentration of
obligors, the amount of delinquent payments and defaults on the contracts may
increase. As a result, the overall timing and amount of collections on the
contracts held by the trust may differ from what you may have expected, and you
may experience delays or reductions in payments you expected to receive. As of
April 1, 1999, approximately 21.80% of the aggregate discounted contract balance
(calculated using the statistical discount rate) of the contracts held by the
trust related to obligors located in California and 6.29% in Illinois, 5.88% in
New York and 5.26% in New Jersey. No other state accounts for more than 5.00% of
the contracts. The contracts in those states represent 39.22% of the aggregate
discounted contract balance of the contracts held by the trust, calculated using
the statistical discount rate. An example of an adverse event specific to a
geographic region is the occurrence of a catastrophic earthquake in California.
An earthquake in California could have negative regional economic repercussions
and potentially cause obligors in that region to delay or reduce their payments
on contracts. Additionally, a substantial downturn in the financial services
industry which is highly concentrated in the states of New York and New Jersey
could reduce revenues for obligors in those states and ultimately reduce the
associated obligors' ability to make timely payments on their related contracts.
Because Disproportionate Amounts of Contracts Relate to Particular Industries,
Adverse Economic Conditions in Those Industries May Cause Increased Defaults and
Delinquencies.
If the industries in which there is a substantial concentration of obligors
experience adverse events or economic conditions, the overall timing and amount
of collections on the contracts held by the trust may differ from what you may
have expected. This could result in delays or reduced payments to you. As of
April 1, 1999, contracts constituting approximately 17.67% of the aggregate
discounted contract balance, calculated using the statistical discount rate, of
the contracts held by the trust relate to equipment used in the printing
industry, 8.66% relate to industrial machinery, 7.09% relate to the business
credit industry and 6.55% relate to the rubber and
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plastic products industry. A reduction in the demand for materials produced by
the industries that utilize print materials, such as advertising and print
media, may consequently cause an increase in delinquencies and defaults on
contracts with obligors associated with the printing industry. A decrease in the
demand for consumer goods could reduce revenues for the plastics industries and
this may consequently increase deliquencies and defaults on the related
contracts. Additionally, an overall economic downturn could reduce demand for
credit and consumer goods. A decrease in the demand for consumer goods could
reduce revenues for the plastics industries and this may consequently increase
delinquencies and defaults on the related contracts. Additionally, an overall
economic downturn could reduce demand for credit. Accordingly, the overall
timing and amount of collections on the contracts held by the trust may differ
from what you may have expected. This could result in delays or reduced payments
to you. No other industry accounts for more than 5.00% of the aggregate
discounted contract balance calculated using the statistical discount rate, of
the contracts held by the trust.
Because Disproportionate Amounts of Contracts Relate to Groups of Obligors,
Including Obligors under Contracts Originated by the Same Vendor, Adverse
Economic Effects for those Groups or Vendors May Cause Increased Defaults and
Delinquencies.
Approximately 13.02% of the aggregate discounted contract balance,
calculated using the statistical discount rate of the contracts was originated
by a single vendor. That vendor leases printing equipment. If the vendor
representing 13.02% of the aggregate discounted contract balance which vendor
leases printing equipment were to experience financial difficulties, the
obligors' payment performance with respect to the related contracts may decline
as the obligors may be less inclined to make payments on contracts originated by
a vendor who is suffering financial difficulties. In effect, if any group of
obligors, including obligors under contracts originated by a single vendor,
i.e., the printing equipment vendors, were to experience financial difficulties,
the amount of delinquent payments and defaults on the contracts may increase. As
a result, the overall timing and amount of collections on the contracts held by
the trust may differ from what you may have expected, and you may experience
delays or reductions in payments you expected to receive. No other single vendor
originated more than 5.20% of the aggregate discounted contract balance,
calculated using the statistical discount rate, of the contracts. We are not
able to determine and have no basis to predict whether any events have occurred
or may occur, that would cause a material increase in delinquencies and defaults
on contracts originated by an individual vendor or group of vendors. Similarly,
we have no basis to determine whether any economic conditions, laws or
regulations exist or will exist that would cause a material increase in
delinquencies and defaults on contracts originated by an individual vendor or
group of vendors. There can be no assurance that any adverse events or
conditions which materially affect contracts originated by an individual vendor
or a group of vendors will not occur. See also "--Ineffective Sale in Vendor
Bankruptcy Could Delay or Reduce Payments Under the Contracts".
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The Rate at which Equipment or Software Becomes Obsolete Affects Prepayment Rate
of the Contracts and the Notes
Technological change could affect your investment in the notes. For
example, technological change may cause obligors to prepay their respective
contracts in order to acquire more current technology. Consequently, an increase
in prepayments on the contracts held by the trust would result in an increase in
the rate at which principal on the notes is paid. As a result, you may need to
reinvest your note principal in a market that offers only investments with lower
returns. See "Prepayment and Yeild Considerations" and "The Contracts
Generally--End-User Contracts".
Even if We Repossess and Sell the Equipment Relating to a Contract After an
Obligor Defaults, Shortfalls in Amounts Available to Pay the Notes May Occur if
the Market Value of the Equipment has Declined.
If a contract held by the trust becomes a defaulted contract, the only
sources of payment for amounts expected to be paid on that contract will be the
income and proceeds from the sale of any related equipment and a deficiency
judgment, if any, against the obligor under the defaulted contract as well as,
to the extent available, vendor recourse. See "The Sale and Servicing
Agreement--Definition of Defaulted Contracts". Since the market value of the
equipment may decline faster than the discounted contract balance, the servicer
may not recover the entire amount due on the contract and might not receive any
recoveries on the equipment. The reserve fund and the subordination of interest
and principal payments on the Class D Notes are intended to make up for
deficiencies in the proceeds and recoveries on the contracts. However, this
protection is limited and could be depleted if those deficiencies are larger
than we currently anticipate.
Servicer's or Vendor's Retention of Contract Files May Hinder Our Ability to
Realize the Value of Equipment Securing the Contracts.
To facilitate servicing and reduce administrative costs, the servicer will
retain possession of the documents evidencing the contracts held by the trust.
Because the documents evidencing the contracts will remain in the servicer's
possession, if a subsequent purchaser were able to take physical possession of
the documents without knowledge of their assignment, that purchaser could have a
security interest in the contracts senior to our security interest. In the event
that we must rely upon repossession and sale of the related equipment securing
defaulted contracts to recover principal and interest due on the defaulted
contracts, our ability to realize upon the equipment may be limited due to the
existence of a third party's senior security interest in those contracts. In
such event, distributions to you could be delayed or reduced. Similarly, with
respect to contracts securing vendor loans, in some instances the vendor will
retain the original documents associated with those contracts. Uniform
Commercial Code financing statements are filed reflecting the pledge of those
contracts to the applicable originator as security for the vendor loans.
However, the related documents will remain in the vendor's possession. If a
subsequent purchaser
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were able to take physical possession of the related documents without knowledge
of the pledge to the originator, our priority security interest in those
contracts, could be defeated. In such event, distributions to you could be
delayed or reduced.
Failure to Record Assignment of Perfected Security Interest May Hinder Our
Ability to Realize the Value of Equipment Securing the Contracts.
In connection with the conveyance of the contracts to the trust, security
interests in the equipment securing the contracts have been assigned by the
originators to the trust depositor and will be assigned by the trust depositor
to the trust. Due to the administrative burden and expense associated with
amending and paying the filing fee for the assignment of approximately 1,639
Uniform Commercial Code financing statements in 50 states where equipment is
located, we will not file any assignments of the Uniform Commercial Code
financing statements evidencing the assignment of the security interests in the
equipment to the trust depositor, the trust or the indenture trustee. Because
neither the trust depositor's, trust's, owner trustee or indenture trustee's
name appears on the UCC financing statements, an originator or the servicer
could inadvertently release the security interest in the equipment securing a
contract. In such event, we would not have a perfected security interest in the
equipment. Without a perfected security interest, we may not be able to fully
realize the value of the equipment if the related contract becomes a defaulted
contract. Failure to file the assignments does not affect either the trust's
perfected security interest in the contracts or the indenture trustee's
perfected security interest in the contracts assigned to it by the trust. It has
been the general policy of the origninators to file or cause to be filed Uniform
Commerical Code financing statements with respect to the equipment relating to
the contracts.
Repurchase Obligation of Trust Depositor and Originators Provides You Only
Limited Protection Against Prior Liens on the Contracts.
Federal or state law may grant liens on a contract that have priority over
the trust's interest. To the extent a lien having priority over the trust's lien
exists with respect to a contract and/or the related equipment, the trust's
interest in the asset will be subordinated to such prior lien. In the event the
creditor associated with the prior lien exercises its remedies on its security
interest it is unlikely that, after the senior creditor is repaid, sufficient
cash proceeds from the contract and related equipment will be available to pay
the discounted contract balance to the trust. An example of a lien arising under
federal or state law is a tax or other government lien on property of the
originator or the trust depositor arising prior to the time a contract is
conveyed to the trust. The tax lien has priority over the interest of the trust
in the contract.
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The vendors have warranted to the originators that the contracts transferred to
the originators are free and clear of the lien of any third party. Additionally,
the vendors have agreed not to sell, pledge, assign, transfer or grant any lien
on any contract transferred to the originators. Under the sale and servicing
agreement, the originators will jointly and severally warrant to the trust that
the contracts transferred thereunder will be transferred free and clear of the
lien of any third party. The originators and the trust depositor also will
jointly and severally warrant to the trust that they will not sell, pledge,
assign, transfer or grant any lien on the contracts. In the event that such
warranties are not true with respect to any contract, the trust depositor and
the originators are required under the sale and servicing agreement to
repurchase the contract. There can be no assurance that the trust depositor or
originators will be able to repurchase a contract at the time we request it.
If a Bankruptcy Court Rules that the Transfer of Contracts from a Vendor to
the Originator was not a True Sale then Payments on the Contracts may be Reduced
or Delayed
The originators have originated contracts or acquired contracts from a
vendor, which contracts have in either case been transferred to the trust
depositor. If a bankruptcy court decides that the acquisition of a contract is
treated not as a sale of the contract from the vendor to the originator, the
contract would be part of the vendor's bankruptcy estate. Accordingly, the
contract would not be available to the vendor's creditors. If a vendor became a
debtor in a bankruptcy case and, in the case of contracts acquired from a
vendor, if an unpaid creditor of the vendor or a representative of creditors of
the vendor, such as a trustee in bankruptcy, or the vendor acting as a
debtor-in-possession, were to take the position that the sale of the contracts
to an originator was ineffective to remove the contracts from the vendor's
estate then delays in payments under the contracts to the trust could occur. For
example, such persons might argue that the sale should be recharacterized as a
pledge of the contracts to secure borrowings by the vendor. Additionally, should
the court rule in favor of such persons, reductions in the amount of the
payments on the contracts could result. If the transfer of contracts to an
originator from a vendor is recharacterized as a pledge, a tax or government
lien on the property of the pledging vendor arising before the contracts came
into existence, then the holders of such other interests may have priority over
such originator's, and hence the trust depositor's, the trust's and the
indenture trustee's, interest in the contracts.
If a Bankruptcy Court Rules that the Transfer of Contracts from the
Originator to the Trust Depositor was not a True Sale then Payments on the
Contracts Could be Reduced or Delayed
If an originator became a debtor in a bankruptcy case and creditors of the
originator, or the originator acting as a debtor-in-possession, were to assert
that the transfer of the contracts from an originator to the trust depositor was
ineffective to remove such contracts from the originator's estate, the
distribution of proceeds of the contracts to the trust might be subject to the
automatic stay provisions of the United States Bankruptcy Code. This would delay
the distribution of those proceeds for an uncertain period of time. Furthermore,
if the bankruptcy court rules in favor of the creditor or originator, reductions
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in payments under the contracts to the trust could occur. In either case,
distributions to you then could be delayed or reduced. In addition, a bankruptcy
trustee would have the power to sell the contracts if the proceeds of the sale
could satisfy the amount of the debt deemed owed by the originator. The
bankruptcy trustee could also substitute other collateral in lieu of the
contracts to secure the debt. Additionally, the bankruptcy court could adjust
the debt if the originator were to file for reorganization under Chapter 11 of
the Bankruptcy Code. In the sale and servicing agreement, the originators will
jointly and severally warrant to the trust depositor that the conveyance of the
contracts to the trust depositor is a valid sale and transfer of the contracts
to the trust depositor. In addition, the originators and the trust depositor
have agreed that they will each treat the transactions described in this
prospectus as a sale of the contracts to the trust depositor. The originators
will take all actions that are required under applicable law to perfect the
trust depositor's ownership interest in the contracts and the equipment, if any,
securing vendor loans sold by the originators.
Insolvency of the Trust Depositor or the Trust Could Delay or Reduce
Payments to You.
If the trust depositor were to become a debtor in a bankruptcy case and
creditors of the trust depositor, or the trust depositor acting as a debtor-in-
possession, were to assert that the sale of the contracts to the trust was
ineffective to remove such contracts from the trust depositor's estate, then
delays in payments under the contracts to the trust could occur or, reductions
in the amount of payments under the contracts to the trust could result.
Distributions to you then could be delayed or reduced. The trust depositor will
warrant in the sale and servicing agreement that the conveyance of the contracts
to the trust is a valid sale of the contracts to the trust. The trust depositor
will also warrant that the security interest in the contracts granted by the
trust to the indenture trustee is a valid and duly perfected security interest.
The trust depositor will also agree to take all actions that are required under
applicable law to perfect the trust's and the indenture trustee's respective
interests in the contracts.
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In the event the trust depositor becomes subject to insolvency proceedings,
the trust, the trust's interest in the trust's assets and the trust's obligation
to make payments on the notes might also become subject to the insolvency
proceedings. We believe that the trust will be considered bankruptcy remote from
the originators. However, no law firm will render an opinion to that effect.
Insolvency of the Vendors Could Delay or Reduce Payments to You.
In the event a vendor under a vendor loan becomes subject to insolvency
proceedings, the end-user contracts and equipment securing the vendor loan as
well as the vendor's obligation to make payments would also become subject to
the insolvency proceedings. Moreover, under bankruptcy and insolvency laws the
servicer may have to write off vendor loans as uncollectible. In that event, we
may be forced to delay distributions on the notes. We may pay less than the full
amount of principal and interest due on the notes if collections from the
remaining unaffected contracts are insufficient to cover losses to the trust.
Additionally, your remedies under the indenture and the sale and servicing
agreement could be limited.
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Some assignments of end-user contracts by vendors provide that the
originator has recourse to the vendor for all or a portion of the losses the
originator may incur as a result of a default under those end-user contracts. In
the event of a vendor's bankruptcy, a bankruptcy trustee, a creditor or the
vendor as debtor in possession might attempt to characterize sales to an
originator through vendor assignments as loans to the vendor from the originator
secured by the end-user contracts. If such an attempt is successful, such
assignments from vendors would be subject to the risks described in this
prospectus for vendor loans. In such case, the contracts sold under such vendor
assignments would constitute security for loans to the related vendor.
The vendor loans are, payable solely from the proceeds of the end-user
contracts securing the vendor loans, and do not generally represent obligations
of the vendor. Consequently, you must rely solely upon the end-user contracts
and any other assets securing the vendor loans, if any, for the repayment of the
related vendor loans. Any end-user contract originated by a vendor in which the
vendor has retained a residual interest will be subject to rejection by the
vendor, as debtor in possession, or by the vendor's bankruptcy trustee. Upon any
such rejection, scheduled payments under the rejected end-user contract may
terminate. If the scheduled payments terminate, you may suffer losses if the
remaining unaffected contracts, and security interests in the related equipment,
are insufficient to cover the losses.
The Retention of a Residual Interest by a Vendor May Increase the Risk of
Rejection of the Related Contract if that Vendor Becomes Bankrupt.
Any end-user contract which is originated by a vendor for which the vendor
retains a residual interest in the equipment will be subject to rejection by
that vendor, as debtor-in-possession, or by that vendor's bankruptcy trustee.
Upon the vendor's rejection, scheduled payments under the rejected end-user
contract may terminate. You may suffer losses if the remaining unaffected
contracts, and security interests in the related equipment, are insufficient to
cover the losses.
Proceeds From Required Sale of the Contracts Following Trust Depositor
Bankruptcy May Not Be Sufficient to Repay the Notes in Full.
If the trust depositor is bankrupt or insolvent, then an event of default
would occur with respect to the notes. Under the indenture and the sale and
servicing agreement, and assuming the trust was not then a debtor in a
bankruptcy case, the indenture trustee would be required to sell the interests
in the contracts. If the sum of the proceeds of the sale of the contracts and
the proceeds of any collections on the contracts is insufficient to pay you in
full, then you may suffer losses on your investment in the notes.
End-User and Vendor Bankruptcy May Reduce or Delay Collections on the
Contracts.
Bankruptcy and insolvency laws could affect your interests in contracts
with bankrupt end-user obligors if those laws result in any of the contracts
being written off as uncollectible or result in delay in payments due on any
contracts. As a result, you may be subject to delays in receiving payments, and
you may also suffer losses if collections from the remaining unaffected
contracts are insufficient to cover losses to the trust. State laws impose
requirements and restrictions relating to foreclosure sales and obtaining
deficiency judgments following foreclosure sales. In the event that you must
rely on repossession and disposition of equipment to recover amounts due on
defaulted contracts, the amounts due may not be realized due to these
requirements and restrictions. Factors that may affect whether you receive the
full amount due on a contract include the failure to file financing statements
to perfect the originator's, or trust's security interest in the equipment
securing the contract. The depreciation, obsolescence, damage or loss of any
item of equipment will also affect whether you receive the full amount due on a
contract. As a
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result, you may be subject to delays in receiving payments, and you may also
suffer losses if collections from the remaining unaffected contracts are
insufficient to cover such losses to the trust.
Certain Contracts Relating to Software or Related Support and Consulting
Services are not Secured by the Software or Related Services
Some of the contracts held by the trust will relate to software or related
support and consulting services that are not owned by an originator. In these
cases, the vendor or a licensor traditionally owns the software, and the
software and related support and consulting services do not serve as collateral
for the contracts. Thus, we will not have an interest in such software or
related support and consulting services. In other words, we own solely the
associated contracts' cash flow. See "The Contracts Generally". Accordingly,
if any such contract becomes a defaulted contract, we will not be able to
foreclose on the software or related support and consulting services. Because
there will be no proceeds from the software or related support and consulting
services which could be used to make payments to you, we must look solely to the
obligor to collect amounts due on the contract. There can be no assurance that
the obligor will be able to pay in full amounts due under the contract. The
discounted contract balance of the contracts to be transferred to the trust that
relate to software or relating support and consulting services, does not exceed
11.38% of the aggregate discounted contract balance (calculated using the
statistical discount rate) of the contracts.
Transfer of Servicing May Delay Payments to Noteholders Due to Contract
Processing Delays
If Heller Financial were to cease acting as servicer, delays in processing
payments on the contracts and information in respect thereof could occur and
result in delays in payments to you.
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Year 2000 Issues May Impact Heller Financial's Ability to Service the Contracts
If Heller Financial, Inc., as servicer, and Heller Financial Leasing, Inc.
as sub-servicer do not have computerized systems that are Year 2000 compliant by
the Year 2000, their ability to service the contracts may be materially and
adversely affected. Similarly, if the indenture trustee does not have
computerized systems that are Year 2000 compliant by the Year 2000, its ability
to make distributions to you may be materially and adversely affected. The "Year
2000" issue concerns the potential exposures related to the automated generation
of business and financial misinformation resulting from the application of
computer programs which have been written using two digits to identify a year in
the date field rather than four. These programs could fail or produce erroneous
results during the transition from the Year 1999 to the Year 2000.
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Although Heller Financial, Inc. has taken significant steps to address the
Year 2000 issue, Heller Financial, Inc. continues to bear some risk related to
the Year 2000 issue and could be materially adversely affected if its own
remediation and contingency planning efforts fall behind schedule or if other
entities not affiliated with it do not appropriately address their own Year 2000
compliance issues. These other entities include vendors and those providing
contingency plans or outsourced technology services such as mainframe and
application support, as well as borrowers and power companies. Due to this
uncertainty, Heller Financial, Inc. is unable to represent that there will be no
material adverse consequences related to the Year 2000 issue, however, it
believes that it is doing what is reasonably necessary to provide the expertise,
resources, assessments and corrective procedures for the Year 2000 issues which
could have a material adverse impact on its operations or financial condition.
See "Heller Financial, Inc. and Heller Financial Leasing, Inc.--Assessment of
Year 2000 Issues."
Use of Proceeds
In consideration of the trust depositor's transfer of the contracts to the
trust, the trust will transfer the net proceeds from the sale of the notes to
the trust depositor. The trust depositor purchased the contracts from time to
time from the originators pursuant to a purchase agreement. The trust depositor
previously sold undivided variable percentage ownership interests in the
contracts to various purchasers. The trust depositor will apply the net
proceeds from the sale of the notes to the repurchase of those undivided
variable percentage ownership interests.
Calculation of Discounted Contract Balance
As used in this prospectus, the "discounted contract balance" of a contract
is,
(1) as of the related cutoff date, the present value of all of the
remaining scheduled payments becoming due under such contract after
the applicable cutoff date discounted monthly at the discount rate,
unless another rate is specifically mentioned, and
(2) as of any other date of determination, the sum of:
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(A) the present value of all of the remaining scheduled payments
becoming due under such contract after such date of determination
discounted monthly at the discount rate, unless another rate is
specifically mentioned, and
(B) the aggregate amount of all scheduled payments due and payable
under such contract after the applicable cutoff date and prior to
such date of determination that have not then been received by
the servicer. Excluded from the calculation are scheduled
payments related to defaulted contracts and contracts which have
terminated prior to their scheduled maturity date.
The discounted contract balance for each contract shall be calculated
assuming:
(1) All payments due in any collection period are due on the last day of
such collection period;
(2) Payments are discounted on a monthly basis using a 30 day month and
a 360 day year; and
(3) All security deposits and drawings under letters of credit, if any,
issued in support of a contract are applied to reduce scheduled
payments in inverse order of the due date of those payments.
The discount rate is [__]% and was calculated as the sum of:
(1) The average of the interest rate of the notes weighted by the
initial average life, assuming a 15% conditional prepayment rate and
no loss scenario and the initial principal amount of the notes; and
(2) 0.40%
Composition of the Contracts
On or about April 15, 1999, the trust depositor will transfer to the trust
the contracts as of January 1, 1999 and from time to time substitute contracts
as of the applicable cutoff dates under the sale and servicing agreement. The
originators selected the contracts from their portfolio of contracts based on
the criteria described in the sale and servicing agreement. See "The Sale and
Servicing Agreement--Representations and Warranties; Definition of Eligible
Contract" and "--Concentration Amounts; Definition of Excess Contract". The
originators will jointly and severally represent that all of the contracts
transferred to the trust are commercial, rather than consumer, leases or
loans/financings, and that no adverse selection process was employed in the
originators' selection of contracts for sale to the trust depositor and to the
Trust under the sale and servicing agreement.
The composition and distribution of the contracts by remaining term,
original term, discounted contract balance, original gross contract balance,
end-user industry, geographic distribution, type of equipment and type of end-
user contract are set forth in the following tables and are reported as of April
1, 1999 using the statistical discount rate. For further information regarding
the contracts, see "The Contracts".
As the obligors pay amounts owed by them under the contracts, the aggregate
discounted contract balance of all of the contracts held by the trust will
decrease. This decrease in the discounted contract balance of the contracts is
referred to as amortization. The rate at which the discounted contract balance
of each contract is reduced may vary from contract to contract. The variance
will depend in large part on the contract terms and the manner in which the
obligor makes its payments. As a result, the statistical distribution of the
contracts held by the trust, including the concentration of obligors in any one
state or of the contracts with respect to any one equipment type will vary as
the contract balances amortize.
25
<PAGE>
While reading the tables you should note that:
. In the event that the documents evidencing a contract require amounts
to be billed to multiple billing locations, the contract is not
treated as a single contract, but rather multiple contracts
corresponding in number to the number of billing locations.
. Classification by industry is based on Heller Financial's customary
procedures for determining obligor industry.
. Percentages and amounts set forth in the following tables may not
total due to rounding.
. The largest end-user industry concentration including end-user
obligors on contracts and end-user contracts securing vendor loans,
which represents an aggregate discounted contract balance of
approximately 16.67% as of January 1, 1999 (calculated at the
statistical discount rate), relates to printing equipment. See "Risk
Factors--Certain Risks Associated with Geographic or Industry
Concentrations of Contracts", and "The Contracts Pool - Contract Loss
Experience".
. The final scheduled payment date of the contract with the latest
maturity or expiration was January 13, 2006.
. Approximately 13.17% of the aggregate discounted contract balance
(calculated at the statistical discount rate) of the contracts provide
for payments by the obligor thereunder on a basis other than monthly
payments.
Some of the contracts intended, as of April 1, 1999, to be transferred to
the trust may be determined not to meet the eligibility requirements and those
contracts may not be transferred to the trust on the closing date for the sale
of the contracts to the trust. While the statistical distribution of the
characteristics as of the closing date for the final pool of contracts and
calculated at the discount rate will vary somewhat from the statistical
distribution of the characteristics as of April 1, 1999 and calculated at the
statistical discount rate as presented in this prospectus, the variance will not
be material. Changes in the characteristics of the contracts between April 1,
1999 and the closing date will not affect more than 5.00% of the aggregate
discounted principal balance of the contracts.
With respect to notes issued in a separate offering by the Heller Equipment
Asset Receivables Trust 1997-1, the variance between the aggregate discounted
contract balance calculated at the statistical discount rate and the discount
rate was .36%. There can be no assurance that the variance between the
statistical discount rate and the discount rate with respect to the notes issued
by the trust will be substantially similar.
The statistical information presented in the following tables is as of
April 1, 1999 and is calculated using the statistical discount rate of 5.977%.
The percentages and balances set forth in each of the following tables may not
total due to rounding. The statistical discount rate is based on an average of
the estimated interest rates of the notes, weighted by estimated initial average
life and initial principal amounts.
Aggregate Discounted Contract Balance $386,265,903
Number of Contracts 1,603
Weighted Average Original Term [56.53]
(Range) (in months) 18 - 114
Weighted Average Remaining Term [40.58]
(Range) (in months) 2 - 81
26
<PAGE>
Average Discounted Contract Balance $240,964
Distribution of Contracts by Contract Type
Data as of January 1, 1999
<TABLE>
<CAPTION>
Percentage of Aggregate
Percentage of Number of Discounted Contract Discounted Contract
Type Number of Contracts Contracts Balance Balance
- ---- ------------------- --------- ------- -------
<S> <C> <C> <C> <C>
Leases 882 55.02% $127,399,691 32.98%
Loans 721 44.98% $258,865,711 67.02%
----- ------ ------------ ------
Total: 1,603 100.00% $386,265,403 100.00%
</TABLE>
27
<PAGE>
Distribution of Contracts by State in Which Obligors are Located
as of April 1, 1999
(ordered by percentage of aggregate discounted contract balance)
<TABLE>
<CAPTION>
Percentage of
Number of Percentage of Discounted Aggregate Discounted
State Contracts Number of Contracts Contract Balance Contract Balance
- ------ --------- ------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
California 274 17.09% $ 84,190,051 21.80%
Illinois 110 6.86% $ 24,285,862 6.29%
New York 151 9.42% $ 22,704,450 5.88%
New Jersey 74 4.62% $ 20,305,412 5.26%
Virginia 15 0.94% $ 18,722,629 4.85%
Massachusetts 81 5.05% $ 18,217,508 4.72%
Minnesota 75 4.68% $ 15,931,371 4.12%
Pennsylvania 92 5.74% $ 15,591,291 4.04%
Texas 61 3.81% $ 15,346,281 3.97%
Florida 67 4.18% $ 14,442,857 3.74%
Ohio 51 3.18% $ 13,239,162 3.43%
Connecticut 48 2.99% $ 11,871,345 3.07%
Washington 32 2.00% $ 10,493,632 2.72%
Arizona 30 1.87% $ 8,735,610 2.26%
Georgia 35 2.18% $ 7,420,101 1.92%
Oregon 18 1.12% $ 7,381,775 1.91%
Wisconsin 20 1.25% $ 7,102,096 1.84%
Missouri 20 1.25% $ 6,976,514 1.81%
Tennessee 25 1.56% $ 6,200,158 1.61%
North Carolina 41 2.56% $ 6,225,705 1.61%
Tennessee 25 1.56% $ 6,200,158 1.61%
South Dakota 2 0.12% $ 5,982,228 1.55%
Michigan 37 2.31% $ 5,495,379 1.42%
Idaho 2 0.12% $ 4,866,050 1.26%
Kentucky 20 1.25% $ 3,147,372 0.81%
Colorado 21 1.31% $ 3,050,081 0.79%
Indiana 25 1.56% $ 2,979,991 0.77%
Utah 12 0.75% $ 2,932,072 0.76%
Kansas 14 0.87% $ 2,293,762 0.59%
New Hampshire 18 1.12% $ 2,265,955 0.59%
Maryland 20 1.25% $ 2,107,777 0.55%
Arkansas 6 0.37% $ 2,087,752 0.54%
Rhode Island 20 1.25% $ 2,078,381 0.54%
Alabama 7 0.44% $ 1,994,991 0.52%
Iowa 14 0.87% $ 1,918,977 0.50%
Nevada 9 0.56% $ 1,550,523 0.40%
West Virginia 12 0.75% $ 1,292,209 0.33%
Mississippi 11 0.69% $ 1,143,811 0.30%
Louisiana 9 0.56% $ 971,802 0.25%
South Carolina 8 0.50% $ 799,299 0.21%
Nebraska 2 0.12% $ 659,727 0.17%
Maine 4 0.25% $ 455,356 0.12%
Delaware 1 0.06% $ 230,753 0.06%
Vermont 3 0.19% $ 169,656 0.04%
New Mexico 1 0.06% $ 144,546 0.04%
Washington D.C. 3 0.19% $ 126,491 0.03%
Montana 1 0.06% $ 89,516 0.02% \
Alaska 1 0.06% $ 47,135 0.01%
--------- -------- ------------ ---------
Total 1,603 100.00% $386,265,403 100.0%
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Rhode Island 20 1.22% $ 2,406,209 0.56%
Maryland 20 1.22% $ 2,255,037 0.53%
Arkansas 7 0.43% $ 2,193,731 0.51%
Iowa 14 0.85% $ 2,079,443 0.49%
Nevada 10 0.61% $ 1,671,099 0.39%
South Carolina 10 0.61% $ 1,537,918 0.36%
West Virginia 12 0.73% $ 1,439,143 0.34%
Mississippi 11 0.67% $ 1,218,451 0.28%
Louisiana 9 0.55% $ 1,031,196 0.24%
Nebraska 2 0.12% $ 727,229 0.17%
Maine 4 0.24% $ 540,645 0.13%
Delaware 1 0.06% $ 259,574 0.06%
New Mexico 1 0.06% $ 150,410 0.04%
Vermont 3 0.18% $ 178,535 0.04%
Washington D.C. 3 0.18% $ 137,566 0.03%
Montana 1 0.06% $ 97,102 0.02%
Alaska 1 0.06% $ 51,243 0.01%
----- ------ ------------ ------
Total: 1,639 100.00% $428,332,192 100.00%
</TABLE>
29
<PAGE>
Distribution of Contracts by Equipment Type
-------------------------------------------
as of April 1, 1999
-------------------
<TABLE>
<CAPTION>
Percentage of Discounted Percentage of Aggregate
Equipment Type Number of Contracts Number of Contracts Contract Balance Discounted Contract Balance
- -------------- ------------------- ------------------- ---------------- ---------------------------
<S> <C> <C> <C> <C>
Computer Hardware 268 16.72% $ 66,033,931 17.10%
Printing 174 10.85% $ 62,624,785 16.21%
Computer Software 106 6.61% $ 45,731,800 11.84%
Machine Tool 331 20.65% $ 40,788,974 10.56%
Plastics 265 16.53% $ 31,972,626 8.28%
General Equipment 39 2.43% $ 22,854,201 5.92%
High Tech Manufacturing 9 0.56% $ 18,940,392 4.90%
Entertainment 17 1.06% $ 14,636,764 3.79%
Construction 78 4.87% $ 13,030,456 3.37%
Furniture and Fixture 29 1.81% $ 11,828,238 3.06%
Industrial Equipment 11 0.69% $ 7,183,694 1.86%
Transportation 2 0.12% $ 5,639,442 1.46%
Dry Cleaning 32 2.00% $ 4,826,458 1.25%
Pre-Press 21 1.31% $ 4,567,723 1.18%
Vehicles 10 0.62% $ 4,561,163 1.18%
Medical-Hospital 33 2.06% $ 4,459,534 1.15%
Telecommunications 7 0.44% $ 4,273,820 1.11%
Agriculture 15 0.94% $ 4,252,744 1.10%
Medical - Clininc 11 0.69% $ 3,391,539 1.02%
Dental 1 0.06% $ 2,969,956 0.77%
Textile 43 2.68% $ 2,175,761 0.56%
Retail 38 2.37% $ 2,102,756 0.54%
Oil & Gas Extraction 23 1.43% $ 1,454,708 0.38%
Communication 9 0.56% $ 1,322,104 0.34%
Franchising 7 0.44% $ 928,086 0.24%
Medical 3 0.19% $ 718,020 0.19%
Unused 2 0.12% $ 615,312 0.16%
Post Press 1 0.06% $ 487,902 0.13%
Film Processing 8 0.50% $ 404,094 0.10%
Miscellaneous House I 4 0.25% $ 347,663 0.09%
Environmental Control 1 0.06% $ 160,075 0.04%
Food Processing 1 0.06% $ 151,527 0.04%
Material Handling 2 0.12% $ 143,516 0.04%
Miscellaneous House II 1 0.06% $ 108,233 0.03%
Petroleum Equipment 1 0.06% $ 37,404 0.01%
Total: 1,603 100.00% $386,265,403 100.00%
</TABLE>
30
<PAGE>
Distribution of Contracts by Obligor Industry
Data as of April 1, 1999
<TABLE>
<CAPTION>
Percentage of
Percentage of Discounted Aggregate Discounted
Industry Number of Contracts Number of Contracts Contract Balance Contract Balance
- -------- ------------------- ------------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Printing/Publishing 199 12.41% $ 68,262,341 17.67%
Business Services 106 6.61% $ 35,048,539 9.07%
Industrial 229 14.29% $ 33,449,900 8.66%
Machinery/Equipment
Nondepository 52 3.24% $ 27,398,402 7.09%
Institutions
Rubber and Misc. 211 13.16% $ 25,316,711 6.55%
Plastic Products
Electronic and Other 32 2.00% $ 17,918,003 4.64%
Electrical Equipment
Communications 11 0.69% $ 14,763,570 3.82%
Wholesale Trade 56 3.49% $ 12,677,618 3.28%
Durable Goods
Health Services 60 3.74% $ 11,987,762 3.10%
Fabricated Metal 89 5.55% $ 10,440,506 2.70%
Products
Transportation 21 1.31% $ 7,951,274 2.06%
Equipment
Insurance Carriers 19 1.19% $ 7,708,105 2.00%
Eating and Drinking 29 1.81% $ 7,200,072 1.86%
Places
Nonclassifiable 39 2.43% $ 6,891,739 1.78%
Establishments
Special Trade 27 1.68% $ 6,152,225 1.59%
Contractors
Transportation by Air 3 0.19% $ 5,782,304 1.50%
Personal Services 32 2.00% $ 5,752,947 1.49%
Engineering & 14 0.87% $ 5,740,037 1.49%
Management Services
Auto Repair, Services 4 0.25% $ 5,561,777 1.44%
and Parking
Miscellaneous Retail 25 1.56% $ 5,399,739 1.40%
Stone, Clay and Glass 48 2.99% $ 5,120,236 1.33%
Products
Trucking and 9 0.56% $ 4,835,399 1.25%
Warehousing
Chemicals and Allied 16 1.00% $ 4,746,596 1.23%
Products
Food and Kindred 13 0.81% $ 4,460,738 1.15%
Spirits
Instruments and 16 1.00% $ 4,341,753 1.12%
Related Products ---- ------- ------------ -----
Subtotal 1,360 84.84% $344,908,294 89.29%
----- ------- ------------ -------
All others 243 15.16% $ 41,357,108 10.71%
----- ------- ------------ -------
Total: 1,603 100.00% $386,265,403 100.00%
===== ====== ============ ======
</TABLE>
31
<PAGE>
Distribution of Contracts By Original Contract Balance
Data as of April 1, 1999
<TABLE>
<CAPTION>
Original Gross Percentage of Discounted Percentage of
Contract Number of Number of Contract Aggregate Discounted
Balance Contracts Contracts Balance Contract Balance
- ------- --------- --------- ------- ----------------
<S> <C> <C> <C> <C>
25,001 - 50,000 39 2.43% $ 1,167,018 0.30%
50,001 - 100,000 324 20.21% 14,475,438 3.75%
100,001 - 150,000 258 16.09% 18,462,797 4.78%
150,001 - 200,000 206 12.85% 21,209,667 5.49%
200,001 - 250,000 149 9.30% 20,031,211 5.19%
250,001 - 300,000 116 7.24% 18,671,907 4.83%
300,001 - 400,000 133 8.30% 27,216,217 7.05%
400,001 - 500,000 82 5.12% 19,797,067 5.13%
500,001 - 600,000 70 4.37% 20,959,483 5.43%
600,001 - 700,000 37 2.31% 13,444,772 3.48%
700,001 - 800,000 29 1.81% 11,998,976 3.11%
800,001 - 900,000 14 0.87% 6,558,294 1.70%
900,001 - 1,000,000 13 0.81% 6,319,177 1.64%
1,000,001 - 1,250,000 39 2.43% 25,464,219 6.59%
1,250,001 - 1,500,000 22 1.37% 18,375,835 4.76%
1,500,001 - 1,750,000 13 0.81% 10,809,298 2.80%
1,750,001 - 2,000,000 9 0.56% 11,242,031 2.91%
2,000,001 - 2,250,000 8 0.50% 9,395,375 2.43%
2,250,001 - 2,500,000 9 0.56% 14,760,117 3.82%
2,500,001 - 2,750,000 3 0.19% 5,364,465 1.39%
2,750,001 - 3,000,000 3 0.19% 6,197,335 1.60%
3,000,001 - 3,500,000 9 0.56% 20,735,691 5.37%
3,500,001 - 4,000,000 5 0.31% 9,997,464 2.59%
4,000,001 - 4,500,000 2 0.12% 4,933,833 1.28%
4,500,001 - 5,000,000 2 0.12% 6,753,632 1.75%
5,000,001 - 6,000,000 3 0.19% 11,932,568 3.09%
7,000,001 - 8,000,000 3 0.19% 15,932,602 4.12%
8,000,001 - 9,000,000 1 0.06% 3,962,679 1.03%
10,000,001 - 11,000,000 1 0.06% 5,884,070 1.52%
18,000,001 - 19,000,000 1 0.06% 4,212,668 1.09%
- ----- ----------- -----
Total: 1,603 100.00% $386,265,403 100.00%
</TABLE>
Distribution of Contracts By Remaining Contract Balance
Data as of January 1, 1999
<TABLE>
<CAPTION>
Remaining Percentage of Discounted Percentage of
Contract Number of Number of Contract Aggregate Discounted
Balance Contracts Contracts Balance Contract Balance
- ------- --------- --------- ------- ----------------
<S> <C> <C> <C> <C>
1 - 25,000 13 0.81% $ 279,918 0.07%
25,001 - 50,000 298 18.59% 11,109,655 2.88%
50,001 - 100,000 432 26.95% 31,287,377 8.10%
100,001 - 150,000 257 16.03% 31,396,550 8.13%
150,001 - 200,000 167 10.42% 29,144,002 7.55%
200,001 - 250,000 110 6.86% 24,672,814 6.39%
250,001 - 300,000 66 4.12% 18,094,225 4.68%
300,001 - 400,000 65 4.05% 22,237,975 5.76%
400,001 - 500,000 49 3.06% 21,795,869 5.64%
500,001 - 600,000 23 1.43% 12,545,517 3.25%
600,001 - 700,000 21 1.31% 13,671,943 3.54%
700,001 - 800,000 17 1.06% 12,778,393 3.31%
800,001 - 900,000 9 0.56% 7,756,268 2.01%
900,001 - 1,000,000 8 0.50% 7,559,225 1.96%
1,000,001 - 1,250,000 16 1.00% 17,381,942 4.50%
1,250,001 - 1,500,000 15 0.94% 20,677,565 5.35%
1,500,001 - 1,750,000 4 0.25% 6,450,439 1.67%
1,750,001 - 2,000,000 8 0.50% 14,926,698 3.86%
2,000,001 - 2,250,000 5 0.31% 10,709,424 2.77%
2,250,001 - 2,500,000 6 0.37% 14,061,148 3.64%
2,500,001 - 2,750,000 1 0.06% 2,501,724 0.65%
2,750,001 - 3,000,000 2 0.12% 5,967,752 1.54%
3,000,001 - 3,500,000 1 0.06% 3,499,388 0.91%
3,500,001 - 4,000,000 4 0.25% 14,976,931 3.88%
4,000,001 - 4,500,000 1 0.06% 4,212,668 1.09%
4,500,001 - 5,000,000 2 0.12% 9,700,113 2.51%
5,000,001 - 6,000,000 3 0.19% 16,874,885 4.37%
---- ------- ---------- -------
Total: 1,639 100.00% $386,265,403 100.00%
</TABLE>
32
<PAGE>
Distribution of Contracts By Original Contract Term
Data as of April 1, 1999
<TABLE>
<CAPTION>
Number Percentage of Percentage of
Original Term of Numbers of Discounted Aggregate Discounted
(Months) Contracts Contracts Contract Balance Contract Balance
- -------- --------- --------- ---------------- ----------------
<S> <C> <C> <C> <C>
13 - 24 40 2.50% $ 15,735,301 4.07%
25 - 36 264 16.47% 59,493,109 15.40%
37 - 48 151 9.42% 52,993,836 13.72%
49 - 60 845 52.71% 154,024,594 39.88%
61 - 72 162 10.11% 33,495,045 8.67%
73 - 84 106 6.61% 42,773,797 12.11%
85 - 35 2.18% 23,749,720 6.15%
----- ------ ------------ -------
Total: 1,603 100.00% $386,265,403 100.00%
</TABLE>
Distribution of Contracts By Remaining Months to Stated Maturity
Data as of April 1, 1999
<TABLE>
<CAPTION>
Percentage of Percentage of
Remaining Term Number Numbers of Aggregate Discounted Aggregate Discounted
(Months) of Contracts Contracts Contract Balance Contract Balance
- -------- ------------ --------- ---------------- ----------------
<S> <C> <C> <C> <C>
1 - 12 78 4.87% $ 9,625,305 2.49%
13 - 24 350 21.83% 67,714,024 17.53%
25 - 36 383 23.89% 94,859,172 24.56%
37 - 48 438 27.32% 82,986,400 21.48%
49 - 60 265 16.53% 72,816,478 20.15%
61 - 72 61 3.81% 35,412,748 9.17%
73 - 84 28 1.75% 17,851,276 4.62%
----- ------ ------------ ------
Total: 1,603 100.00% $386,265,403 100.00%
</TABLE>
33
<PAGE>
Delinquency and Loss Information
The originators treat a contract as delinquent if the obligor does not make
a scheduled payment at the time or in the amount required by on the contract is
not paid by an obligor in a manner consistent with the contract terms. Contract
terms require payment by the obligor within 30 days from the "due date" provided
in the associated invoice. As of April 1, 1999 no contract sold to the trust has
any delinquent scheduled payments. We consider a schedule payment to be
delinquent if:
. it is more than 60 days delinquent; and
. the delinquent amount is more than the greater of the following:
(A) $10 or
(B) 10% or more of the scheduled payment.
There are no non-performing or non-prime contracts included in the contracts
sold to the trust.
For a definition of defaulted contracts. see "The Sale and Servicing Agreement-
Definition of Defaulted Contracts".
The following tables set forth the originators' delinquency and loss
experience on their aggregate domestic portfolio of equipment lease and loan
portfolio. Not all of the contracts in the originators' aggregate portfolio will
be transferred to the trust. Therefore, the data in the following tables
includes delinquency and loss experience for the contracts and other financial
assets owned by Heller Financial. The delinquency and loss experience set forth
in the following tables is described in terms of receivables and repossessed
assets on Heller Financial's financial statements. The receivables are
calculated net of unearned income.
The data presented in the following tables and the period to period
discussion below reflect historical results and there is no assurance that the
delinquency or loss experience of the contracts will be similar to that set
forth below.
34
<PAGE>
Contract Portfolio
Delinquency Experience
(Dollars in Millions)
At
___________________________________________________________________________
<TABLE>
<CAPTION>
Twelve Twelve Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
December December December December
31, 1998 31, 1997 31, 1996 31, 1995
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ending
Receivables and
Repossesed
Assets..........
$1,647.00 100.00% $1,758.00 100.00% $1,525.00 100.00% $1,175.00 100.00%
Number of
Delinquent Days
($ of Ending
Receivables and
Repossessed
Assets)
31-60 days....... $9.44 0.57% $17.33 0.99% $16.55 1.09% $18.38 1.56%
61-90 days....... $6.04 0.37% $6.86 0.39% $4.68 0.31% $11.23 0.96%
Over 90 days..... $14.55 0.88% $18.91 1.08% $17.15 1.12% $11.84 1.01%
Total............ $30.03 1.82% $43.10 2.45% $38.38 2.52% $41.45 3.53%
</TABLE>
Delinquent receivables on the above table include accrued interest.
35
<PAGE>
<TABLE>
<CAPTION>
Contract Portfolio
Contract Loss Experience
(Dollars in Millions)
At
--------------------------------------------------------------------
Twelve Months Twelve Months Twelve Months Twelve Months
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
------------ ------------ ------------ ------------
1998 1997 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
average Receivables and
Repossessed Assets $1,845.00 100% $1,609.00 100% $1,293.00 100% $1,014.0 100%
gross losses (as % of
Receivables and Repossessed
Assets) $ 1.35 0.07% $ 1.92 0.12% $ 0.65 0.05% $ 0.89 0.09%
gross recoveries (as % of
Receivables and Repossessed
Assets) $ 0.60 0.03% $ 0.42 0.03% $ 0.36 0.03% $ 0.32 0.03%
net losses (as % of
Receivables and Repossessed
Assets) $ 0.75 0.04% $ 1.50 0.09% $ 0.29 0.02% $ 0.58 0.06%
</TABLE>
Gross losses, as a percentage of receivables and repossessed assets, are shown
in the above table net of vendor recourse.
With respect to contracts representing over 50% of the average receivables and
repossessed assets for contracts secured by printing equipment, defaults would
have been approximately $4.1 million in the twelve months ended December 31,
1998 and $8.4 million for the twelve months ended December 31, 1997; after
vendor recourse, actual losses aggregated $58,000 over the period.
36
<PAGE>
Twelve Months Ended December 31, 1998 versus Twelve Months Ended December 31,
1997
The amounts classified as delinquent as a percentage of receivables and
repossessed assets declined between December 31, 1997 and December 31, 1998. Net
losses as a percentage of average receivables and repossessed assets decreased
slightly in 1998 as compared to 1997. The slight increase is not attributable to
any one factor and we have no basis to predict, and offer no assurances as to,
whether net losses as a percentage of receivables and repossessed assets will
continue to decrease in subsequent periods. Average receivables and repossessed
assets decreased approximately 14.7% from December 31, 1997 to December 31, 1998
due to normal fluctuations in the amount of contracts originated. We believe
that stability in delinquency and loss experience is a result of continued
generally favorable economic conditions and consistent application of credit
standards on the part of the originators of such assets.
Twelve Months Ended December 31, 1997 versus Twelve Months Ended December 31,
1996
The amounts classified as delinquent as a percentage of receivables and
repossessed assets decreased slightly between December 31, 1996 and December 31,
1997. Net losses as a percentage of average receivables and repossessed assets
increased slightly in 1997 as compared to 1996. The increase is not attributable
to any one factor and we believe that it is partially attributable to the
increase in average receivables and repossessed assets. Average receivables and
repossessed assets increased approximately 24% from December 31, 1996 to
December 31, 1997 due to an increase in financing activity. As noted above, we
believe that stability in delinquency and loss experience is a result of
continued generally favorable economic conditions and consistent application of
credit standards on the part of the originators of such assets.
Twelve Months Ended December 31, 1996 versus Twelve Months Ended December 31,
1995
The amounts classified as delinquent as a percentage of receivables and
repossessed assets decreased between December 31, 1995 and December 31, 1996.
Net losses as a percentage of average receivables and repossessed assets
decreased slightly during the same period while average receivables and
repossessed assets increased approximately 27.5%. As noted above, we believe
that stability in delinquency and loss experience is a result of continued
generally favorable economic conditions and consistent application of credit
standards on the part of the originators of such assets.
37
<PAGE>
The Contracts
The trust will be entitled to all collections on account of the contracts
and related equipment, including collections on end user contracts securing
vendor loans. However, the trust will not be entitled to the Excluded Amounts.
See "Description of the Notes and Indenture -- Amounts Available for Payment
on the Notes". All of the contracts are commercial contracts.
End-User Contracts
The following discussion describes the end-user contracts, including end-
user contracts securing vendor loans. All of the end-user contracts in respect
of equipment, software and related support and consulting services to be
included from time to time in the trust are of one of the following types:
. conditional sale agreements;
. leases;
. secured promissory notes;
. installment payment agreements; and
. financing agreements.
There is no limit on the number of contracts which may consist of any of
the foregoing types. Each contract must be an eligible contract as of the
applicable cutoff date. In order for a contract to be eligible to be
transferred to the trust and to be a trust asset it must have the certain
characteristics which are more fully described in "The Sale and Servicing
Agreement -- Representations and Warranties; Definition of Eligible Contract".
Conditional Sale Agreements.
The originators offer financing for equipment under conditional sale
agreements assigned to the originators by vendors. Most of the conditional sale
agreements transferred to the trust will consist of either the originators'
standard pre-printed form, or of the vendors' standard, pre-printed forms.
These forms have been reviewed and approved for use by the applicable
originator. The conditional sale agreement sets forth the description of each
item financed thereunder and the schedule of installment payments. Most of the
Generally, loans under conditional sale agreements are fixed rate and are for a
one to seven year term. Most of the payments under conditional sale agreements
generally are due monthly. Conditional sale agreement terms include the
following:
. a grant by the end-user thereunder of a security interest in any related
equipment which is then assigned by the vendor to the originator;
. may allow prepayment of the obligation upon payment, where allowed by
applicable state law, of an additional prepayment fee;
. the end-user is required to maintain the equipment, keep it free and
clear of liens and encumbrances and pay all taxes related to the
equipment;
. no modification or disposal of the equipment without the originator's,
or its assignee's, consent;
. a disclaimer of warranties;
. the end-user's indemnity against liabilities arising from the use,
possession or ownership of the equipment; and
. the end-user's absolute and unconditional obligation to pay the
installment payments required under the terms of the agreement.
38
<PAGE>
The conditional sale agreement also requires each end-user to maintain
insurance, the terms of which may vary. The terms of a conditional sale
agreement may be modified at its inception at the end-user's request. These
modifications must either be approved by the originator's legal department and
several levels of management before the originator will agree to accept an
assignment of the conditional sale agreement from a vendor, or the vendor must
indemnify the originator against any losses or damages it may suffer as a result
of the modifications.
Leases.
The originators, either directly or by assignment from vendors, offer
financing of equipment under leases. Leases may consist of individual lease
agreements each relating to a single, separate transaction or may consist of
individual transactions written under and governed by a master lease agreement
which contains the general terms and conditions of the transaction. Specific
terms and conditions, such as descriptions of the specific equipment being
leased or financed and the schedule of related rental payments, are contained in
a supplement or schedule to the master lease agreement, which is signed by the
end-user, as lessee, and either the vendor or the originator, as lessor. The
supplement or schedule incorporates the master lease agreement by reference and
is treated by the originator as a separate lease. Each lease is originated in
the ordinary course of business by either the originator or a vendor. The
vendors assign leases to the originator through a vendor finance agreement or
vendor assignment.
The initial terms of most of the leases transferred to the trust generally
range from one to seven years. Each lease provides for the periodic payment by
the end-user of rent in advance or arrears, usually generally monthly or
quarterly. The periodic payments represent the amortization, usually generally
on a level basis, of the total amount that an end-user is required to pay
throughout the term of a lease.
The leases to be transferred to the trust are "net leases" under which the
end-user assumes responsibility for the items financed thereunder, including
operation, maintenance, repair, insurance, return of any equipment at the
expiration or termination of the lease and the payment of all sales and use and
property taxes relating to such financed item during the lease term. The
originator or vendor is named as loss payee on insurance policies covering the
equipment. The end-user further agrees to indemnify the lessor for any
liabilities arising out of the use or operation of the item financed by the end-
user. In most cases, the lessor is also authorized to perform the end-user's
obligations under the lease at the end-user's expense, if it so elects, in cases
where the end-user has failed to perform. In addition, the leases often
generally contain "hell or high water" clauses unconditionally obligating the
end-user to make periodic payments, without setoff, at the times and in the
amounts specified in the lease. If the originator is the lessor, the lease
contains no express or implied warranties with respect to the items financed
thereunder other than a warranty of quiet enjoyment. If a vendor is the lessor,
the lease or a related agreement may contain representations and warranties
relating to the items financed thereunder in addition to a warranty of quiet
enjoyment; however, the end-user agrees not to assert any warranty claims
against any assignee of the vendor, including the originator, by way of setoff,
counterclaim or otherwise, and further agrees that it may only bring such claims
against the vendor. All leases of equipment require the end-user to maintain, at
its expense, casualty insurance covering damage to or loss of the equipment
during the lease term or to self-insure against those risks, if approved in
advance by the originator.
The leases include both "true leases" and leases intended for security as
defined in Section 1-201(37) of the Uniform Commercial Code. Under a "true
lease," the lessor bears the risk of ownership, although the risk of loss of the
related equipment is passed to the end-user under the leases, and no title is
conferred upon the lessee. Under a "true lease" the lessor also takes any tax
benefits associated with the ownership of depreciable property under applicable
law. The lessee under a "true lease" has the right to the temporary use of
property
39
<PAGE>
for a term shorter than the economic life of such property in exchange for
payments at scheduled intervals during the lease term and the lessor retains a
significant "residual" economic interest in the leased property. End of lease
options for "true leases" include purchase or renewal at fair market value.
Under leases intended for security, the lessor in effect finances the "purchase"
of the leased property by the lessee and retains a security interest in the
leased property. The lessee retains the leased property for substantially all
its economic life and the lessor retains no significant residual interest. Such
leases are considered conditional sales type leases for federal income tax
purposes and, accordingly, the lessor does not take any federal tax benefits
associated with the ownership of depreciable property. End of lease options for
such leases depend on the terms of the related individual lease agreement or
master lease agreement supplement or schedule. Those terms usually provide for
the purchase of the equipment at a specified restated price, which may be
nominal.
End-users under a lease are either prohibited from altering or modifying
the equipment or may alter or modify the equipment only to the extent the
alterations or modifications are readily removable without damage to the
equipment. Under some master lease agreements, the end-user may assign its
rights and obligations under the lease, but only upon receiving the prior
written consent of the lessor. Under some master lease agreements, the end-user
may relocate the equipment upon giving the lessor prompt written notice of the
relocation. The right to grant or deny the consent or to receive the written
notice will be exercised by the servicer pursuant to the authority delegated to
it in the Sale and Servicing Agreement. Some leases permit the end-user to
substitute substantially identical leased equipment for leased equipment
scheduled to be returned to the lessor under the lease.
While the terms and conditions of the leases do not usually permit
cancellation by the end-user, some leases may be modified or terminated before
the end of the lease term. Modifications to a lease term or early lease
terminations may be permitted by the originator, or by a vendor with the consent
of the originator. Modifications are often generally permitted in conjunction
with additional financing opportunities from the same end-user. Early
termination of a lease may be permitted in connection with the acquisition of
new technology requiring replacement of the equipment. In such cases, the
related equipment is returned to the vendor or originator and an amount
approximately generally equal to the present value of the remaining rental
payments under the lease plus an early termination fee is paid by the end-user
to the originator. Modifications usually involve repricing a lease or
modification of the lease term. Occasionally a lease may be modified in
connection with an increase in the capacity or performance of equipment by
adding additional equipment that includes new technology. Coincident with the
financing of an upgrade to the equipment, the originator may reprice and extend
the related base lease term. Leases whose terms have been extended under those
circumstances may remain in the pool of contracts held by the trust. Heller
Financial, Inc., as servicer, expects to continue to permit these modifications
and terminations with respect to leases included in the contracts pursuant to
the authority delegated to it in the Sale and Servicing Agreement. However the
servicer's ability to make material modifications is limited as described under
"The Sale and Servicing Agreement --Material Modifications to Contracts".
The standard terms and conditions of a master lease agreement may be
modified at the inception of a lease at the request of the end-user. The
modifications must either be approved by the originator's legal department and
several levels of management before the originator will agree to enter into the
lease or accept an assignment of the lease from a vendor. Alternatively, the
vendor must indemnify the originator against any losses or damages it may suffer
as a result of the modifications. Common permitted modifications include, but
are not limited to, the following:
40
<PAGE>
. a one dollar purchase option at the end of the lease term;
. prearranged mid-lease purchase options, early termination options and
lease extension options as described above;
. modifications to the lessor's equipment inspection rights;
. modifications to the end-user's insurance requirements permitting the
end-user to self-insure against casualty to the equipment;
. the end-user's right to assign the lease or sub-lease the items financed
pursuant to the lease items to an affiliated entity, so long as the end-
user remains liable under the lease and promptly notifies the lessor or
its assignee of such assignment or sublease; and
. extended grace periods for late payments of rent.
Secured Promissory Notes.
The originators also provide direct initial financing or refinancing of
equipment under secured promissory notes, which consist of an installment note
and a separate security agreement. In an initial financing transaction, the
applicable originator pays to the vendor the purchase price for the equipment
and in a refinancing transaction, the originator pays off an end-user's existing
financing source. In the case of a refinancing transaction, upon payment to the
existing financing source, the originator obtains a release of the other party's
lien on the financed equipment. In either case, the originator records its own
lien against the financed equipment and takes possession of the secured
promissory note, which constitutes chattel paper under the Uniform Commercial
Code. In either case, the transaction is documented as a direct loan by the
originator to the end-user of the equipment using a secured promissory note.
Except for the lack of references to "sale" or "purchase" of equipment, the
terms and conditions contained in a secured promissory note are substantially
similar to those contained in a conditional sale agreement.
Installment Payment Agreements and Financing Agreements.
The originators provide financing for software license fees and related
support and consulting services under installment payment supplements to
software license agreements, separate installment payment agreements or other
forms of financing agreements assigned to the applicable originator by vendors
of software. Each financing agreement is an unsecured obligation of the end-
user. Most of the financing agreements provide:
. a fixed schedule of payments with no end-user right of prepayment;
. that the agreement is noncancellable for its term;
. a "hell or high water" clause unconditionally obligating the end-user to
make periodic payments, without setoff, at the times and in the amounts
specified in such agreement;
. for the vendor to assign the payment agreement to a third party,
including the originator
. an agreement by the end-user, upon such assignment, not to assert
against such assignee any claims or defenses the end-user may have
against the vendor; and
. default and remedy provisions that often include acceleration of amounts
due.
In some cases, the financing agreements also give the vendor the right to
terminate the underlying software license and all related support and consulting
activities. The originator may obtain this right by assignment from the vendor.
Equipment
The end-user contracts cover a wide variety of new and used equipment. Some
examples of the types of equipment are: printing, pre-press, machine tool,
plastics, computer hardware, computer software, restaurant, transportation,
energy related, medical, industrial equipment and aircraft. All of the interests
of the originator
41
<PAGE>
in the equipment subject to an end-user contract will be transferred to the
trust. Those interests consist or will consist of either title to the equipment
or a security interest in the equipment.
Software and Related Services
Some of the end-user contracts, which are usually in the form of financing
agreements, cover license fees and other fees owed by the end-users under either
perpetual or term software license agreements and other related agreements in
connection with the use by such end-users of computer software programs. Those
end-user contracts may also cover related support and consulting services which
are provided by the vendor, an affiliate of the vendor or a third party contract
party and which facilitate the obligors use of the software. No interest in the
software, the software license agreement or the related services, other than the
right to collect the payment of software license fees and, in some cases, to
exercise rights and remedies under the software license agreement, has been or
will be conveyed to the originators or the trust depositor. Consequently, the
trust will not have title to or a security interest in the software, nor will it
own the related services, and would not be able to realize any value from the
software therefrom under a related end-user contract upon a default by the end-
user.
Vendor Loans
The contracts may include limited recourse or non-recourse loan or
repayment obligations. These loan or repayment obligations are referred to in
this prospectus as vendor loans. A vendor loan is payable by a vendor and
secured by all of the vendor's interest in an individual end-user contract
originated by the vendor and by the equipment related to that end-user contract.
A vendor can be a equipment manufacturer, dealer or distributor or a computer
software distributor or any other person located in the United States.
Vendor loans may be originated under a vendor finance program. Under some
vendor financial programs end-user contracts may be originated by the originator
directly, or purchased by the originator from the vendor, in separate
transactions not giving rise to vendor loans. See "--Vendor Finance Programs".
Vendor loans often are non-recourse to the vendor, meaning the applicable
originator may obtain repayment solely from the proceeds of the end-user
contracts and related equipment securing the vendor loan. In a few instances,
however, recourse to a vendor for nonpayment of a vendor loan may be available
through a limited recourse arrangement included in the related vendor finance
program. The repayment terms under a vendor loan, including periodic amounts
payable and schedule of payments, correspond to the payment terms of the end-
user under the end-user contract collaterally assigned under the vendor
loan.
Vendor Finance Programs
We expect that a substantial portion of the end-user contracts included in
the trust will have been originated by vendors and assigned or pledged to the
originator under the pursuant to vendor finance programs. Also, as described
above, vendor loans may be originated through vendor finance programs with the
related vendor. All rights, but not obligations, of the originators with respect
to the contracts under the agreements governing vendor finance programs are
usually assignable and will be so assigned by the originators to the trust
depositor and in turn conveyed by the trust depositor to the trust. The vendor
finance programs with vendors provide the originators with the opportunity to
finance transactions relating to the acquisition or use by an end-user of a
vendor's equipment, software and related services or other products. Vendor
finance programs
42
<PAGE>
provide the originators with a steady, sustainable flow of new business, often
these vendors have generally with lower costs of origination that are lower than
the originators' than asset-based financings which are marketed directly to end-
users. Many of the vendor finance programs provide various forms of support to
the applicable originator, including representations and warranties by the
vendor in respect of the end-user contracts assigned by the vendor to the
originator and related equipment or software and related services, credit
support with respect to defaults by end-users and equipment repurchase and
remarketing arrangements upon early termination of end-user contracts upon a
default by the related end-users. Some of the vendor finance programs take the
form of a referral relationship which is less formal, and may or may not include
credit or remarketing support to the originator from the vendor.
Other than agreements that only establish a referral relationship, each
agreement governing a vendor finance program generally includes the following
provisions:
. Vendor representations, warranties and covenants regarding each end-
user contract assigned to the originator, including the following
among other things that:
(1) the obligations of the end-user under the assigned end-user
contract are absolute, unconditional, noncancellable and
enforceable in accordance with its terms;
(2) the obligations of the end-user under assigned end-user contract
are free from any rights of offset, counterclaim or defense;
(3) the originator holds the sole original of the end-user contract
and has either title to or a first priority perfected security
interest in the equipment;
(4) the equipment and the end-user contract are free and clear of all
liens, claims or encumbrances;
(5) the equipment or the software has been irrevocably accepted by
the end-user and will perform as warranted to the end-user; and
(6) the assigned end-user contract was duly authorized and signed by
the end-user;
. Remedies in the event of a misrepresentation or breach of a warranty or
covenant by the vendor regarding an assigned end-user contract. These
remedies usually require the vendor to repurchase the affected end-user
contract for the originator's investment balance in the end-user
contract plus costs incurred by the originator in breaking any
underlying funding arrangement;
. In the case of end-user contracts covering equipment, remarketing
support from the vendor in the event of an end-user default and
subsequent repossession or return of the equipment under the end-user
contract. The remarking support is intended to assist the originator in
realizing proceeds from the equipment assigned as collateral security to
support the obligations of the end-user under the end-user contract; and
. The right of the originator to further assign its interests in assigned
end-user contracts, all payments thereunder and any related interest in
equipment.
The originator may delegate to the vendor pursuant to the vendor finance
program agreement, ongoing administrative duties relating to servicing,
processing of collections and actual substantive collection remedies. The vendor
may be able to delegate those administrative duties to a sub-servicer acceptable
to the originator.
43
<PAGE>
In addition to the foregoing, a vendor finance program agreement may
include recourse against the vendor with respect to end-user defaults under
specific end-user contracts. The recourse may structured in the following ways:
. by specifying that the assignment of the end-user contract from the
vendor to the originator is with full recourse against the vendor;
. by specifying that the vendor will absorb a limited fixed dollar or
percentage amount of "first losses" on the contract, or
. by inclusion of the end-user contract in an "ultimate net loss pool"
created under the vendor finance program. In the event of an end-user
default under an end-user contract which was assigned by the vendor to
the originator subject to the ultimate net loss pool, the originator may
draw against the ultimate net loss pool up to the amount of the
originator's remaining unpaid investment balance in the defaulted end-
user contract, but not in excess of the ultimate net loss pool balance
then available. Drawings may also be made against the ultimate net loss
pool with respect to end-user contracts that are not included in the
pool of contracts and, accordingly, there can be no assurance that any
amounts contributed by a vendor to the ultimate net loss pool will be
available in the event of an end-user default under a end-user contract
included in the pool of contracts.
The manner in which end-user contracts are assigned to the originator by
the vendors differs under each vendor finance program, depending upon the nature
of the financed equipment by the contracts, the form of the end-user contract,
the accounting treatment sought by the vendor and the end-user, and tax
considerations.
For example, the originator might either accept a vendor loan and
collateral assignment of the end-user contract and the security interest in the
related equipment from the vendor. Alternatively, the originator may accept a
full assignment of the end-user contract and collateral assignment of related
equipment from the vendor, which collateral assignment secures the end-user's
obligations under the end-user contract. The originator also may receive, from a
vendor with respect to software, a full assignment of leases, installment
payment programs, installment payment supplements to license programs, and other
types of financing programs used in financing software license payments and
related support and consulting services.
We expect that some portion of the end-user contracts included in the pool
of contracts, especially in the case of conditional sale programs, will consist
of end-user contracts originated by vendors and assigned to the originator under
individual assignments tp vendors. Each vendor assignment of a contract or
contracts will either be made with or without recourse against the vendor for
end-user defaults. Additionally, each vendor assignment of a contract will
generally contain many, if not all, of the representations, warranties and
covenants typically contained in vendor finance program agreements, as well as a
vendor repurchase requirement in the event of a breach by the vendor of such
representations, warranties or covenants. The vendor assignments may or may not
provide for any vendor remarketing support in the event of an end-user default.
Contract Files
The applicable originator will indicate in its books and records, including
the appropriate computer files relating to the contracts, that the contracts
have been transferred to the trust for the benefit of the holders of the notes
and certificate. Furthermore, the servicer will stamp the documents relating to
the contracts or otherwise mark the contracts with a legend to the effect that
the contracts have been transferred to the trust
44
<PAGE>
for the benefit of the holders of the notes and certificate. The originators
will also deliver to the indenture trustee a computer file or microfiche or
written list containing a true and complete list of all contracts which have
been transferred to the trust, identified by account number and by the
discounted contract balance as of the applicable cutoff date.
How Collections on the Contracts are Treated
All collections received with respect to the contracts will be allocated as
described in "Description of the notes and Indenture -- Allocations".
Prepayments will be treated as though they were received on the last day of the
collection period in which they are actually received for purposes of
calculating amounts available for distribution to you. Payments of principal on
the contracts made in advance of their due date will be treated as though they
were received on the last day of the collection period in which such principal
payments were actually received. Each collection period begins on the second day
of a calendar month and ends on and includes the first day of the immediately
following calendar month.
Prepayment and Yield Considerations
The rate of principal payments on the notes, the aggregate amount of each
interest payment on the notes and the yield to maturity of the notes are
directly related to the rate of payments on the underlying contracts. The
payments on the contracts may be in the form of payments scheduled to be made
under the terms of the contracts, prepayments or liquidations due to default,
casualty and other events which cannot be specified at present. Any payments
other than scheduled payments may result in distributions to you of amounts
which would otherwise have been distributed over the remaining term of the
contracts. Each prepayment on a contract, if the contract is not replaced by the
trust with a comparable substitute contract as described under "The Sale and
Servicing Agreement -- Substitute Contracts", will shorten the weighted average
remaining term of the contracts and the weighted average life of the notes.
In general, the rate of payments on the contracts may be influenced by a
number of other factors, including general economic conditions. The rate of
principal payments with respect to any class of notes may also be affected by
any repurchase by the trust depositor of contracts under the sale and servicing
agreement. Under the sale and servicing agreement, the trust depositor and the
originators must repurchase contracts if there is:
. a breach of representation or warranty as to the contracts which causes
such contract to be ineligible to be at trust asset;
. prepayment of contracts; or
. the exercise by the trust depositor of its repurchase option when the
aggregate discounted contract balance of the contracts is less than 10%
of the aggregate discounted contract balance of the contracts as of
April 1, 1999, the initial cutoff date.
Further, the servicer may permit the obligor under a contract to make an
optional prepayment in an amount which is less than the amount sufficient to
repay the portion of such contract, together with accrued interest, so long as
the trust is indemnified for any such insufficiency by the vendor or the
originator. In the case of contracts which must be removed from the trust assets
due to their failure to have the characteristics set forth in the sale and
servicing agreement or which are Excess Contracts, the rate of prepayment would
also be influenced by the trust depositor's decision not to repurchase those
contracts and instead, to accept substitute contracts. See "The Sale and
Servicing Agreement -- Substitute Contracts". In the event of a repurchase, the
45
<PAGE>
repurchase price will decrease the aggregate discounted contract balance of the
contracts, leading to a principal repayment and causing the corresponding
weighted average life of the notes to decrease. See "Risk Factors -- Maturity
and Prepayment Considerations."
A higher than anticipated rate of prepayment will reduce the aggregate
discounted contract balance of the contracts more quickly than expected and
thereby result in an increase in the rate at which principal is paid to you and
reduce the aggregate interest payments you may have expected to receive on the
notes.
The effective yield will depend upon, among other things, the amount of and
rate at which principal is paid to you. You will bear any reinvestment risks
resulting from a faster or slower incidence of prepayment of contracts. The
reinvestment risks include the risk that interest rates may be lower at the time
you receive payments from the trust than interest rates would otherwise have
been had the prepayments not been made or had the prepayments been made at a
different time. Your after-tax yield may be affected by lags between the time
interest income accrues to you and the time the related interest income is
received by you.
The following chart sets forth the percentage of the initial principal
amount of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class B Notes, Class C Notes and Class D Notes which would be outstanding
on the distribution dates set forth below assuming a conditional prepayment rate
of 0.00%, 5.00%, 10.00%, 15.00%, 20.00% and 25.00%, respectively. Such
information is hypothetical and is set forth for illustrative purposes only. The
conditional prepayment rate assumes that a fraction of the outstanding contracts
is prepaid on each distribution date, which implies that each contract in the
pool of contracts is equally likely to prepay. This fraction, expressed as a
percentage, is annualized to arrive at the conditional prepayment rate for the
contracts. The conditional prepayment rate measures prepayments based on the
outstanding discounted contract balances of the contracts, after the payment of
all payments scheduled to be made under the terms of the contracts during each
collection period. The conditional prepayment rate further assumes that all
contracts are the same size and amortize at the same rate and that each contract
will be either paid as scheduled or prepaid in full. The amounts set forth below
are based upon the timely receipt of scheduled monthly contract payments as of
April 1, 1999, assumes that the trust depositor exercises its option to cause a
redemption of the notes when the aggregate discounted contract balance of the
contracts is less than 10% of the aggregate discounted contract balance of the
contracts as of April 1, 1999, and assumes the closing date for the sale of the
contracts to the trust is April 19, 1999. These tables are based upon the
statistical discount rate of 5.977%. In addition, it is assumed for the purposes
of these tables only, that the trust issues the notes in the following amounts
and at the following interest rates:
<TABLE>
<CAPTION>
Class Initial Principal Amount Interest Rate
----- ------------------------ -------------
<S> <C> <C>
A-1 $129,943,946 4.96%
A-2 65,665,118 5.31%
A-3 137,124,218 5.55%
A-4 30,356,196 5.69%
B 9,656,635 5.88%
C 7,725,308 6.56%
D 3,862,654 8.79%
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-1 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0% 5% 10% 15% 20% 25%
============================================================================================================
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ------------------------------------------------------------------------------------------------------------
05/13/99 91.75% 90.52% 89.23% 87.86% 86.43% 84.91%
- ------------------------------------------------------------------------------------------------------------
06/13/99 83.52% 81.13% 78.63% 76.02% 73.27% 70.38%
- ------------------------------------------------------------------------------------------------------------
07/13/99 72.55% 69.11% 65.54% 61.81% 57.91% 57.83%
- ------------------------------------------------------------------------------------------------------------
08/13/99 64.37% 59.93% 55.34% 50.57% 45.61% 40.44%
- ------------------------------------------------------------------------------------------------------------
09/13/99 56.60% 51.24% 45.70% 39.98% 34.06% 27.93%
- ------------------------------------------------------------------------------------------------------------
10/13/99 47.03% 40.85% 34.50% 27.97% 21.24% 14.31%
- ------------------------------------------------------------------------------------------------------------
11/13/99 39.64% 32.65% 25.52% 18.21% 10.72% 3.04%
- ------------------------------------------------------------------------------------------------------------
12/13/99 31.48% 23.79% 15.96% 7.99% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
01/13/2000 22.10% 13.82% 5.44% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
02/13/2000 14.13% 5.28% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
03/13/2000 7.22% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
04/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
05/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
06/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
07/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
08/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
09/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
10/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
11/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
12/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
01/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
02/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
03/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
04/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
05/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
06/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
07/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-1 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ------------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
08/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
09/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
10/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
11/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
12/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
01/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
02/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
03/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
04/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
05/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
06/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
07/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
08/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
09/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
10/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
11/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
12/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
01/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
02/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
03/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
04/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
05/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
06/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
07/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
08/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
09/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
10/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
11/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
12/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-1 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0% 5% 10% 15% 20% 25%
===============================================================================================================
01/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
02/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
03/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
04/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
05/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
06/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
07/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
08/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
09/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
10/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
11/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------
Weighted Average Life
(Years)
- ---------------------------------------------------------------------------------------------------------------
To Call: 0.51 yrs 0.46 yrs 0.41 yrs 0.38 yrs 0.34 yrs 0.31 yrs
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-2 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0% 5% 10% 15% 20% 25%
==========================================================================================================
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
05/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
06/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
07/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
08/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
09/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
10/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
11/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
12/13/99 100.00% 100.00% 100.00% 100.00% 99.75% 84.80%
- ----------------------------------------------------------------------------------------------------------
01/13/2000 100.00% 100.00% 100.00% 94.44% 78.94% 63.16%
- ----------------------------------------------------------------------------------------------------------
02/13/2000 100.00% 100.00% 93.43% 77.24% 60.87% 44.33%
- ----------------------------------------------------------------------------------------------------------
03/13/2000 100.00% 96.10% 79.12% 62.06% 44.92% 27.68%
- ----------------------------------------------------------------------------------------------------------
04/13/2000 96.64% 79.06% 61.47% 43.89% 26.31% 8.72%
- ----------------------------------------------------------------------------------------------------------
05/13/2000 82.03% 63.81% 45.67% 27.61% 9.64% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2000 66.52% 47.84% 29.33% 10.98% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2000 48.25% 29.42% 10.83% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2000 34.99% 15.81% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2000 23.17% 3.67% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2000 8.55% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2000 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-2 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0% 5% 10% 15% 20% 25%
==========================================================================================================
09/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2001 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-2 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0% 5% 10% 15% 20% 25%
=============================================================================================================
02/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
03/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
04/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
05/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
06/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
07/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
08/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
09/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
10/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
11/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------------------------------------------
Weighted Average Life
(Years)
- -------------------------------------------------------------------------------------------------------------
To Call: 1.28 yrs 1.18 yrs 1.08 yrs 1.00 yrs 0.92 yrs 0.84 yrs
- -------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-3 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
05/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
06/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
07/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
08/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
09/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
10/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
11/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
12/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 96.06%
- ----------------------------------------------------------------------------------------------------------
06/13/2000 100.00% 100.00% 100.00% 100.00% 96.56% 87.95%
- ----------------------------------------------------------------------------------------------------------
07/13/2000 100.00% 100.00% 100.00% 96.40% 87.75% 79.24%
- ----------------------------------------------------------------------------------------------------------
08/13/2000 100.00% 100.00% 98.55% 89.70% 81.01% 72.51%
- ----------------------------------------------------------------------------------------------------------
09/13/2000 100.00% 100.00% 92.62% 83.69% 74.98% 66.50%
- ----------------------------------------------------------------------------------------------------------
10/13/2000 100.00% 94.74% 85.64% 76.78% 68.19% 59.85%
- ----------------------------------------------------------------------------------------------------------
11/13/2000 98.76% 89.33% 80.18% 71.33% 62.77% 54.53%
- ----------------------------------------------------------------------------------------------------------
12/13/2000 92.91% 83.49% 74.39% 65.62% 57.18% 49.09%
- ----------------------------------------------------------------------------------------------------------
01/13/2001 86.34% 77.02% 68.07% 59.49% 51.27% 43.43%
- ----------------------------------------------------------------------------------------------------------
02/13/2001 80.19% 71.00% 62.22% 53.82% 45.83% 38.25%
- ----------------------------------------------------------------------------------------------------------
03/13/2001 75.15% 66.04% 57.36% 49.11% 41.29% 33.91%
- ----------------------------------------------------------------------------------------------------------
04/13/2001 69.82% 60.85% 52.35% 44.30% 36.72% 29.55%
- ----------------------------------------------------------------------------------------------------------
05/13/2001 64.91% 56.09% 47.75% 39.91% 32.55% 25.24%
- ----------------------------------------------------------------------------------------------------------
06/13/2001 59.14% 50.59% 42.55% 35.02% 27.82% 20.59%
- ----------------------------------------------------------------------------------------------------------
07/13/2001 54.39% 46.05% 38.24% 30.95% 23.64% 16.72%
- ----------------------------------------------------------------------------------------------------------
08/13/2001 50.25% 42.08% 34.47% 27.09% 20.00% 13.35%
- ----------------------------------------------------------------------------------------------------------
09/13/2001 46.65% 38.63% 31.19% 23.68% 16.82% 10.42%
- ----------------------------------------------------------------------------------------------------------
10/13/2001 42.76% 34.95% 27.45% 20.15% 13.56% 7.44%
- ----------------------------------------------------------------------------------------------------------
11/13/2001 39.25% 31.64% 24.03% 16.98% 10.64% 4.78%
- ----------------------------------------------------------------------------------------------------------
12/13/2001 35.42% 27.82% 20.41% 13.65% 7.62% 2.07%
- ----------------------------------------------------------------------------------------------------------
01/13/2002 31.82% 24.14% 17.02% 10.56% 4.83% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2002 28.12% 20.62% 13.80% 7.64% 2.21% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2002 25.03% 17.74% 11.16% 5.24% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2002 21.94% 14.90% 8.57% 2.91% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2002 18.81% 12.05% 6.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2002 15.72% 9.25% 3.49% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2002 12.71% 6.56% 1.09% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2002 9.78% 3.94% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2002 7.25% 1.68% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2002 4.62% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2002 2.12% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-3 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
01/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-3 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
02/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
Weighted Average Life
(Years)
- ----------------------------------------------------------------------------------------------------------
To Call: 2.46 yrs 2.30 yrs 2.15 yrs 2.00 yrs 1.87 yrs 1.74 yrs
- ----------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-4 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
05/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
06/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
07/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
08/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
09/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
10/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
11/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
12/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-4 Notes Principal Amount
at the Conditional Payment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
06/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2001 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2002 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2002 100.00% 100.00% 100.00% 100.00% 100.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2002 100.00% 100.00% 100.00% 100.00% 00.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2002 100.00% 100.00% 100.00% 100.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2002 100.00% 100.00% 100.00% 00.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2002 100.00% 100.00% 100.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2002 100.00% 100.00% 100.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2002 100.00% 100.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2002 100.00% 100.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2002 100.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2002 100.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class A-4 Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
08/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
Weighted Average Life
(Years)
- ----------------------------------------------------------------------------------------------------------
To Call: 3.65 yrs 3.48 yrs 3.32 yrs 3.07 yrs 2.90 yrs 2.73 yrs
- ----------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class B Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
05/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
06/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
07/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
08/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
09/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
10/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
11/13/1999 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
12/13/1999 100.00% 100.00% 100.00% 100.00% 99.93% 95.72%
- ----------------------------------------------------------------------------------------------------------
01/13/2000 100.00% 100.00% 100.00% 98.44% 94.07% 89.62%
- ----------------------------------------------------------------------------------------------------------
02/13/2000 100.00% 100.00% 98.16% 93.59% 88.98% 84.32%
- ----------------------------------------------------------------------------------------------------------
03/13/2000 100.00% 98.90% 94.12% 89.31% 84.49% 79.63%
- ----------------------------------------------------------------------------------------------------------
04/13/2000 99.05% 94.10% 89.15% 84.20% 79.24% 74.29%
- ----------------------------------------------------------------------------------------------------------
05/13/2000 94.94% 89.81% 84.70% 79.61% 74.55% 69.52%
- ----------------------------------------------------------------------------------------------------------
06/13/2000 90.57% 85.31% 80.10% 74.93% 69.81% 64.75%
- ----------------------------------------------------------------------------------------------------------
07/13/2000 85.43% 80.12% 74.88% 69.72% 64.63% 59.62%
- ----------------------------------------------------------------------------------------------------------
08/13/2000 81.69% 76.29% 70.98% 65.77% 60.67% 55.66%
- ----------------------------------------------------------------------------------------------------------
09/13/2000 78.36% 72.87% 67.49% 62.24% 57.12% 52.13%
- ----------------------------------------------------------------------------------------------------------
10/13/2000 74.24% 68.74% 63.39% 58.18% 53.12% 48.22%
- ----------------------------------------------------------------------------------------------------------
11/13/2000 71.10% 65.56% 60.18% 54.97% 49.94% 45.09%
- ----------------------------------------------------------------------------------------------------------
12/13/2000 67.67% 62.12% 56.77% 51.61% 46.65% 41.89%
- ----------------------------------------------------------------------------------------------------------
01/13/2001 63.80% 58.32% 53.06% 48.01% 43.17% 38.56%
- ----------------------------------------------------------------------------------------------------------
02/13/2001 60.18% 54.78% 49.61% 44.68% 39.98% 35.52%
- ----------------------------------------------------------------------------------------------------------
03/13/2001 57.22% 51.86% 46.76% 41.90% 37.31% 32.97%
- ----------------------------------------------------------------------------------------------------------
04/13/2001 54.09% 48.81% 43.81% 39.08% 34.61% 30.42%
- ----------------------------------------------------------------------------------------------------------
05/13/2001 51.20% 46.01% 41.11% 36.49% 32.16% 30.42%
- ----------------------------------------------------------------------------------------------------------
06/13/2001 47.80% 42.78% 38.05% 33.62% 29.48% 30.42%
- ----------------------------------------------------------------------------------------------------------
07/13/2001 45.01% 40.10% 35.51% 31.23% 29.48% 30.42%
- ----------------------------------------------------------------------------------------------------------
08/13/2001 42.57% 37.77% 33.29% 30.68% 29.48% 30.42%
- ----------------------------------------------------------------------------------------------------------
09/13/2001 40.46% 35.74% 31.36% 30.68% 29.48% 30.42%
- ----------------------------------------------------------------------------------------------------------
10/13/2001 38.17% 33.58% 30.49% 30.68% 29.48% 30.42%
- ----------------------------------------------------------------------------------------------------------
11/13/2001 36.11% 31.63% 30.49% 30.68% 29.48% 30.42%
- ----------------------------------------------------------------------------------------------------------
12/13/2001 33.86% 30.12% 30.49% 30.68% 29.48% 30.42%
- ----------------------------------------------------------------------------------------------------------
01/13/2002 31.73% 30.12% 30.49% 30.68% 29.48% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2002 29.97% 30.12% 30.49% 30.68% 29.48% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2002 29.97% 30.12% 30.49% 30.68% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2002 29.97% 30.12% 30.49% 30.58% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2002 29.97% 30.12% 30.49% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2002 29.97% 30.12% 30.49% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2002 29.97% 30.12% 30.49% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2002 29.97% 30.12% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2002 29.97% 30.12% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2002 29.97% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2002 29.97% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class B Notes Principal Amount
at the Conditional Payment Rates Set Forth Below
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
12/13/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class B Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
07/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
Weighted Average Life
(Years)
- ----------------------------------------------------------------------------------------------------------
To Call: 2.35 yrs 2.21 yrs 2.08 yrs 1.93 yrs 1.80 yrs 1.68 yrs
- ----------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Percentage of the Initial Class C Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- ----------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
05/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
06/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
07/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
08/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
09/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
10/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
11/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ----------------------------------------------------------------------------------------------------------
12/13/99 100.00% 100.00% 100.00% 100.00% 99.93% 95.72%
- ----------------------------------------------------------------------------------------------------------
01/13/2000 100.00% 100.00% 100.00% 98.44% 94.07% 89.62%
- ----------------------------------------------------------------------------------------------------------
02/13/2000 100.00% 100.00% 98.16% 93.59% 88.98% 84.32%
- ----------------------------------------------------------------------------------------------------------
03/13/2000 100.00% 98.90% 94.12% 89.31% 84.49% 79.63%
- ----------------------------------------------------------------------------------------------------------
04/13/2000 99.05% 94.10% 89.15% 84.20% 79.24% 74.29%
- ----------------------------------------------------------------------------------------------------------
05/13/2000 94.94% 89.81% 84.70% 79.61% 74.55% 69.52%
- ----------------------------------------------------------------------------------------------------------
06/13/2000 90.57% 85.31% 80.10% 74.93% 69.81% 64.75%
- ----------------------------------------------------------------------------------------------------------
07/13/2000 85.43% 80.12% 74.88% 69.72% 64.63% 59.62%
- ----------------------------------------------------------------------------------------------------------
08/13/2000 81.69% 76.29% 70.98% 65.77% 60.67% 55.66%
- ----------------------------------------------------------------------------------------------------------
09/13/2000 78.36% 72.87% 67.49% 62.24% 57.12% 52.13%
- ----------------------------------------------------------------------------------------------------------
10/13/2000 74.24% 68.74% 63.39% 58.18% 53.12% 48.22%
- ----------------------------------------------------------------------------------------------------------
11/13/2000 71.10% 65.56% 60.18% 54.97% 49.94% 45.09%
- ----------------------------------------------------------------------------------------------------------
12/13/2000 67.67% 62.12% 56.77% 51.61% 46.65% 41.89%
- ----------------------------------------------------------------------------------------------------------
01/13/2001 63.80% 58.32% 53.06% 48.01% 43.17% 38.56%
- ----------------------------------------------------------------------------------------------------------
02/13/2001 60.18% 54.78% 49.61% 44.86% 39.98% 35.52%
- ----------------------------------------------------------------------------------------------------------
03/13/2001 57.22% 51.86% 46.76% 41.90% 37.31% 32.97%
- ----------------------------------------------------------------------------------------------------------
04/13/2001 54.09% 48.81% 43.81% 39.08% 34.61% 30.42%
- ----------------------------------------------------------------------------------------------------------
05/13/2001 51.20% 46.01% 41.11% 36.49% 32.16% 30.42%
- ----------------------------------------------------------------------------------------------------------
06/13/2001 47.80% 42.78% 38.05% 33.62% 30.38% 30.42%
- ----------------------------------------------------------------------------------------------------------
07/13/2001 45.01% 40.10% 35.51% 31.23% 0.00% 30.42%
- ----------------------------------------------------------------------------------------------------------
08/13/2001 42.57% 37.77% 33.29% 31.23% 30.38% 30.42%
- ----------------------------------------------------------------------------------------------------------
09/13/2001 40.46% 35.74% 31.36% 31.23% 30.38% 30.42%
- ----------------------------------------------------------------------------------------------------------
10/13/2001 38.17% 33.58% 31.36% 31.23% 30.38% 30.42%
- ----------------------------------------------------------------------------------------------------------
11/13/2001 36.11% 31.63% 31.36% 31.23% 30.38% 30.42%
- ----------------------------------------------------------------------------------------------------------
12/13/2001 33.86% 31.63% 31.36% 31.23% 30.38% 30.42%
- ----------------------------------------------------------------------------------------------------------
01/13/2002 31.73% 31.63% 31.36% 31.23% 30.38% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2002 31.73% 31.63% 31.36% 31.23% 30.38% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2002 31.73% 31.63% 31.36% 31.23% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2002 31.73% 31.63% 31.36% 31.23% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2002 31.73% 31.63% 31.36% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2002 31.73% 31.63% 31.36% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2002 31.73% 31.63% 31.36% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2002 31.73% 31.63% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2002 31.73% 31.63% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2002 31.73% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2002 31.73% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
12/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
01/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
02/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
03/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
04/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
05/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
06/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
07/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
08/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
09/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
10/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
11/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------
Weighted Average Life
(Years)
- ----------------------------------------------------------------------------------------------------------
To Call: 2.37 yrs 2.23 yrs 2.09 yrs 1.93 yrs 1.80 yrs 1.68 yrs
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Percentage of the Initial Class D Notes Principal Amount
at the Conditional Prepayment Rates Set Forth Below
- --------------------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------------------------------------------------------------------------------------------------------
05/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------------------------------------------------------------------------------------------------------
06/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------------------------------------------------------------------------------------------------------
07/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------------------------------------------------------------------------------------------------------
08/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------------------------------------------------------------------------------------------------------
09/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------------------------------------------------------------------------------------------------------
10/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------------------------------------------------------------------------------------------------------
11/13/99 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- ---------------------------------------------------------------------------------------------------------------------
12/13/99 100.00% 100.00% 100.00% 100.00% 99.93% 95.73%
- ---------------------------------------------------------------------------------------------------------------------
01/13/2000 100.00% 100.00% 100.00% 98.44% 94.07% 89.62%
- ---------------------------------------------------------------------------------------------------------------------
02/13/2000 100.00% 100.00% 98.16% 93.59% 88.98% 84.32%
- ---------------------------------------------------------------------------------------------------------------------
03/13/2000 100.00% 98.90% 94.12% 89.31% 84.49% 79.63%
- ---------------------------------------------------------------------------------------------------------------------
04/13/2000 99.05% 94.10% 89.15% 84.20% 79.24% 74.29%
- ---------------------------------------------------------------------------------------------------------------------
05/13/2000 94.94% 89.81% 84.70% 79.61% 74.55% 69.52%
- ---------------------------------------------------------------------------------------------------------------------
06/13/2000 90.57% 85.31% 80.10% 74.93% 69.81% 64.75%
- ---------------------------------------------------------------------------------------------------------------------
07/13/2000 85.43% 80.12% 74.88% 69.72% 64.63% 59.62%
- ---------------------------------------------------------------------------------------------------------------------
08/13/2000 81.69% 76.29% 70.98% 65.77% 60.67% 55.66%
- ---------------------------------------------------------------------------------------------------------------------
09/13/2000 78.36% 72.87% 67.49% 62.24% 57.12% 52.13%
- ---------------------------------------------------------------------------------------------------------------------
10/13/2000 74.24% 68.74% 63.39% 58.18% 53.12% 48.22%
- ---------------------------------------------------------------------------------------------------------------------
11/13/2000 71.10% 65.56% 60.18% 54.97% 49.94% 45.09%
- ---------------------------------------------------------------------------------------------------------------------
12/13/2000 67.67% 62.12% 56.77% 51.61% 46.65% 41.89%
- ---------------------------------------------------------------------------------------------------------------------
01/13/2001 63.80% 58.32% 53.06% 48.01% 43.17% 38.56%
- ---------------------------------------------------------------------------------------------------------------------
02/13/2001 60.18% 54.78% 49.61% 44.68% 39.98% 35.52%
- ---------------------------------------------------------------------------------------------------------------------
03/13/2001 57.22% 51.86% 46.76% 41.90% 37.31% 32.97%
- ---------------------------------------------------------------------------------------------------------------------
04/13/2001 54.09% 48.81% 43.81% 39.08% 34.61% 30.52%
- ---------------------------------------------------------------------------------------------------------------------
05/13/2001 51.20% 46.01% 41.11% 36.49% 32.16% 30.52%
- ---------------------------------------------------------------------------------------------------------------------
06/13/2001 47.80% 42.78% 38.05% 33.62% 32.16% 30.52%
- ---------------------------------------------------------------------------------------------------------------------
07/13/2001 45.01% 40.10% 35.51% 31.23% 32.16% 30.52%
- ---------------------------------------------------------------------------------------------------------------------
08/13/2001 42.57% 37.77% 33.29% 31.23% 32.16% 30.52%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
0% 5% 10% 15% 20% 25%
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
09/13/2001 40.46% 35.74% 31.36% 31.23% 32.16% 30.52%
- ------------------------------------------------------------------------------------------------------------------------------------
10/13/2001 38.17% 33.58% 31.36% 31.23% 32.16% 30.52%
- ------------------------------------------------------------------------------------------------------------------------------------
11/13/2001 36.11% 31.63% 31.36% 31.23% 32.16% 30.52%
- ------------------------------------------------------------------------------------------------------------------------------------
12/13/2001 33.86% 31.63% 31.36% 31.23% 32.16% 30.52%
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/2002 31.73% 31.63% 31.36% 31.23% 32.16% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
02/13/2002 31.73% 31.63% 31.36% 31.23% 32.16% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
03/13/2002 31.73% 31.63% 31.36% 31.23% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
04/13/2002 31.73% 31.63% 31.36% 31.23% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
05/13/2002 31.73% 31.63% 31.36% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
06/13/2002 31.73% 31.63% 31.36% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
07/13/2002 31.73% 31.63% 31.36% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
08/13/2002 31.73% 31.63% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
09/13/2002 31.73% 31.63% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
10/13/2002 31.73% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
11/13/2002 31.73% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
12/13/2002 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
02/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
03/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
04/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
05/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
06/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
07/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
08/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
09/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
10/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
11/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
12/13/2003 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
01/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
02/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
03/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
04/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
05/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
06/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
07/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
08/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
09/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
10/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
11/13/2004 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Average Life
- ---------------------
(Years)
- ------
- ------------------------------------------------------------------------------------------------------------------------------------
To Call: 2.37 yrs 2.23 yrs 2.09 yrs 1.93 yrs 1.82 yrs 1.69 yrs
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Collateral Cashflows
<TABLE>
<CAPTION>
Collection Period Scheduled Cashflow
----------------- ------------------
<S> <C>
April - 1999............................................................. 12,640,878.67
May - 1999............................................................... 12,565,592.84
June - 1999.............................................................. 16,072,027.57
July - 1999.............................................................. 12,383,777.42
August - 1999............................................................ 11,779,668.38
September - 1999......................................................... 14,079,035.07
October - 1999........................................................... 11,191,164.58
November - 1999.......................................................... 12,140,091.63
December - 1999.......................................................... 13,660,029.47
January - 2000........................................................... 11,779,733.40
February - 2000.......................................................... 10,343,615.01
March - 2000............................................................. 13,131,085.48
April - 2000............................................................. 11,817,353.58
May - 2000............................................................... 12,404,052.37
June - 2000.............................................................. 14,347,741.42
July - 2000.............................................................. 10,666,158.45
August - 2000............................................................ 9,577,821.54
September - 2000......................................................... 11,554,567.79
October - 2000........................................................... 8,992,365.03
November - 2000.......................................................... 9,713,879.78
December - 2000.......................................................... 10,780,241.06
January - 2001........................................................... 10,083,440.61
February - 2001.......................................................... 8,367,582.76
March - 2001............................................................. 8,762,197.35
April - 2001............................................................. 8,095,623.78
May - 2001............................................................... 9,345,693.57
June - 2001.............................................................. 7,773,135.38
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
Collection Period Scheduled Cashflow
----------------- ------------------
<S> <C>
July - 2001.............................................................. 6,821,247.16
August - 2001............................................................ 5,969,516.49
September - 2001......................................................... 6,371,988.59
October - 2001........................................................... 5,778,827.85
November - 2001.......................................................... 6,234,898.36
December - 2001.......................................................... 5,869,951.27
January - 2002........................................................... 5,641,000.84
February - 2002.......................................................... 4,626,463.75
March - 2002............................................................. 4,591,176.70
April - 2002............................................................. 4,630,473.61
May - 2002............................................................... 4,555,715.62
June - 2002.............................................................. 4,408,363.05
July - 2002.............................................................. 4,304,619.61
August - 2002............................................................ 3,718,746.68
September - 2002......................................................... 3,838,625.10
October - 2002........................................................... 3,645,664.39
November - 2002.......................................................... 2,975,887.43
December - 2002.......................................................... 3,318,739.88
January - 2003........................................................... 2,872,440.25
February - 2003.......................................................... 2,750,564.87
March - 2003............................................................. 2,679,653.95
April - 2003............................................................. 2,334,100.93
May - 2003............................................................... 2,692,543.81
June - 2003.............................................................. 1,737,015.19
July - 2003.............................................................. 1,905,910.16
August - 2003............................................................ 1,500,487.85
September - 2003......................................................... 1,427,312.05
October - 2003........................................................... 1,310,378.11
November - 2003.......................................................... 986,547.57
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
Collection Period Scheduled Cashflow
----------------- ------------------
<S> <C>
December - 2003.......................................................... 846,627.72
January - 2004........................................................... 1,103,465.96
February - 2004.......................................................... 806,332.74
March - 2004............................................................. 771,636.93
April - 2004............................................................. 2,702,099.04
May - 2004............................................................... 714,004.15
June - 2004.............................................................. 696,794.83
July - 2004.............................................................. 697,907.21
August - 2004............................................................ 643,655.40
September - 2004......................................................... 791,090.85
October - 2004........................................................... 523,512.53
November - 2004.......................................................... 507,262.01
December - 2004.......................................................... 489,503.13
January - 2005........................................................... 465,179.75
February - 2005.......................................................... 407,533.13
March - 2005............................................................. 337,450.75
April - 2005............................................................. 286,044.95
May - 2005............................................................... 236,791.05
June - 2005.............................................................. 185,195.44
July - 2005.............................................................. 175,725.44
August - 2005............................................................ 170,553.87
September - 2005......................................................... 137,672.98
October - 2005........................................................... 82,556.00
November - 2005.......................................................... 377,095.43
December - 2005.......................................................... 49,295.43
</TABLE>
65
<PAGE>
<TABLE>
<CAPTION>
Collection Period Scheduled Cashflow
- ----------------- ------------------
<S> <C>
March - 2004................................................. 771,636.93
April - 2004................................................. 2,702,099.04
May - 2004................................................... 714,004.15
June - 2004.................................................. 696,794.83
July - 2004.................................................. 697,907.21
August - 2004................................................ 643,655.40
September - 2004............................................. 791,090.85
October - 2004............................................... 523,512.53
November - 2004.............................................. 507,262.01
December - 2004.............................................. 489,503.13
January - 2005............................................... 465,179.75
February - 2005.............................................. 407,533.13
March - 2005................................................. 337,450.75
April - 2005................................................. 286,044.95
May - 2005................................................... 236,791.05
June - 2005.................................................. 185,195.44
July - 2005.................................................. 175,725.44
August - 2005................................................ 170,553.87
September - 2005............................................. 137,672.98
October - 2005............................................... 82,556.00
November - 2005.............................................. 377,095.43
December - 2005.............................................. 49,295.43
</TABLE>
66
<PAGE>
Weighted Average Life
If the trust depositor does not exercise its option to cause a redemption
of the notes when the aggregate discounted contract balance of the contracts is
less than 10% of the aggregate discounted contract balance of the contracts as
of April 1, 1999, the average life of the each class of notes would be as
follows:
<TABLE>
<CAPTION>
Weighted Weighted Weighted Weighted Weighted Weighted
Average Life Average Life Average Life Average Life Average Life Average Life
Assuming 0% Assuming 5% Assuming 10% Assuming 15% Assuming 20% Assuming 25%
Conditional Conditional Conditional Conditional Conditional Conditional
Class Prepayment Rate Prepayment Rate Prepayment Rate Prepayment Rate Prepayment Rate Prepayment Rate
- ----- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
A-1 0.51 yrs 0.46 yrs 0.41 yrs 0.38 yrs 0.34 yrs 0.31 yrs
A-2 1.28 yrs 1.18 yrs 1.08 yrs 1.00 yrs 0.92 yrs 0.84 yrs
A-3 2.46 yrs 2.30 yrs 2.15 yrs 2.00 yrs 1.87 yrs 1.74 yrs
A-4 4.28 yrs 4.08 yrs 3.88 yrs 3.69 yrs 3.50 yrs 3.31 yrs
B 2.86 yrs 2.72 yrs 2.60 yrs 2.46 yrs 2.29 yrs 2.17 yrs
C 3.03 yrs 2.89 yrs 2.74 yrs 2.61 yrs 2.46 yrs 2.33 yrs
D 3.17 yrs 3.04 yrs 2.09 yrs 2.77 yrs 2.67 yrs 2.49 yrs
</TABLE>
The weighted average life of a note is determined by:
. multiplying the amount of cash distributions in reduction of the
outstanding principal amount of such class of notes, by the number of
years from the closing date of the sale of the contracts to the trust
to the respective Note payment date on which such class of notes is
repaid in full;
. adding the results; and
. dividing the sum by the initial principal amount of such class of
notes.
68
<PAGE>
Heller Financial, Inc. and Heller Financial Leasing, Inc.
General
Heller Financial, Inc. is a Delaware corporation formed in 1919 and is
engaged in various aspects of the commercial finance business. Heller Financial,
Inc. and its consolidated subsidiaries employ approximately 2,500 people; its
executive offices are located at 500 West Monroe Street, Chicago, Illinois 60661
(telephone: (312) 441-7000). In May 1998, Heller Financial, Inc. issued
38,525,000 shares of Class A Common Stock in an initial public offering. Fuji
American Holdings, a wholly owned subsidiary of The Fuji Bank, Limited, owns 79%
of the voting interest and 56% of the economic interest in Heller Financial,
Inc.'s issued and outstanding common stock. All of the outstanding common stock
of the Heller Financial Leasing, Inc. is owned by Heller Financial, Inc. Heller
Financial Leasing, Inc. is a non-operating subsidiary which through the
Commercial Equipment Finance and the Global Vendor Finance business units
originate contracts.
Heller Financial, Inc. is a leading diversified commercial financial
services company which provides a broad array of financial products and services
to mid-sized and small businesses in the United States and selected
international markets. Heller Financial, Inc. provides its products and services
principally through two business segments namely, Domestic Commercial Finance
and International Corporate Finance. The Domestic Commercial Finance segment is
made up of five business units:
. Heller Corporate Finance, which provides collateralized cash flow and
asset based lending;
. Heller Real Estate Financial Services, which provides secured real
estate financing;
. Heller Leasing Services, which provides debt and lease financing of
small and large ticket equipment and commercial aircraft;
. Heller Small Business Finance, which provides financing to small
businesses, primarily under U.S. Small Business Administration loan
programs; and
. Heller Commercial Services, which provides factoring and receivables
management services.
Heller Financial, Inc.'s International Factoring and Asset Based Finance
segment provides factoring services and loans secured primarily by receivables,
inventory and equipment through its wholly-owned subsidiaries and joint
ventures. Heller Financial Leasing, Inc. is made up of three distinct units:
Global Vendor Finance, Commercial Equipment Finance and Capital Finance.
69
<PAGE>
Heller Financial, Inc. primarily serves middle-market businesses. The
middle-market segment served includes entities primarily in the manufacturing
and service sectors with annual sales in the range of $15 million to $200
million and in the real estate sector with property values typically in the
range of $5 million to $40 million.
<TABLE>
<CAPTION>
As of December 31,
1998 1997 1996
---- ---- ----
(in billions)
<S> <C> <C> <C>
Total Assets $14.4 $12.9 $9.9
Total Liabilities $12.4 $11.1 $8.4
Total Stockholders' Equity $ 2.0 $ 1.7 $1.5
For the fiscal year ended December 31,
1998 1997 1996
---- ---- ----
(in millions)
Total Revenues $783 $754 $533
Net Income $193 $158 $133
</TABLE>
Heller Financial, Inc. and Heller Financial Leasing, Inc. originated the
contracts under two separate operating units: Commercial Equipment Finance and
Global Vendor Finance. Originations from either Commercial Equipment Finance or
Global Vendor Finance must meet Heller Financial, Inc.'s Credit Risk Management
System as described below.
Credit Risk Management System
Heller Financial, Inc's Credit Risk Management System provides credit
functions within the originators' origination groups, including Commercial
Equipment Finance and Global Vendor Finance, as well as credit oversight at
Heller Financial, Inc.'s corporate level. The system provides established,
consistent and documented credit policies at both the corporate and group level.
The first line of credit risk management is the origination groups where
substantially all originations, due diligence and primary credit analysis are
performed. Credit determinations are separate from origination and are staffed
with experienced credit and portfolio officers in the origination groups.
Oversight over the credit process at Heller Financial, Inc.'s corporate
level is headed by Heller Financial, Inc.'s Chief Credit Officer. The Chief
Credit Officer is responsible for ensuring that the credit risk management
system is appropriately implemented. Heller Financial, Inc.'s Chief Credit
Officer approves all new transactions and modifications that exceed origination
group authority. Additionally, Heller Financial's Credit Committee approves new
lending programs and performs ongoing reviews of existing lending programs and
strategies as well as identifies strategic credit issues, including review of
the portfolio mix, and the credit policies and procedures throughout Heller
Financial, Inc.
70
<PAGE>
The Credit Risk Management System emphasizes active portfolio management in
an effort to ensure:
. individual accounts are appropriately managed;
. portfolio reporting to management is accurate and timely; and
. problem accounts are identified and reported on a timely basis to
ensure prompt corrective action.
Each origination group has portfolio practices which enhance early
identification of account issues through account performance analysis, risk
rating systems and regular group portfolio reviews. Management of risk accounts
is transferred to corporate workout specialists where appropriate. Quarterly or
semi-annual portfolio reviews are held with the Chief Executive Officer and
Chief Credit Officer. Heller Financial, Inc.'s Internal Audit Department
performs extensive loan reviews on an independent basis to ensure:
. compliance with group and corporate credit policies and procedures;
. the integrity of the risk ratings;
. the effectiveness of problem loan identification; and
. the adequacy of loan loss reserves.
As servicer, Heller Financial, Inc. will continue to apply its Credit Risk
Management System to the management of the contracts that have been sold to the
trust.
Global Vendor Finance
General Description.
Global Vendor Finance was formed in 1998 by the combination of the existing
Vendor Finance unit and U.S. assets of the Dealer Products Group of Dana
Commercial Credit Corporation and the stock of Dealer Products Group's
international subsidiaries which were acquired by Heller Financial, Inc. on
November 30, 1998. Global Vendor Finance provides customized sales financing
programs that enable vendors and manufacturers in commercial, industrial,
medical, information and technology markets to offer financing and leasing
options to their customers. These programs are often made with partial, or in
some cases, full recourse from the vendor. This unit also provides a wide range
of financing options to independent leasing companies, including term financing,
residual financing and private securitization structures. The Global Vendor
Finance portfolio is well diversified with an average transaction size of
$350,000 excluding newly acquired Dealer Products Group which has an average
transaction size of $10,000. In 1998, Global Vendor Finance generated
approximately $792 million in new business volume.
Global Vendor Finance's Credit Analysis.
The primary factors used by Global Vendor Finance in its credit analysis
are the following, listed in order of importance:
(1) vendor support and the originator's reliance on such support;
(2) the credit strength of the underlying end-user of the equipment or
software; and
(3) the value of the equipment.
The credit analysis involves finding an appropriate balance between these
factors.
The following discipline is applied to all Global Vendor Finance
originations:
71
<PAGE>
. a complete underwriting is required for each new vendor finance program
evaluating financial information, equipment value, quality of obligor
customer base, review of relevant industry data and the value of recourse,
. tiered credit approval authorities have been implemented for each vendor
program and the transactions originated under such programs,
. a comprehensive credit policies and procedures manual is maintained to
ensure consistent compliance with the originator's credit standards,
. an independent internal audit function exists within Global Vendor Finance
to conduct due diligence on new client relationships and which conducts
ongoing audits of the client relationship,
. financial performance of each vendor is periodically reviewed,
. Global Vendor Finance's portfolio is reviewed semiannually with the
originator's Chief Executive Officer and Chief Credit Officer, and
. there is an independent internal audit function.
Collection Process/Vendor Recourse.
The vendor finance programs usually provide for some form of credit
support or recourse to the vendor. Vendor recourse ranges from limited
remarketing assistance to full recourse programs. Vendor credit support includes
direct recourse, holdbacks, funded reserves, remarketing agreements as well as
representations and warranties provided in the contract documentation. Direct
vendor recourse may be provided with respect to a "pool" of numerous underlying
transactions or on an individual, transaction-by-transaction basis. In some
circumstances the vendor and/or another leasing company originates, documents
and performs servicing while in other circumstances the originators originate,
document and perform servicing with respect to the contracts. The vendor may
generate documents and the bills as well as collect payments from the end-user
and remit payment to the servicer. In such instances the servicer's involvement
is transparent to the end-user and is motivated by a variety of vendor marketing
considerations. In other situations, the vendor simply originates the contract
and the servicer performs the servicing with respect to such contract. In
general, the servicing function of the vendor is an important factor in the
pricing characteristics for the respective vendor finance program. A write-down
or write-off of a loan or lease receivable is governed by Heller Financial, Inc.
policy, with the amount of the write-off or write-down based on the principal
amount outstanding; plus unpaid service charges which have not been suspended;
less the fair market value of collateral or the amount of dealer/vendor
recourse. Accounts are reviewed and appropriate write-offs made when an obligor
is past due or when an obligor is in bankruptcy.
In those situations in which the vendor is providing a substantial portion
of the servicing functions, the servicer undertakes extensive due diligence with
respect to the vendor's internal operating procedures with additional emphasis
on billing, collection, reporting and remittance. The due diligence analysis
will take on various levels of scrutiny depending on the degree of servicing
handled by the vendor, the vendor's credit strength, the volume generated by the
vendor, and the history and relationship with the vendor.
72
<PAGE>
Commercial Equipment Finance
General Description.
Commercial Equipment Finance offers expansion, replacement and modernization
equipment financing directly to a broad range of industries where the financing
is primarily collateralized by the financed equipment. In addition to direct
origination, Commercial Equipment Finance generates business through traditional
broker and intermediary channels. The portfolio is well diversified with
financings that typically range from $500,000 to $15 million. As of December 31,
1997 the average transaction size was approximately $4 million. New business
volume in 1998 was approximately $600 million representing a 11% increase over
1997.
Commercial Equipment Finance Credit Analysis.
Commercial Equipment Finance's approach to lending concentrates on three
critical factors:
. cash flow of the obligor -- meaning Commercial Equipment Finance evaluates
the quality of the underlying obligor's cash flow by analyzing the related
industry dynamics, such obligor's competitive strengths and weaknesses, the
role of external factors in such obligor's business as well as the financial
profile of the obligor,
. the importance/value of the equipment to the obligor's overall operations --
in a downside/workout scenario, the more important/valuable the equipment,
the more likely it is that the originator will be paid, and
. the originator's position in the overall capital structure of the obligor --
the smaller the role that Commercial Equipment Finance plays in a company's
overall capital structure, the more likely it is that the originator will be
paid in a negative economic environment.
Notwithstanding the type of program or related credit analysis, the following
discipline is applied to all Commercial Equipment Finance originations:
. the Commercial Equipment Finance credit approval process requires complete
financial due diligence, collateral review, management/strategy evaluation,
review of all industry relevant data as well as review of all legal aspects
of the credit,
. reliance on the Commercial Equipment Finance Policy Manual,
. approval authority tiered to provide prompt responses to the customer at
lower exposure levels and ensure divisional involvement at higher exposure
levels; All regional office origination is approved by both the region
manager and the area region credit manager,
. quarterly/annual financial reviews of each account are prepared by Commercial
Equipment Finance credit staff,
. quarterly reviews of the portfolio are conducted with the Chief Executive
Officer and Chief Credit Officer of the originator,
. monthly distribution of key reports relating to delinquency and risk ratings
changes to the originator's senior management to ensure prompt communication
of material credit issues, and
73
<PAGE>
. industry and geographic diversity is maintained with respect to Commercial
Equipment Finance's originations.
Collection/Servicing.
A delinquency report for each region must be prepared by a region credit
manager on a monthly basis. Heller Financial's key to successful resolution of a
problem contract is early recognition. Each region is responsible for detecting
signs of potential problem contracts through proactive portfolio management,
including review of delinquency reports, the financial statement and covenant
compliance checklist for each account, account risk rating memos, flash reports,
annual reviews, and the quarterly portfolio reviews held in Chicago. Within ten
business days of the point in time at which an account is both 60 days past due
or delinquent and is put on a "watch list", an in-person collateral inspection
must be performed. If an in-person inspection is impractical, an updated Uniform
Commercial Code search must be performed within the same ten day period.
Commercial Equipment Finance transactions are required to contain a
provision for assessing late charges in the event that an obligor fails to make
a payment on the contract on the related due date. The charge is usually between
1% and 5% of the amount due and is incurred within one to fifteen days after the
due date depending upon the documentation. An account is delinquent when a
payment is not made according to contract terms. A write-down or write-off of a
loan or lease receivable is governed by Heller Financial, Inc. policy, with the
amount of the write-off or write-down based on the principal amount outstanding;
plus unpaid service charges which have not been suspended; less the fair market
value of collateral or the amount of dealer/vendor recourse. Accounts are
reviewed and appropriate write-offs made when an obligor is past due or when an
obligor is in bankruptcy.
All obligors are required by the terms of the contracts to maintain the
equipment and install the equipment at a place of business approved by
Commercial Equipment Finance personnel. Delivery, transportation, repairs and
maintenance are obligations of obligors, and obligors are required to carry, at
their own expense, liability and replacement cost insurance under terms
acceptable to Commercial Equipment Finance. Any lease payment defaults permit
Commercial Equipment Finance to declare immediately due and payable all
remaining lease payments. At the end of a lease term, lessees must return the
leased equipment to the originator in good working order unless the lease is
renewed or the leased equipment is purchased by the obligor.
Legal Proceedings
Heller Financial, Inc. is not subject to any legal proceedings that could
have a material adverse impact on its operations or its consolidated financial
condition
Assessment of Year 2000 Issues
Heller Financial, Inc., as servicer, and as the parent of the trust
depositor and Heller Financial Leasing, Inc. as sub-servicer, has adopted a
phased approach to assessing and, where necessary, remediating or otherwise
addressing Year 2000 issues. Phases include:
. awareness, which, while ongoing, is substantially complete;
. assessment, which was substantially completed in 1998 with respect to
information technology systems and potential issues relating to
borrowers, vendors, international affiliates and environmental
factors;
. remediation or implementation of contingency solutions, which is
substantially complete for all but one of the information technology
systems deemed mission-critical; and
. validation, which is scheduled for completion on the final mission-
critical information technology system and key information technology
infrastructure in the second quarter of 1999 and will continue
throughout 1999 for all other matters.
As part of the validation process, Heller Financial, Inc. is also assessing
the need for any re-verification of client server hardware and software
represented as compliant by the vendor. In late 1998, Heller Financial, Inc.
acquired leasing assets from another company and, in connection with the
acquisition, completed an assessment of related Year 2000 risk. Heller Financial
has engaged a third party to complete remediation and validation activities,
which are underway and scheduled for completion in 1999.
Heller Financial, Inc. has made, and will continue to make, investments in
its software applications and systems to ensure that its systems function
properly through and beyond the Year 2000. Heller Financial, Inc. has three loan
processing systems, a lease processing system, a factoring system and systems
for general ledger processing, payroll, accounts payable, fixed assets, treasury
and other smaller applications. Heller Financial, Inc. has established plans to
modify, upgrade or replace each of these systems for compliance and has
established an overall plan to bring all of these systems into compliance by
the end of 1999. Heller Financial, Inc. continues to address the impact of Year
2000 issues on its consolidated international subsidiaries and its international
joint venture companies. As a result of the risk assessment substantially
completed with respect to these international companies in 1998, significant
remediation activity and additional readiness validation are underway for
completion in 1999.
In addition to information technology systems, Heller Financial, Inc. is
assessing potential Year 2000 impacts on its material vendors and borrowers, as
well as Year 2000 issues relating to environmental factors such as facilities
and general utilities. With respect to vendors, Heller Financial, Inc. has
categorized vendors with reference to materiality and availability of other
sources for the provided services and supplies, and is making inquiry of those
vendors deemed material. Responses are reviewed to assess the need for any
follow-up action. This assessment and any resulting remediation or contingency
solutions are scheduled for completion during 1999. With respect to borrowers,
Heller Financial, Inc. has incorporated a Year 2000 risk assessment has been
incorporated into its underwriting and portfolio management activities in order
to evaluate exposure due to any lack of compliance on the part of borrowers.
Heller Financial, Inc. categorizes prospective and existing borrowers by level
of Year 2000 risk, and is underwriting new transactions and managing portfolio
accounts accordingly. Finally, Heller Financial, Inc. is incorporating Year 2000
contingency planning into its overall business resumption program in
consideration of facilities and other environmental factors. The planning
component of this effort is scheduled for completion in the first quarter of
1999, with implementation to occur throughout the year.
To date, Heller Financial, Inc. has incurred approximately, $10 million of
expenses related to the Year 2000 issue and estimates that an additional amount,
of approximately $6 million, will be incurred through the end of 1999.
Remediation, compliance, maintenance and modification costs will be expensed as
incurred.
The Trust
The trust has been organized as a business trust to be formed under with
the laws of the State of Delaware under the Trust Agreement. The Trust was
formed solely for the purpose of effectuating the transactions described in this
prospectus. Prior to formation, we will have had no assets or obligations and no
operating history. Upon formation, we will not engage in any business activity
other than:
(1) acquiring, managing and holding the contracts and related interests
described in this prospectus,
(2) issuing the notes and certificate,
(3) making distributions and payments on the notes and certificate,
and
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(4) engaging in those activities, including entering into agreements, that
are necessary, suitable or convenient to accomplish the above listed
activities or are incidental to those activities.
As a consequence, we do not expect to have any source of capital resources other
than the assets transferred to the trust as described in this prospectus. As of
the date of this prospectus, neither the trust depositor nor the trust is
subject to any legal proceedings.
If the issuance and sale of the notes had taken place on April 1, 1999 the
capitalization of the trust would consist solely of the notes with an aggregate
principal amount of $386,265,403.
The trust depositor has filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended, with
respect to the notes offered by this prospectus. For further information, you
should read the registration statement. The registration statement may be
inspected and copied at the public reference facilities maintained by the
Securities and Exchange Commission at the following locations:
50 Fifth Street, N.W. Citicorp Center Seven World Trade Center
Room 1024 500 West Madison, Suite 1400 Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60661 New York, New York 10048
You may obtain copies of the registration statement for a fee from the
Public Reference Branch of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Securities and Exchange Commission
also maintains a public access site on the Internet through the World Wide Web
at which you may view reports, information statements and other information,
including all electronic filings, regarding the trust depositor and the trust.
The Internet address of the World Wide Web site is http://www.sec.gov. The
servicer, on behalf of the trust, will also file or cause to be filed with the
Securities and Exchange Commission the periodic reports required under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission thereunder. Copies of those reports can
be obtained as described above.
The Trust Depositor
The trust depositor is a wholly-owned bankruptcy-remote subsidiary of
Heller Financial, Inc. The trust depositor was formed solely for the purpose of
acquiring from the originators contracts as well as other financial assets and
either issuing debt securities secured by identifiable fixed or revolving pools
of financial assets, or conveying or depositing the same into trusts or other
securitization vehicles. As a bankruptcy-remote entity, the trust depositor's
operations will be restricted so that it does not engage in business with, or
incur liabilities to, any other entity other than the indenture trustee and
other trustees and agents on behalf of other
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<PAGE>
investors in nonrecourse, asset-backed financings. The restrictions are intended
to prevent the trust depositor from engaging in business with other entities
which may bring bankruptcy proceedings against the trust depositor. The
restrictions are also intended to reduce the risk that the trust depositor will
be consolidated into the bankruptcy proceedings of any other entity.
The trust depositor will have no other assets available to pay amounts
owing under the indenture except the trust's assets, including the contracts and
the security interests in the equipment, the proceeds of the contracts and
earnings on the amounts on deposit in the collection account. The trust
depositor's address is 500 West Monroe Street, Chicago, Illinois 60661, and its
phone number is (312) 441-7246.
On the closing of the sale of the contracts to the trust, Heller Funding
Corporation II will be liquidated and all of its assets and liabilities will be
assumed by its successor, Heller Funding Corporation. Heller Funding Corporation
is a wholly-owned subsidiary of Heller Financial, Inc. Heller Funding
Corporation's articles of incorporation are substantially identical to Heller
Funding Corporation II's articles of incorporation. Specifically, Heller Funding
Corporation will assume the trust depositor's obligations under the agreement
forming the trust and the sale and servicing agreement. When we refer to the
trust depositor in this prospectus we are referring to Heller Funding
Corporation II prior to the closing and Heller Funding Corporation as the
successor to Heller Funding Corporation II as of the closing.
Description of the Notes and Indenture
The statements under this caption describe all of the material terms of the
notes and an Indenture, dated as of April 1, 1999, between the trust and the
indenture trustee. However, these statements are summaries. For a more
detailed description of the terms of the notes, you should read the sale and
servicing agreement and the indenture, the forms of which have been filed as
exhibits to the registration statement of which this prospectus is a part.
General
The offered notes will consist of six classes, the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, Class B Notes and the
Class C Notes. The Class D Notes are not being offered and sold pursuant to this
prospectus. The notes will be issued under the indenture.
The notes will be available for purchase in minimum denominations of $1,000
and in integral multiples of $1,000 in book-entry form. The Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and Class C
Notes will initially be represented by one or more certificates registered in
the name of the nominee of The Depository Trust Company, except as set forth
below. Payments on the notes will be made as described below to the noteholders
in whose names the notes were registered at the close of business on the day
immediately preceding the day on which such payments will be made. However, the
final payment on the notes offered hereby will be made only upon presentation
and surrender of the notes. All payments with respect to the principal of and
interest on the notes will be made in immediately available funds. See
"Description of the Notes and Indenture--Book-Entry Registration".
The indenture trustee will be granted a first priority lien on the trust's
assets to secure the notes; provided, that distributions on the notes will be
allocated as provided in "--Allocations". The notes are nonrecourse
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obligations of the trust only and do not represent interests in or obligations
of the originators, the servicer or the trust depositor, or any affiliate of
such persons.
Interest and Principal
Interest on the notes will be payable on the 13th day of each calendar
month, or if that day is not a business day, the next business day, beginning on
May 13, 1999 until the notes have been paid in full or have matured. Interest on
the offered notes will be paid at the respective rates specified on the cover of
this prospectus. Interest on each class of notes will accrue at the interest
rate specified for the class, for the period from and including the most recent
date on which interest has been paid. However, in the case of the initial
interest payment date, interest will accrued from the closing date for the
initial transfer of the Contracts to the trust to but excluding the following
interest and principal payment date. The interest will accrue on the outstanding
principal amount of the notes as of the first day of the interest accrual
period.
The stated maturity dates of the offered notes are specified on the cover
of this prospectus. The Class D Notes will have a stated maturity date of
November 13, 2006. However, if all payments on the contracts are made as
scheduled, final payment with respect to the notes would occur prior to stated
maturity. Prior to the respective stated maturity dates, amounts to be applied
in reduction of the outstanding principal amount of any note, including the
payment of the Class A Principal Payment Amount, Class B Principal Payment
Amount, Class C Principal Payment Amount or Class D Principal Payment Amount
payable on any interest and principal payment date, will not be due and payable,
although the failure of the trust depositor or servicer to remit any amounts
available for payment on the notes will, after the applicable grace period,
constitute an event of default under the indenture. See "--Events of Default".
We will pay interest and principal on the notes on an interest and
principal payment date using amounts representing primarily collections of
payments due under the contracts and amounts received upon prepayment or
purchase of the contracts or liquidation of the contracts and disposition of the
related equipment upon defaults thereunder, but only after we use those amounts
to repay servicer advances. See "--Amounts Available for Payments on the Notes"
and "The Sale and Servicing Agreement-- Servicing Standard and Servicer
Advances".
Amounts Available for Payments on the Notes
As of any payment date which shall be the 13th day of each calendar month,
the amounts available for payment of interest and principal consist of:
. except for Excluded Amounts, all amounts on deposit in the collection account
as of the third business day immediately preceding the payment date on
account of scheduled payments due on or before, and prepayments received on
or before, the last day of the immediately preceding collection period;
. recoveries on account of previously defaulted contracts received during the
preceding collection period, including proceeds of repossessed equipment or
other security or other property, insurance proceeds, amounts representing
late fees and penalties and amounts subsequently received from the related
vendor, net of collection and liquidation expenses;
. amounts held from time to time in the collection account, together with
investment earnings credited to the collection account and the reserve fund;
. late charges relating to a contract received during the preceding collection
period, provided that the late charges were included in the contract's terms
as of the applicable cutoff date; and
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<PAGE>
. proceeds of any of the foregoing; and
. funds on deposit in the reserve fund in the amount specified in "Reserve
Fund".
Each collection period for purposes of determining the amounts available
for distribution on the notes is a monthly period that begins on the second day
of each calendar month and ends on and includes the first day of the next
following calendar month.
Amounts available for distribution to you will not include any amounts
payable on an account of the equipment which exceeds the sum of the scheduled
payments and late charges described above payable under the related contract.
Furthermore, the available amounts will not include amounts relating to the
residual value of equipment leased under true leases.
Prepayments on the contracts which are treated as available amounts are:
. optional prepayments which are partial and full prepayments, including any
payment which the servicer has received, and expressly permitted the related
obligor to make, in advance of its scheduled due date;
. payments upon repurchases by the applicable originator through the trust
depositor as a result of the breach of representations and warranties or
covenants in the sale and servicing agreement; and
. payments upon an optional termination of the trust.
If the servicer permits an obligor to prepay a contract in an amount less
than its discounted contract balance plus accrued, unpaid interest at the
discount rate, the originator of the contract will make up the difference.
"Excluded Amounts" means:
. collections on deposit in the collection account or otherwise received
by the servicer on or with respect to the contracts or related
equipment, which collections are attributable to any taxes, fees or
other charges imposed by any governmental authority; and
. collections representing reimbursements of insurance premiums or
payments for services that were not financed by the originator; and
. any proceeds from prepayments in excess of the sum of
(1) the discounted contract balance of the prepaid contracts on the
date of the prepayments plus any accrued and unpaid interest and
(2) any outstanding servicer advances on those prepaid contracts.
Allocations
Prior to an Event of Default.
On the third business day prior to each payment date prior to the
occurrence of an event of default under the indenture, the servicer shall
instruct the indenture trustee to withdraw, and on the payment date the
indenture trustee shall withdraw, from the collection account the amounts needed
to make the following payments. See "--Amounts Available for Payment on the
Notes" and "--Events of Default". The payments listed below will be made only to
the extent there are sufficient amounts available on the payment date. We will
make payments on the 13th day of each calendar month, or if such day is not a
business day, the next business day, in the following order of priority:
FIRST, to the servicer, reimbursement for the amount of any scheduled
payments on the contracts which were not received when due and which the
servicer advanced for deposit in the collection account;
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SECOND, if the servicer is no longer Heller Financial, Inc. or an affiliate
of Heller Financial, Inc., to the servicer, its monthly servicing fee for the
preceding monthly period together with any amounts in respect of the servicer's
fee that were due in respect of prior monthly periods that remain unpaid;
THIRD, to the holders of the notes, the amounts specified in the following
table and in the order set forth in the following table:
<TABLE>
<CAPTION>
Class of Note
Receiving Payment Amount to be Paid
- ---------------------------------------------------------------------------------------------------------
<S> <C>
A-1, A-2, A-3 and Interest accrued on the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class
A-4 A-4 Notes at their respective interest rates for the period from and including the
most recent date on which interest has been paid to, but excluding, the current
interest payment date.
- ---------------------------------------------------------------------------------------------------------
B Interest accrued on the Class B Notes at the Class B Note interest rate for the
period from and including the most recent date on which interest has been paid to,
but excluding, the current interest payment date.
- ---------------------------------------------------------------------------------------------------------
C Interest accrued on the Class C Notes at the Class C Note interest rate for the
period from and including the most recent date on which interest has been paid to,
but excluding, the current interest payment date.
- ---------------------------------------------------------------------------------------------------------
D Interest accrued on the Class D Notes at the Class D Note interest rate for the
period from and including the most recent date on which interest has been paid to,
but excluding, the current interest payment date.
- ---------------------------------------------------------------------------------------------------------
A-1 The Class A Principal Payment Amount, until the outstanding principal of the Class
A-1 Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
A-2 . $0, Prior to the payment date on which the outstanding principal of the Class A-1
Notes is reduced to $0.
. Class A Principal Payment Amount less the amount needed to reduce the outstanding
principal of the class A-1 Notes to $0, on subsequent payment dates until the
outstanding principal of the Class A-2 Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
A-3 . $0, Prior to the payment date on which the outstanding principal of the Class A-1
Notes and Class A-2 Notes is reduced to $0.
. Class A Principal Payment Amount less the amount needed to reduce the outstanding
principal of the Class A-1 Notes and Class A-2 Notes to $0, on subsequent payment dates
until the outstanding principal of the Class A-3 Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
A-4 . $0, Prior to the payment date on which the outstanding principal of the Class A-1
Notes, Class A-2 Notes and Class A-3 Notes is reduced to $0.
. Class A Principal Payment Amount less the amount needed to reduce the outstanding
principal of the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes to $0, on
subsequent payment dates until the outstanding principal of the Class A-4 Notes is
reduced to $0.
- ---------------------------------------------------------------------------------------------------------
B . $0, Prior to the payment date on which the outstanding principal of the Class A-1
Notes is reduced to $0.
. Class B Principal Payment Amount, on subsequent payment dates until the
outstanding principal of the Class B Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Class of Note
Receiving
Payment Amount to be Paid
- ------------- -----------------
- ---------------------------------------------------------------------------------------------------------
<C> <S>
C . $0, prior to the payment date on which the outstanding principal of the Class A-1
Notes is reduced to $0.
. Class C Principal Payment Amount, on subsequent payment dates until the
outstanding principal of the Class C Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
D . $0, prior to the payment date on which the outstanding principal of the Class A-1
Notes is reduced to $0.
. Class D Principal Payment Amount, on subsequent payment dates until the
outstanding principal of the Class D Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
A-2 . $0, prior to the payment date on which the outstanding principal of the Class A-1
Notes is reduced to $0.
. Additional Principal, on subsequent payment dates until the outstanding principal
of the Class A-2 Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
A-3 . $0, prior to the payment date on which the outstanding principal of the Class A-1
Notes and Class A-2 Notes is reduced to $0.
. the excess of Additional Principal over the amount needed to reduce the outstanding
principal of the Class A-Z Notes to $0, on subsequent payment dates until the outstanding
principal of the Class A-3 Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
A-4 . $0, prior to the payment date on which the outstanding principal of the Class A-1
Notes, Class A-2 Notes and Class A-3 Notes is reduced to $0.
. the excess of Additional Principal over the amount needed to reduce the
outstanding principal of the Class A-2 Notes and Class A-3 Notes to $0, on
subsequent payment dates until the outstanding principal of the Class A-4 Notes is
reduced to $0.
- ---------------------------------------------------------------------------------------------------------
B . $0, prior to the payment date on which the Class A-4 Notes is reduced to $0.
. The excess of Additional Principal over the amount needed to reduce the
outstanding principal of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes,
as applicable, to $0, on subsequent payment dates until the outstanding principal
of the Class B Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
C . $0, prior to the payment date on which the Class B Notes is reduced to $0.
. The excess of Additional Principal over the amount needed to reduce the
outstanding principal of the Class A-2 Notes, Class A-3 Notes, or Class A-4 Notes,
as applicable, and Class B Notes to $0, on subsequent payment dates until the
outstanding principal of the Class C Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
D . $0, prior to the payment date on which the Class C Notes is reduced to $0.
. The excess of Additional Principal over the amount needed to reduce the
outstanding principal of the Class A-2 Notes, Class A-3 Notes or Class A-4 Notes,
as applicable, Class B Notes and Class C Notes to $0, on subsequent payment
dates until the outstanding principal of the Class D Notes is reduced to $0.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
FOURTH, if the servicer is Heller Financial, Inc. or an affiliate of Heller
Financial, Inc., to the servicer, its monthly servicing fee for the preceding
monthly period together with any amounts in respect of the servicer's fee that
were due in respect of prior monthly periods that remain unpaid;
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FIFTH, to the extent that any amounts remain after allocating the amounts
available for distribution on the notes, the indenture trustee will deposit into
the reserve fund an amount, if any, which, when so deposited, causes the balance
in the reserve fund to equal the Required Reserve Amount; and
SIXTH, any excess shall be paid to the holder of the certificate.
The indenture trustee will distribute available amounts on each note within
each class of notes based on the outstanding principal amount of the note
relative to the aggregate outstanding principal amount of that class of
notes.
Following an Event of Default.
On the third business day prior to each payment after the occurrence of
an event of default under the indenture, the servicer shall instruct the
indenture trustee to withdraw, and on the payment date the indenture trustee
will follow the instructions to withdraw, from the collection account the
amounts needed to make the following payments. See "--Amounts Available for
Payment on the Notes" and see "--Events of Default". The payments listed below
will be made only to the extent there are sufficient amounts available on such
payment date. We will make payments on the 13th day of each calendar month, or
if such day is not a business day, the next business day, in the following order
of priority:
FIRST, pay to the indenture trustee or the owner trustee, the amount of any
unpaid fees, expenses, late charges or other losses;
SECOND, pay to the noteholders, reimbursement for any indemnity payments made
by them to the indenture trustee;
THIRD, if the servicer is no longer Heller Financial or an affiliate of
Heller Financial, to the servicer, its monthly servicing fee for the preceding
monthly period together with any amounts in respect of the servicer's fee that
were due in respect of prior monthly periods that remain unpaid;
FOURTH, to the holders of the notes the amounts specified in the following
table and in the order set forth in the following table:
<TABLE>
<CAPTION>
Class of Note
Receiving Payment Amount to be Paid
<S> <C>
A-1, A-2, A-3 and Interest accrued on the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and
A-4 Class A-4 Notes at their respective interest rates for the period from and
including the most recent date on which interest has been paid to, but excluding,
the current interest payment date.
B Interest accrued on the Class B Notes at the Class B Note interest rate for the
period from and including the most recent date on which interest has been paid to,
but excluding, the current interest payment date.
C Interest accrued on the Class C Notes at the Class C Note interest rate for the
period from and including the most recent date on which interest has been paid to,
but excluding, the current interest payment date.
D Interest accrued on the Class D Notes at the Class D Note interest rate for the
period from and including the most recent date on which interest has been paid to,
but excluding, the current interest payment date.
A-1 Outstanding principal of the Class A-1 Notes.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Class of Note
Receiving Amount to be Paid
Payment -----------------
<S> <C>
A-2, A-3 and Outstanding principal of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes,
A-4 pro rata according to the outstanding principal for each class of notes.
B Outstanding principal of the Class B Notes.
C Outstanding principal of the Class C Notes.
D Outstanding principal of the Class D Notes.
</TABLE>
FIFTH, any excess shall be paid to the holder of the certificate.
The terms used in describing the calculation of interest and principal
payments and allocations on the notes are defined as follows:
"Additional Principal" means, with respect to a date on which principal is to
be paid,
(1) if the Class B Target Investor Principal Amount, Class C Target Investor
Principal Amount and Class D Target Investor Principal Amount exceed the
Class B Floor, Class C Floor and Class D Floor, respectively, an amount
of $0; or
(2) if all of the conditions in clause (1) are not satisfied, an amount
equal to the excess, if any, of
(A) the difference between (i) the sum of the outstanding principal
amount of all of the notes and the Overcollateralization Balance
as of the immediately preceding principal payment date (after
making any principal payments on such date) and (ii) the aggregate
discounted contract balance of the contracts as of the last day of
the most recently completed collection period over
(B) the sum of the Class A Principal Payment Amount, Class B Principal
Payment Amount, Class C Principal Payment Amount and Class D
Principal Payment Amount for such payment date.
"Class A Percentage" means approximately 90.9583%, which is the ratio of:
(1) the sum of the initial principal amount of the Class A-2 Notes, Class A-
3 Notes and Class A-4 Notes to
(2) the aggregate discounted contract balance of the contracts as of April
15, 1999 minus the initial principal amount of the Class A-1 Notes.
"Class A Principal Payment Amount" means, with respect to a date on which
principal is to be paid,
(1) while there is outstanding principal on the Class A-1 Notes, the lesser
of :
(A) the amount necessary to reduce such outstanding principal to $0
and
(B) the difference between (1) the sum of the outstanding principal
amount of all of the notes and the Overcollateralization Balance
as of the immediately preceding principal payment date (after
making any principal payments on such date) and (2) the aggregate
discounted contract balance of the contracts as of the last day of
the most recently completed collection period;
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(2) on the payment date on which the outstanding principal of the Class A-1
Notes is reduced to $0, the sum of:
(A) the amount necessary to reduce the outstanding principal of the
Class A-1 Notes to $0; and
(B) the amount necessary to reduce the sum of the outstanding
principal amount of the Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes to the Class A Target Investor Principal Amount; or
(3) on any subsequent payment dates, the amount necessary to reduce the
sum of outstanding principal amount of the Class A-2 Notes, Class A-3
Notes and Class A-4 Notes to the Class A Target Investor Principal
Amount.
"Class A Target Investor Principal Amount" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class A Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
"Class B Floor" means, with respect to a date on which principal is to be
paid,
(1) 1.86% of the initial aggregate discounted contract balance of the
contracts plus
(2) the Cumulative Loss Amount as of such payment date minus
(3) the sum of
(A) the outstanding principal amount of the Class C Notes and Class D
Notes as of the immediately preceding payment date after giving
effect to all principal payments made on such prior payment date
and
(B) the Overcollaterization Balance as of the immediately preceding
payment date.
"Class B Percentage" means approximately 3.7674% which is the ratio of:
(1) the initial principal amount of the Class B Notes to
(2) the aggregate discounted contract balance of the contracts as of April
15, 1999 minus the initial principal amount of the Class A-1 Notes.
"Class B Principal Payment Amount" means, with respect to a date on which
principal is to be paid,
(1) while there is outstanding principal on the Class A-1 Notes, $0; and
(2) after the outstanding principal amount of the Class A-1 Notes is reduced
to $0, the amount necessary to reduce the outstanding principal amount
of the Class B Notes to the greater of:
(A) the Class B Target Investor Principal Amount; or
(B) the Class B Floor.
"Class B Target Investor Principal Amount" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class B Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
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"Class C Floor" means, with respect to a date on which principal is to be
paid,
(1) 1.09% of the initial aggregate discounted contract balance of the
contracts plus
(2) the Cumulative Loss Amount as of such payment date minus
(3) the sum of
(A) the outstanding principal amount of the Class D Notes as of the
immediately preceding payment date after giving effect to all
principal payments made on such prior payment date and
(B) the Overcollaterization Balance as of the immediately preceding
payment date; provided, however, that if the outstanding principal
amount of the Class B Notes is less than or equal to the Class B
Floor on such payment date, the Class C Floor will equal the
outstanding principal amount of the Class C Notes as of the
immediately preceding payment date after giving effect to all
principal payments made on such prior payment date.
"Class C Percentage" means approximately 3.0139%, which is the ratio of:
(1) the initial principal amount of the Class C Notes to
(2) the aggregate discounted contract balance of the contracts as of April
15, 1999 minus the initial principal amount of the Class A-1 Notes.
"Class C Principal Payment Amount" means, with respect to a date on which
principal is to be paid,
(1) while there is outstanding principal on the Class A-1 Notes, $0; and
(2) after the outstanding principal amount of the Class A-1 Notes is reduced
to $0, the amount necessary to reduce the outstanding principal amount
of the Class C Notes to the greater of:
(A) the Class C Target Investor Principal Amount; or
(B) the Class C Floor.
"Class C Target Investor Principal Amount" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class C Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
"Class D Floor" means, with respect to a date on which principal is to be
paid,
(1) 0.47% of the initial aggregate discounted contract balance plus
(2) the Cumulative Loss Amount as of such payment date minus
(3) the Overcollaterization Balance as of the immediately preceding payment
date; provided, however, that if the outstanding principal amount of the
Class C Notes is less than or equal to the Class C Floor on such payment
date, the Class D Floor will equal the outstanding principal amount of
the Class D Notes as of the immediately preceding payment date after
giving effect to all principal payments made on such prior payment date.
"Class D Percentage" means approximately 1.5070% which is the ratio of:
(1) the initial principal amount of the Class D Notes to
(2) the aggregate discounted contract balance of the contracts as of April
15, 1999 minus the initial principal amount of the Class A-1 Notes.
"Class D Principal Payment Amount" means, with respect to a date on which
principal is to be paid,
(1) while there is outstanding principal on the Class A-1 Notes, $0;
and
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(2) after the outstanding principal amount of the Class A-1 Notes is reduced
to $0, the amount necessary to reduce the outstanding principal amount
of the Class D Notes to the greater of:
(A) the Class D Target Investor Principal Amount; or
(B) the Class D Floor.
"Class D Target Investor Principal Amount" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class D Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
"Cumulative Loss Amount" means, with respect to a date on which principal is
to be paid, an amount equal to the excess, if any, of
(1) the total of:
(A) the outstanding principal amounts of all of the notes as of the
immediately preceding payment date after giving effect to all
principal payments made on such date plus
(B) the Overcollateralization Balance as of the immediately preceding
payment date minus
(C) the lesser of
(1) the difference between (x) the sum of the outstanding
principal amount of all of the notes and the
Overcollateralization Balance as of the immediately preceding
principal payment date (after making any principal payments
on such date) and (y) the aggregate discounted contract
balance of the contracts as of the last day of the most
recently completed collection period; and
(2) the amounts available for distribution on the notes after
paying all amounts owing to the servicer and all interest due
on the notes on such payment date over
(2) the aggregate discounted contract balance as of the last day of the
immediately preceding completed collection period.
"Overcollaterization Balance" means with respect to a principal payment date,
an amount equal to the excess, if any, of:
(1) the aggregated discounted contract balance as of the last day of the
collection period completed immediately prior to such date over
(2) the sum of the outstanding principal amount of all of the notes as of
such date after giving effect to all principal payments made on such date.
Reserve Fund
The reserve fund will be an account held in the name of the indenture trustee
on behalf of you. On the closing date for the transfer of the contracts to the
trust, the reserve fund balance will be $386,265. On any payment date, after
distributing the available amounts to the servicer and noteholders as described
in "-- Allocations", we will deposit the remaining available amounts into the
reserve fund until the amounts in the reserve fund equal the Required Reserve
Amount.
"Required Reserve Amount" means with respect to a payment date, an amount
equal to 0.70% of the aggregate outstanding principal amount of the notes as of
the last day of the immediately preceding completed collection period.
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The reserve fund will never contain more than the Required Reserve Amount.
Amounts in the reserve fund will be invested in investments deemed to be
eligible investments for funds held in the collection account. See
"--Collection Account". Earnings on the eligible investments will be treated as
amounts available for distribution to the noteholders and the holder of the
certificate.
If on any payment date, the available amounts remaining after we pay the
servicer and noteholders as described in "-- Allocations" exceed the amount
needed to increase the reserve fund balance to the Required Reserve Amount, we
will distribute such excess to the holder of the certificate. Upon any such
distributions to the holder of the certificate, you will have no further rights
in, or claims to, such amounts.
On any payment date, if the amounts available for making the following two
payments are insufficient, the indenture trustee will withdraw the deficiency
from the reserve fund to make the following two payments;
. servicing fee, if the servicer is no longer Heller Financial, Inc. or an
affiliate of Heller Financial, Inc.; or
. interest on the notes.
Furthermore, if the amounts available for making the following four payments are
insufficient, the indenture trustee will withdraw the lesser of the deficiency
and the excess in the reserve fund over the Required Reserve Amount to make the
following four payments:
. unreimbursed servicer advances;
. principal on the notes;
. additional principal, if any, to most senior outstanding class of notes;
or
. servicing fee, if the servicer is Heller Financial, Inc. or an affiliate
of Heller Financial, Inc.
We will allocate amounts withdrawn from the reserve fund as described in
"-- Allocations". Upon making these payments in full, the funds on deposit in
the reserve fund in excess of the Required Reserve Amount shall be paid to the
holder of the certificate.
If amounts on deposit in the reserve fund have been depleted as a result of
losses in respect of the contracts, the credit enhancement afforded by the
reserve fund will be exhausted and will not be restored.
The servicer may, from time to time after the date of this prospectus
request each rating agency that rated the notes to, at the request of the trust
depositor, approve a formula for determining the Required Reserve Amount that is
different from the formula described above and would result in a decrease in the
amount of the Required Reserve Amount or the manner by which the reserve fund is
funded. If each rating agency delivers a letter to the indenture trustee and the
owner trustee to the effect that the use of the new formulation will not result
in a qualification, reduction or withdrawal of its then-current rating of any
class of notes then the Required Reserve Amount will be determined using the new
formula. The sale and servicing agreement will accordingly be amended to reflect
the new calculation without your consent.
Collection Account and Collection Period
The servicer, for your benefit, shall cause to be established an account
referred to as the "collection account" maintained in the name of the indenture
trustee, with an office or branch of a depository institution or trust company,
which may be the indenture trustee, organized under any state laws or laws of
the United States of America and located in the state designated by the
servicer. This account will be a non-interest bearing segregated corporate trust
account bearing a designation clearly indicating that the funds deposited in the
account are held in trust for the benefit of the noteholders.
At all times such depository institution or trust company shall have the
following characteristics and the amounts in the collection account will be
invested in the following eligible investments:
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<TABLE>
<CAPTION>
Eligible Depository
Institution or Trust Company Eligible Investments
- ----------------------------------------------- -----------------------------------------------
<S> <C>
. the corporate trust department of the . obligations fully guaranteed by the United
indenture trustee or States of America;
. a depository institution organized under any . demand deposits, time deposits or
state laws or the laws of the United States certificates of deposit of depository
of America or the District of Columbia or any institutions or trust companies having
domestic branch of a foreign bank, commercial paper and short-term unsecured debt
(1) (A) which has either obligations, other than such obligation whose
(i) a long-term unsecured debt rating rating is based on the credit of another
acceptable to the rating agencies person, with the highest rating from each
rating the notes or rating agency rating the notes;
(ii) a short-term unsecured debt
rating or certificate of deposit . commercial paper or other short-term
rating acceptable to the rating obligations having the highest rating from
agencies, each rating agency rating the notes at the
(B) the parent corporation of which time the trust purchased it;
has either
(i) a long-term unsecured debt rating . demand deposits, time deposits and
acceptable to the rating agencies certificates of deposit which are fully
rating the notes or insured by the FDIC.
(ii) a short-term unsecured debt
rating or certificate of deposit . notes or banker's acceptance issued by any
rating acceptable to the rating depository institution or trust company having
agencies or commercial paper and short-term unsecured debt
(C) is otherwise acceptable to the obligations, other than such obligation whose
rating agencies rating the notes and rating is based on the credit of another
(2) whose deposits are insured by the person, with the highest rating from each
Federal Deposit Insurance Corporation. rating agency rating the notes;
. money market funds which have the highest
rating from, or have otherwise been approved
in writing by, each rating agency rating the
notes;
. time deposits with an entity, the commercial
paper of which has the highest rating from the
rating agency rating the notes;
. eligible repurchase agreements; and
. any other investments approved in writing by
the rating agencies.
</TABLE>
Funds in the collection account may be invested in debt obligations of
Heller Financial or its affiliates so long as the obligations qualify as the
above described eligible investments.
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Any earnings, net of losses and investment expenses, on funds in the
collection account will be held in that account and be treated as amounts
available for distribution to you. The servicer will have the revocable power to
instruct the indenture trustee to make withdrawals and payments from the
collection account for the purpose of carrying out its duties under the sale and
servicing agreement.
If any institution at which any of the collection account is established
ceases to be an eligible institution as described above, the servicer shall,
within ten business days after receiving notice of that fact, establish a
replacement account at another institution meeting the above eligibility
requirements.
Each collection period begins on the second day of a calendar month and
ends on and includes the first day of the immediately following calendar month.
Events of Default
Allocations of amounts to payments to you will be made as described above
under "--Allocations; Prior to an Event of Default" unless and until an event of
default has occurred, in which case allocations of amounts will be made as
described above under "--Allocations; Following an Event of Default".
An "event of default" refers to any of the following events:
. failure to pay on an interest payment date the full amount of
accrued interest on any note;
. failure to pay the then outstanding principal amount of any note,
if any, on its related maturity date of the note;
. (1) failure on the part of any originator to make any payment or
deposit required under the sale and servicing agreement within
three business days after the date the payment or deposit is
required to be made, or
(2) failure on the part of any originator, the trust depositor,
the trust or the owner trustee to observe or perform any other
covenants or agreements in the sale and servicing agreement or the
Indenture, which failure has a material adverse effect on the
noteholders and which continues unremedied for a period of 60 days
after written notice; provided, there is no 60-day cure period
if the originators do not accept reassignment of ineligible
contracts as required by the sale and servicing agreement, and
further provided, that only a five day cure period shall apply in
the case of a failure by any originator, the indenture trustee or
the owner trustee to comply with their respective covenants not to
grant a security interest in or otherwise intentionally create a
lien on the contracts;
. any representation or warranty made by any originator, the trust
depositor, the indenture trustee or the owner trustee in the sale
and servicing agreement or the Indenture or any information
required to be given by any originator or the trust depositor to
the indenture trustee to identify the contracts was incorrect in
any material respect when made and continues to be incorrect in
any material respect for a period of 60 days after written notice
and as a result of
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which the noteholders' interests are materially and adversely
affected; provided, however, that an event of default shall not be
deemed to occur under the sale and servicing agreement if the
originator has repurchased the related contracts through the trust
depositor during such period under the terms of the sale and
servicing agreement;
. the occurrence of any of the following events with respect to the
originator, the trust depositor, the trust or the servicer:
(1) a court files a decree or order for relief against the party
in an involuntary case under the Bankruptcy Code of the
United States or any other liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or
similar debtor relief laws affecting the rights of creditors,
(2) the party commences a voluntary case under any insolvency
law,
(3) the party consents to a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official taking
possession of any substantial part of its property,
(4) the party makes a general assignment for the benefit of
creditors, or
(5) the party fails to pay its debt as those debts become due;
. the trust becomes an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
In the case of any event described above, an event of default with respect
to the notes will be deemed to have occurred; provided the event of default may
be waived if the Required Holders provide written notice to the trust depositor
and the servicer of the waiver. In the event the indenture trustee has actual
knowledge of an event of default, it will be required to notify, among others,
the trust depositor, each originator, the servicer and the owner trustee.
"Required Holders" means:
(1) prior to the payment in full of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes outstanding, holders Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes,
respectively, evidencing more than 66 2/3% of the aggregate of
principal amount of the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes voting as a single class, and
(2) from and after the payment in full of the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes outstanding, holders of
Class B Notes evidencing more than 66 2/3% of the aggregate principal
amount of the Class B Notes outstanding, and
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(3) from and after the payment in full of the Class B Notes outstanding,
holders of Class C Notes evidencing more than 66 2/3% of the aggregate
principal amount of the Class C Notes outstanding.
If events relating to the bankruptcy or insolvency of the trust depositor
occur on the day of such event, the trust depositor will promptly give notice to
the indenture trustee of the event, and the indenture trustee will, unless
notified to the contrary by the Required Holders, promptly act to sell, dispose
of or otherwise liquidate the contracts in a commercially reasonable manner and
on commercially reasonable terms. The proceeds from any sale, disposition or
liquidation of contracts will be deposited in the collection account and
allocated as described in the sale and servicing agreement and in
"--Allocations". If the proceeds of any collections on contracts in the
collection account allocated to noteholders of any class is not sufficient to
pay the principal amount of the notes of the class in full, those noteholders
will incur a loss.
Events of Default; Remedies
If an event of default relating to bankruptcy or insolvency as described
under the heading "--Events of Default" has occurred, then the unpaid principal
of the notes, together with interest accrued but unpaid, and all other amounts
due to you under the indenture, shall immediately become due and payable.
If an event of default other than the event of default referred to in
paragraph (e) under the heading "--Events of Default" occurs, the Required
Holders may waive the event of default by sending a written notice of the waiver
to the indenture trustee, the servicer and the trust depositor. If the Required
Holders do not waive the event of default then the unpaid principal of the
notes, together with interest accrued but unpaid and all other amounts due to
you under the indenture, shall immediately and without further act become due
and payable.
The Indenture Trustee
The indenture trustee with respect to the notes is Norwest Bank Minnesota,
National Association. Heller Financial, Inc. and its affiliates may from time
to time enter into banking and trustee relationships with the indenture trustee
and its affiliates. Heller Financial, Inc. and its affiliates may hold notes in
their own names; however, any notes so held shall not be entitled to participate
in any decisions made or instructions given to the indenture trustee by the
noteholders as a group.
The indenture trustee's responsibilities will be ministerial in nature,
consisting principally of:
. the distribution of monies as required by the sale and servicing
agreement;
. the authentication and registration of transfer of notes under the
indenture, and
. the delivery of information received from the trust depositor.
The indenture trustee also, as pledgee of the trust under the indenture, will
take and maintain possession of any contracts constituting "instruments" for
purposes of the Uniform Commercial Code that are not otherwise part of chattel
paper.
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For purposes of meeting the legal requirements of any jurisdictions in which
any part of the trust's assets may at the time be located, the indenture trustee
will have the power to appoint a co-trustee or separate trustee of all or any
part of the trust's assets. To the extent permitted by law, all rights, powers,
duties and obligations conferred or imposed upon the indenture trustee will be
conferred or imposed upon and exercised or performed by the indenture trustee
and the separate trustee or co-trustee jointly. In any jurisdiction in which the
indenture trustee will be incompetent or unqualified to perform as required by
the indenture, all rights, powers, duties and obligations conferred or imposed
upon the indenture trustee will be conferred or imposed upon such separate
trustee or co-trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the indenture trustee.
The indenture trustee may resign at any time, in which event a successor
indenture trustee which meets the requirements of Section 310(a) of the Trust
Indenture Act of 1939, as amended, will be appointed by the servicer. The
servicer may also remove the indenture trustee if the indenture trustee ceases
to be eligible to continue as the trustee under the indenture. In such
circumstances, a successor indenture trustee which meets the requirements of
Section 310(a) of the Trust Indenture Act will be appointed by the servicer. Any
resignation or removal of the indenture trustee and appointment of a successor
indenture trustee does not become effective until acceptance of the appointment
by the successor indenture trustee.
Governing Law
The indenture will be governed by the laws of the State of New York.
Amendments
The owner trustee, the trust depositor, and the indenture trustee, with the
written consent of the Required Holders represented thereby, may execute a
supplement to the indenture for the purpose of adding provisions to, or changing
or eliminating provisions of, the indenture. Additionally, the indenture
trustee, with the written consent of the Required Holders represented thereby,
may consent to or execute a written amendment of or supplement to, or waiver or
consent under, the sale and servicing agreement. But, in each case the consent
of each noteholder is required to:
(1) reduce the amount or extend the time of payment of any amount
owing or payable under any note,
(2) increase or reduce the interest payable on any note,
(3) or alter or modify the provisions of the sale and servicing
agreement with respect to the order of priorities in which collections
on the contracts shall be paid to noteholders or with respect to the
amount or timing of payments on the notes,
(4) reduce, modify or amend any indemnities in favor of any
noteholder or in favor of or to be paid by the trust depositor, or alter
the definition of "Indemnitees" to exclude any noteholder, except as
consented to by each person adversely affected by the change,
(5) make any interest or principal payable in a currency other
than U.S. dollars,
(6) modify, amend or supplement the provisions of the sale and
servicing agreement relating to amendments, waivers and supplements to
the indenture, the sale and servicing agreement or any other document,
or
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(7) modify the definition of Required Holders or the percentage
of noteholders required to make any modification of the indenture.
However, only the consent of the affected holder shall be required for any
decrease in an amount of or the rate of interest payable on the note or any
extension for the time of payment of any amount payable under the note.
Servicing Compensation and Payment of Expenses
The servicer's compensation with respect to its servicing activities and
reimbursement for its expenses will be a servicing fee calculated monthly in
conjunction with the collection periods for the notes. The servicer's monthly
fee will be an amount equal to the product of
(1) one-twelfth,
(2) 0.40% and
(3) the aggregate discounted contract balance of all of the contracts as of
the second day of the immediately preceding calendar month.
The servicer's fee will be funded from payments due under the contracts and
amounts received upon the prepayment or purchase of contracts or liquidation of
the contracts and disposition of the related equipment upon defaults thereunder.
See "-- Amounts Available for Payments on the Notes". The servicer's monthly fee
will be paid on the 13th day of each calendar month from the collection account.
See "Description of the Notes and Indenture -- Allocations" above.
The servicer will pay from its servicing compensation some of the expenses
incurred in connection with servicing the contracts including, without
limitation:
. expenses related to the enforcement of the contracts;
. payment of the fees and disbursements of the indenture trustee and owner
trustee and independent accountants;
. expenses of maintaining casualty insurance on equipment to the extent the
contracts provide for the originator to pay such insurance; and
. any fees which are not expressly stated in the sale and servicing
agreement to be payable by the trust, you or the trust depositor.
However, the servicer will not pay federal, state, local and foreign income,
franchise or other taxes based on income, if any, or any interest or penalties
on such income, imposed upon the trust. The servicing fees of any sub-servicers,
including vendor sub-servicers, will be paid by the servicer out of its monthly
servicing fee.
In the event that Heller Financial is acting as servicer and fails to pay the
fees and disbursements of the indenture trustee or owner trustee, the trustee
will be entitled to receive the portion of the servicer's monthly servicing fee
that is equal to those unpaid amounts. In no event will you be liable to the
indenture trustee or owner trustee for the servicer's failure to pay those
amounts.
Optional Termination
If the aggregate discounted contract balance of the contracts is less than
10% of the initial aggregate discounted contract
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balance of the contracts as of April 1, 1999, the trust depositor will have the
option to cause the trust to purchase without penalty all, but not less than
all, of the remaining outstanding notes and certificate. The trust depositor
will exercise this option only on a payment date for the notes. The redemption
price will be equal to the sum of the outstanding principal amount of the notes
and certificate, together with accrued interest through the date of redemption.
The source of funds for the redemption price will be the proceeds of the trust's
sale to the trust depositor of the contracts and the trust depositor's
concurrent resale of the contracts to the applicable originators. Following any
redemption, you will have no further rights with respect to the trust's assets.
Reports
No later than the third business day prior to each payment date, the servicer
will forward to the indenture trustee and each rating agency rating the notes a
monthly report prepared by the servicer setting forth information with respect
to the trust and the notes and certificate, including:
(1) the aggregate discounted contract balance (A) as of the end of the
related collection period and (B) as of the end of the second collection
period preceding such interest and principal payment date;
(2) the Class A Principal Payment Amount, Class B Principal Payment
Amount, Class C Principal Payment Amount Class D Principal Payment Amount and
Additional Principal, including the calculations utilized in the
determination of those principal payment amounts;
(3) the aggregate discounted contract balance of contracts held by the
trust which were 31, 61 and 91 days or more delinquent as of the end of such
collection period;
(4) the discounted contract balance of contracts that became defaulted
contracts during such collection period and cumulatively for each preceding
collection period;
(5) the monthly servicing fee for the related collection period;
(6) the amounts available for distribution to the holders of the notes
with respect to the related collection period, including the calculation of
those amounts;
(7) the total amount distributed on the notes;
(8) the amount allocable to principal on each class of the notes;
(9) the amount allocable to interest on each class of the notes;
(10) any services advances; and
(11) the balance in the reserve fund.
On each payment date, the indenture trustee (or an agent on its behalf), will
forward to each noteholder of record a copy of the monthly report.
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On or before January 31 of each calendar year, commencing January 31, 2000,
the indenture trustee will furnish or cause to be furnished to each person who
at any time during the preceding calendar year was a noteholder of record, a
statement containing the information required to be provided by an issuer of
indebtedness under the Internal Revenue Code of 1986, as amended for such
preceding calendar year or the applicable portion of the year during which you
were a noteholder, together with such other customary information as is
necessary to enable you to prepare your tax returns. See "Federal Income Tax
Consequences".
As long as the notes remain in book-entry form, periodic and annual unaudited
reports, containing information concerning the trust, the contracts, the offered
notes and the certificate, will be prepared by the servicer and sent on behalf
of the trust to Cede & Co., as nominee of The Depository Trust Company, and the
Euroclear System or Cedel Bank, S.A. as registered holders of the offered notes.
These reports will be made available by DTC, Euroclear or CEDEL and its
participants to holders of interests in the offered notes as required by the
rules, regulations and procedures creating and affecting DTC, Euroclear and
CEDEL, respectively. See "Description of the Notes and Indenture--Book Entry
Registration" and "--Reports". These reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles
or that have been examined and reported upon by, with an opinion expressed by,
an independent or certified public accountant. Upon the issuance of fully
registered, certificated notes, these reports will be sent to each registered
noteholder.
List of Noteholders
If the notes are subsequently issued in fully registered, certificated form,
the indenture trustee will afford you access during normal business hours to the
current list of noteholders for purpose of communicating with other noteholders
with respect to their rights under the indenture, the sale and servicing
agreement or the notes. The indenture trustee will provide this list upon
written request of any noteholder or group of noteholders of record holding
notes evidencing not less than 10% of the aggregate unpaid principal amount of
the notes. While the notes are held in book-entry form, holders of beneficial
interests in the notes will not have access to a list of other holders of
beneficial interests in the notes, which may impede the ability of such holders
of beneficial interests to communicate with each other. See "--Book-Entry
Registration" below.
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Administration Agreement
Heller Financial,Inc., in its capacity as administrator, will enter into an
Administration Agreement. Heller Financial, Inc. will agree, to the extent
provided in the Administration Agreement, to provide the notices and to perform
other administrative obligations required to be provided or performed by the
trust or the owner trustee under the indenture.
Heller Financial, Inc., as the administrator agrees to perform the
accounting functions of the trust which the owner trustee is required to perform
under the Trust Agreement, including but not limited to:
. maintaining the books of the trust;
. filing tax returns for the trust; and
. delivering tax related reports to you.
However, the owner trustee shall retain responsibility for distributing the
Schedule K-1s. As compensation for the performance of the administrator's
obligations under the Administration Agreement and as reimbursement for its
expenses, Heller Financial, Inc., as the administrator will be entitled to a
monthly administration fee, which fee will be paid by the servicer.
Book-Entry Registration
You may hold your notes through The Depository Trust Company in the United
States or Cedel Bank, society anonyme or Euroclear System in Europe if you are a
participant of those systems, or indirectly through organizations that are
participants in those systems.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under to Section 17A of the Exchange Act. DTC was
created to hold securities for its direct participants and to facilitate the
clearance and settlement of securities transactions between its direct
participants through electronic book-entries, thereby eliminating the need for
physical movement of certificates. DTC's direct participants include the
underwriters offering the notes to you, securities brokers and dealers, banks,
trust companies and clearing corporations, and may include other organizations.
Indirect access to the DTC system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly.
To facilitate subsequent transfers, all notes deposited with DTC will be
registered in the name of DTC's nominee, Cede & Co. You will maintain beneficial
ownership of the notes despite the deposit of notes with DTC and their
registration in the name of Cede. DTC has no knowledge of the actual
noteholders; DTC's records reflect only the identity of its direct participants
to whose accounts such notes are credited, which may or may not be the
noteholders. DTC's direct and indirect participants will remain responsible for
keeping account of their holdings on behalf of their customers.
You will not be entitled to receive a certificate representing such
person's interest in a class of notes. As long as the notes are registered in
the name of Cede & Co., any action to be taken by you or any other noteholders
will be taken by DTC upon instructions from DTC's participants, and all
distributions, notices,
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reports and statements to noteholders will be delivered to Cede, as the
registered holder of the notes, for distribution to noteholders in compliance
with DTC procedures.
You will receive all payments of principal and interest on the notes through
direct participants or indirect participants. DTC will forward such payments to
its direct participants which will forward them to indirect participants or
noteholders. Under a book-entry format, you may experience some delay in their
receipt of payments, since such payments will be forwarded to Cede as nominee of
DTC. You will not be recognized by the indenture trustee as a noteholder, as
such term is used in the indenture. You will be permitted to exercise the rights
of noteholders only indirectly through DTC and its direct participants and
indirect participants. Because DTC can act only on behalf of direct
participants, who in turn act on behalf of indirect participants, and on behalf
of banks, trust companies and other persons approved by it, your ability to
pledge the notes to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such notes, may be limited due to
the absence of physical notes for such notes.
Conveyance of notices and other communications by DTC to direct participants,
by direct participants to indirect participants and by direct participants and
indirect participants to noteholders will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payments by DTC participants to noteholders will be governed
by standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street name"
and will be the responsibility of such DTC participant and not of DTC, the
indenture trustee, the owner trustee, the originators or the originator, subject
to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal and interest to DTC is the responsibility of the
indenture trustee, disbursement of such payments to direct participants shall be
the responsibility of DTC and disbursement of such payments to noteholders shall
be the responsibility of direct participants and indirect participants.
Purchases of notes under the DTC system must be made by or through direct
participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each actual noteholder is in turn to be recorded on the
direct participants' and indirect participants' records. noteholder will not
receive written confirmation from DTC of their purchase, but noteholders are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holders, from the direct participant or
indirect participant through which the noteholder entered into the transaction.
Transfers of ownership interests in the notes are to be accomplished by entries
made on the books of DTC's participants acting on behalf of noteholders.
noteholders will not receive physical notes representing their ownership
interest in notes, except in the event that use of the book-entry system for the
notes is discontinued.
DTC will not comment or vote with respect to the notes. DTC has advised us
that it will take any action permitted to be taken by a noteholder under the
indenture only at the direction of one or more direct participants to whose
accounts with DTC the notes are credited. Additionally, DTC has advised us that
to the extent that the indenture requires that any action may be taken only by
noteholders representing a specified percentage of the aggregate outstanding
principal amount of the notes, DTC will take such action only at the direction
of and on behalf of direct participants whose holdings include undivided
interests that satisfy such specified percentage.
DTC may discontinue providing its services as securities depositary with
respect to the notes at any time by giving reasonable notice to the indenture
trustee. Under such circumstances, in the event that a successor securities
depositary is not obtained, fully registered, certificated notes are required to
be printed and delivered.
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The originator may decide to discontinue use of the system of book-entry
transfers through DTC or a successor securities depositary. In that event, fully
registered, certificated notes will be delivered to noteholders. See "--Issuance
of Definitive Notes at a Later Date".
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but neither we
nor the trust depositor take any responsibility for the accuracy of this
information.
Cedel and Euroclear will hold omnibus positions on behalf of the participants
in the Cedel and Euroclear systems, respectively, through customers' securities
accounts in Cedel's and Euroclear's names on the books of their respective
depositaries which in turn will hold such positions in customers' securities
accounts in the depositaries' names on the books of DTC.
Cedel is incorporated under the laws of Luxembourg as a professional
depositary. Cedel holds securities for its participants and facilitates the
clearance and settlement of securities transactions between its participants
through electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars. Cedel
provides to its participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedel interfaces with domestic markets in
several countries. As a professional depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel's participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations and may include the underwriters. Indirect access to Cedel is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Cedel participant,
either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear's participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 29 currencies, including United States dollars. Euroclear
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear is
operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New
York, under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation. All operations are conducted by Euroclear's operator
and all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with Euroclear's operator. Euroclear Clearance Systems S.C. establishes
policy for Euroclear on behalf of Euroclear's participants. Euroclear
participants include banks, securities brokers and dealers and other
professional financial intermediaries and may include the underwriters. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
Morgan Guaranty Trust Company of New York is the Belgian branch of a New York
banking corporation which is a member bank of the Federal Reserve System. As
such, it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York Banking Department, as well as the Belgian
Banking Commission.
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Securities clearance accounts and cash accounts with Euroclear operator are
governed by the Terms and Conditions Governing Use of Euroclear and the related
Operating Procedures of the Euroclear System and applicable Belgian law. Those
Euroclear Terms and Conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear operator acts under the
Euroclear Terms and Conditions only on behalf of Euroclear's participants, and
has no record of or relationship with persons holding through Euroclear's
participants.
Transfers between direct participants will comply with DTC rules. Transfers
between Cedel's participants and Euroclear's participants will comply with their
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly through
DTC in the United States, on the one hand, and directly or indirectly through
Cedel or Euroclear, on the other, will be effected in DTC under DTC rules
through the relevant European international clearing system through its
Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system as required by its rules and procedures and within
its established deadlines (European time). The relevant European international
clearing system will, if the transaction meets its settlement requirements,
deliver instructions to its depositary to take action to effect final settlement
on its behalf by delivering or receiving securities in DTC, and making or
receiving payment using its normal procedures for same-day funds settlement
applicable to DTC. Cedel participants and Euroclear participants may not deliver
instructions directly to the depositaries.
Because of time-zone differences, credits of securities in Cedel or Euroclear
as a result of a transaction with a DTC participant will be made during the
subsequent securities settlement processing day, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing day will be reported to the relevant
Cedel participant or Euroclear participant on such business day. Cash received
in Cedel or Euroclear as a result of sales of securities by or through a Cedel
participant or a Euroclear participant to a DTC participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of notes among participants of DTC, Cedel and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.
Except as required by law, none of the originator, any originator, the owner
trustee, the Trust Depositor or the indenture trustee will have any liability
for any aspect of the records relating to, actions taken or implemented by, or
payments made on account of, beneficial ownership interests in the notes held
through DTC, or for maintaining, supervising or reviewing any records or actions
relating to such beneficial ownership interests .
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Issuance of Certificated Notes at a Later Date
The notes will be issued in fully registered, certificated form to beneficial
owners or their nominees rather than to The Depository Trust Company or its
nominee, only if:
(1) we advise the indenture trustee in writing that The Depository Trust
Company is no longer willing or able to discharge properly its
responsibilities as Depository with respect to such notes, and we or the
indenture trustee are unable to locate a qualified successor or
(2) we elect to terminate the book-entry system.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the indenture trustee is required to notify all beneficial
owners for each class of notes held through The Depository Trust Company of the
availability of notes in fully registered, certificated form. Upon surrender by
The Depository Trust Company of the global note representing the notes and
instructions for reregistration, the indenture trustee will issue such fully
registered, certificated notes, and the indenture trustee will recognize the
holders of such fully registered, certificated notes as noteholders under the
indenture.
Additionally, upon the occurrence of any such event described above,
distribution of principal of and interest on the notes will be made by the
indenture trustee directly to you as required by the indenture. Distributions
will be made by check, mailed to your address as it appears on the note
register. Upon at least 10 days' notice to noteholders for such class, however,
the final payment on any note will be made only upon presentation and surrender
of such Note at the office or agency specified in the notice of final
distribution to noteholders. The final payment will be made in this manner
whether the notes are fully registered, certificated notes or the note for such
class registered in the name of Cede & Co. representing the notes of such class.
Fully registered, certificated notes of each class will be transferable and
exchangeable at the offices of the indenture trustee or its agent in New York,
New York, which the indenture trustee shall designate on or prior to the
issuance of any fully registered, certificated notes with respect to such class.
No service charge will be imposed for any registration of transfer or exchange,
but the indenture trustee may require payment of a sum sufficient to cover any
tax or other governmental charge imposed in connection with the transfer or
exchange.
The Class D Notes and the Certificate
On the closing date for the sale of the offered notes; we will also issue
$3,862,654 aggregate principal amount of Class D [ ]% Receivable-Backed
Notes, Series 1999-1. The initial principal balance of the Class D Notes is
equal to approximately 1.00% of the initial aggregate discounted contract
balance of the contracts. The Class D Notes will mature on October 13, 2006. We
will also issue the certificate with an initial certificate balance of
$1,931,328; the certificate will not bear interest and shall have the right to
monies in the reserve fund and to funds remaining after the payment of all
principal and interest on the notes. The certificate will represent a fractional
undivided beneficial equity interest in the trust and will be issued under the
Trust Agreement.
Neither the Class D Notes nor the certificate is not being offered and sold
by this prospectus. We expect to sell the Class D Notes concurrently in a
private placement. The trust depositor is expected initially to retain the
certificate, although we may transfer the certificate at some later date in a
transaction separate from this offering provided the Owner trustee and indenture
trustee receive an opinion of independent counsel that such
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transfer will not cause the trust to become a taxable entity or otherwise
adversely affect the noteholders. Distributions with respect to the certificate
will be subordinated to the rights of the noteholders to the extent described in
"Description of the Notes and Indenture--Allocations".
The Sale and Servicing Agreement
The following is a summary of all of the material terms of the sale and
servicing agreement dated as of April 1, 1999 among the trust depositor, the
originators, the trust and the indenture trustee. You should read the sale and
servicing agreement, the form of which was filed as an exhibit to the
Registration Statement of which this prospectus is a part.
Termination of Trust
Unless the trust depositor instructs the owner trustee otherwise, the trust
will terminate only on the earliest to occur of
(1) the day following the day on which the aggregate principal amount of all
notes is zero; provided, that the trust depositor shall have delivered a
written notice to the owner trustee electing to terminate the trust, or
(2) if the contracts are sold, disposed of or liquidated following the
occurrence of events relating to bankruptcy or insolvency, immediately
following such sale, disposition or liquidation. Upon termination of the
trust, all right, title and interest in the trust's assets (other than
amounts in accounts maintained by the trust for the final payment of
principal and interest to the holders of the notes and certificate) will
be conveyed and transferred to the holder of the certificate and any
permitted assignee.
Conveyance of the Contracts
The contracts, and security interests in the equipment and in end-user
contracts and equipment securing vendor loans for the contracts, will be sold or
contributed to the trust by the trust depositor as required by the sale and
servicing agreement. The originators have sold, transferred, assigned, set over
and otherwise conveyed to the trust depositor, without recourse all of the
originators' right, title and interest in and to:
. the contracts, including any substitute contracts, and all monies due or
to become due in payment of the contracts on or after the related cutoff
date, including all scheduled payments thereunder due on or after the
cutoff date;
. any prepayment amounts, any payments in respect of a casualty or early
termination, and any recoveries on the contracts but excluding any
scheduled payments due prior to the related cutoff date, any scheduled
payments due after the cutoff date but received on or prior to the
cutoff date and any Excluded Amounts;
. the related equipment (and, in the case of any vendor loan, any end-user
contracts or equipment securing the vendor loan), including all proceeds
from any sale or other disposition of the equipment;
. any documents delivered to the trust depositor or held by the servicer
on its behalf with respect to each contract;
. all payments made or to be made in the future with respect to each
contract and the obligor thereunder and under any other guarantee or
similar credit enhancement with respect to the contracts;
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. all payments made with respect to each contract under any insurance
policy covering physical damage to the related equipment; and
. all income and proceeds of the foregoing.
As of the initial cutoff date or any subsequent cutoff date for substitute
contracts, the trust depositor will transfer and assign the assets described in
the previous six bullet points to the trust for the benefit of the noteholders
and the trust will grant a lien on the same in favor of the indenture trustee.
To facilitate servicing and reduce administrative costs, Heller Financial
Leasing, Inc., as a sub-servicer, will retain custody of, but not title to, the
contracts, the documents relating to the contracts and any related evidence of
insurance payments, scheduled payments and any other similar payments under the
contracts. Prior to the conveyance of any contracts to the trust depositor, each
originator indicated in its books and records, including the computer files
relating to the contracts, that the contracts have been transferred to the trust
depositor. Prior to each transfer of any assets to the trust, the trust
depositor will file UCC financing statements reflecting the conveyance of the
assets described in the previous six bullet points to the trust and the grant of
a lien on those assets to the indenture trustee. The trust depositor will mark
its books and records, including the appropriate computer files relating to the
contracts, to indicate that the contracts have been conveyed to the trust. The
trust will give the indenture trustee a list of the contracts transferred to
trust, identified by account number and by the discounted contract balance as of
the related cutoff date. With respect to end-user contracts securing vendor
loans, in some instances the vendor will retain the original contract files
associated with those end-user contracts. UCC financing statements have been
filed to reflect the pledge of contracts to the applicable originator as
security for the vendor loans.
Representations and Warranties; Definition of Eligible Contract
The originators will, jointly and severally, make the following
representations and warranties in the sale and servicing agreement with respect
to each contract as of April 1, 1999. Similarly, the originators will make or be
deemed to have made those representations and warranties with respect to each
substitute contract which may be transferred by either of them as of its related
cutoff date, including that:
(1) the information with respect to the contract, is true and correct in
all material respects;
(2) immediately prior to the transfer of a contract, the contract was owned
by the originator free and clear of any adverse claim;
(3) the contract is not a defaulted contract;
(4) no provision of the contract has been waived, altered or modified in
any way, except by instruments or documents contained in the files
relating to the contract;
(5) the contract is a valid and binding payment obligation of the obligor
and its terms are enforceable, except, the enforcement may be limited
by insolvency, bankruptcy, moratorium, reorganization, or other similar
laws affecting enforceability of creditors' rights and the availability
of equitable remedies;
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(6) the contract is not and will not be subject to rights of rescission,
setoff, counterclaim or defense;
(7) the contract, at the time it was made, did not violate the laws of the
United States or any state, except for any violations which do not
materially and adversely affect the collectibility of the contracts
taken as a whole;
(8) (a) the contract and any related equipment have not been sold,
transferred, assigned or pledged by the originator to any person other
than the end-user;
(b) any equipment related to the contract is free and clear of any liens
and encumbrances of any third parties other than liens in favor of the
originator and permitted liens; and
(c) either
(i) the contract is secured by a fully perfected lien of the first
priority on the related equipment or, in the case of any vendor
loan, related end-user contract or equipment or
(ii) in the case of a contract secured by aircraft, within 30
calendar days of the origination or acquisition of the contract
by the originator all required federal registration or
recording procedures were initiated, and such interest will be
so noted or recorded within 180 days of such acquisition or
origination;
(9) if the contract constitutes either an "instrument" or "chattel paper"
for purposes of the Uniform Commercial Code, there is not more than one
"secured party's original" counterpart of the contract;
(10) all filings necessary to evidence the conveyance or transfer of the
contract to the trust depositor have been made in all appropriate
jurisdictions;
(11) the obligor is not, to the originators' knowledge, subject to bankruptcy
or other insolvency proceedings;
(12) the contract is a U.S. dollar-denominated obligation and the associated
equipment is located in the United States;
(13) the contract does not require the prior written consent of an obligor or
contain any other restriction on the transfer or assignment of the
contract other than a consent or waiver of such restriction that has
been obtained prior to the date of the contract was sold to the trust;
(14) the obligations of the related obligor under the contract are
irrevocable and unconditional and non-cancelable or, if prepayable by
its terms, such contract meets the criteria described in clause (24)
below;
(15) the contract has an original maturity of not greater than 114 months;
(16) no adverse selection procedure was used in selecting the contract for
transfer;
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(17) the obligor under the contract is required to maintain casualty
insurance with respect to the related equipment or to self-insure
against casualty with respect to the related equipment in an amount that
is consistent with the servicer's normal servicing requirements;
(18) the contract constitutes chattel paper, an account, an instrument or a
general intangible as defined under the Uniform Commercial Code;
(19) no lease is a "consumer lease" as defined in Section 2A-103(1)(e) of the
Uniform Commercial Code and each lease is a lease intended for security
as defined in Section 1-201(39) of the Uniform Commercial Code;
(20) each lessee has represented to the originator or the vendor that it has
accepted the related equipment and that it has had a reasonable
opportunity to inspect and test the equipment and the originator has not
been notified of any defects in the equipment;
(21) the contract is not guaranteed by any originator nor has the originator
established any specific credit reserve with respect to the related
obligor;
(22) each lease is a "triple net lease" under which the obligor is
responsible for the maintenance of the related equipment in a manner
that conforms with general industry standards;
(23) each vendor loan is secured by an end-user contract(s) having an
aggregate discounted contract balance equal to the outstanding principal
amount of the vendor loan, assuming that the interest rate specified in
the vendor loan;
(24) no provision of the contract provides for a prepayment amount less than
(a) the amount the discounted contract balance on the date of the
prepayment plus
(b) any accrued, unpaid interest at the discount rate plus
(c) any outstanding servicer's advances for the contract;
unless the vendor or the originators pay to the trust the difference
between the prepayment amount actually paid and the required prepayment
amount; and
(25) the obligor is not the United States of America or any state or local
government or any agency, department, subdivision or instrumentality
of these governments.
These representations and warranties will be reaffirmed by the originators
when they transfer a substitute contract to the trust depositor. A contract
which satisfies all of the above representations and warranties shall be deemed
an "eligible contract". Contracts with respect to which the representations in
clauses (3), (15) and (24) are not true shall also be eligible contracts if the
trust depositor shall have received confirmation from each rating agency
rating the notes that the discrepancy will not result in a downgrading of the
existing ratings on the notes. In addition, the originators will jointly and
severally represent and warrant to the trust depositor that they have validly
sold and assigned to the trust depositor all right, title and interest of the
applicable originator in the related contracts and the proceeds of the
contracts.
The originators will also jointly and severally represent and warrant in the
sale and servicing agreement with respect to each end-user contract securing a
vendor loan transferred by either originator that as of the related cutoff date,
among other things,
(1) that the end-user contract is an eligible contract,
(2) that the originator holds a duly perfected lien of the first priority on
the end-user contract and
(3) that the transfer of the originator's security interest in the end-user
contract and the proceeds of those contracts to the trust depositor is
effective to create in favor of the trust depositor a lien on those
contracts and that such lien has been duly perfected.
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Permitted liens on the contracts consist of:
(1) liens for state, municipal or other local taxes but only if
(a) such taxes shall not at the time be due and payable or
(b) the trust depositor shall currently be contesting the validity
of those liens in good faith by appropriate proceedings and
shall have reserved for those liens on its books;
(2) liens in favor of the trust depositor created under the sale and
servicing agreement and transferred to the trust under the sale
and servicing agreement;
(3) liens in favor of the trust created under the sale and servicing
agreement; and
(4) liens in favor of the indenture trustee created under the sale and
servicing agreement and the indenture; and
Permitted liens on the equipment securing the contracts consist of:
(1) materialmen's, warehousemen's, mechanics' and other liens arising
by operation of law in the ordinary course of business for sums
not due;
(2) liens for state, municipal or other local taxes if:
(A) such taxes shall not at the time be due and payable or
(B) the trust depositor shall currently be contesting the
validity of those liens in good faith by appropriate
proceedings and shall have set aside on its books adequate
related reserves;
(3) liens in favor of the trust depositor and transferred to the trust
under the sale and servicing agreement;
(4) liens in favor of the trust created under the sale and servicing
agreement;
(5) liens in favor of the indenture trustee created under the sale and
servicing agreement and the indenture;
(6) other subordinated liens which are subordinated to the prior
payment of the notes on terms described in the sale and servicing
agreement; and
(7) liens granted by the end-users or vendors which are subordinated
to the interest of the trust in the equipment.
The trust depositor will represent and warrant in the sale and servicing
agreement that:
(1) that the transfer of the contracts, is a valid sale, transfer and
assignment to the trust of all right, title and interest of the trust
depositor in the contracts;
(2) all filings necessary to evidence the conveyance or transfer of the
contracts to the trust have been made in all appropriate jurisdictions;
(3) that each contract is an eligible contract;
(4) that each end-user contract or interest in the contract securing a
vendor loan is an eligible contract;
(5) that the security interest granted on the related contracts, by the
trust to the indenture trustee is effective to create in favor of the
indenture trustee a lien on the contracts and that the lien has been
duly perfected; and
(6) that the trust depositor holds a duly perfected lien of the first
priority on each end-user contract securing a vendor loan.
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None of the indenture trustee, the trust, the owner trustee or any of them in
their individual capacities, shall make or be deemed to have made any
representations or warranties, express or implied, regarding the trust's assets
or the transfers of those assets by the originators, the trust depositor or the
trust.
Remedies for Breaches of Representations and Warranties; Definition of
Ineligible Contract
Under the terms of the sale and servicing agreement, each contract must be an
eligible contract as of its date of transfer to the trust. The indenture trustee
shall reassign any contract to the trust depositor, and the originators will be
concurrently obligated, jointly and severally, to purchase from the trust
depositor, such contract transferred by an originator no later than 90 days
after any originator becomes aware, or receives written notice from the servicer
or the trust depositor, of the breach of any representation or warranty made by
the originator in the sale and servicing agreement. That transfer and repurchase
of the contract is required only if the breach of the representation or warranty
by the originator materially adversely affects the interests of the trust
depositor or the trust or their successors or assigns in such contract or the
documents relating to such contract, which breach has not been cured or waived
in all material respects. This purchase obligation will constitute the sole
remedy against the originators and the trust depositor available to you for a
breach of a representation or warranty under the sale and servicing agreement
made by the originators with respect to that contract.
An ineligible contract shall be reassigned to the trust depositor and the
trust depositor shall make a deposit in the collection account in immediately
available funds in an amount equal to the discounted contract balance of the
ineligible contract together with accrued interest and any outstanding servicer
advances on the contract. Any amount deposited into the collection account in
connection with the reassignment of an ineligible contract shall be considered
payment in full of the ineligible contract, and that amount shall be treated as
an amount available for distribution to you. In the alternative, the trust
depositor may instead obtain a substitute contract and convey the substitute
contract to the trust in replacement for the affected ineligible contract. We
will release by the ineligible contract and the trust depositor will reconvey it
to the originator. See "Substitute Contracts".
Concentration Amounts; Definition of Excess Contract
In addition to the representations and warranties made by the originators and
the trust depositor with respect to the contracts as described above under
"--Representations and Warranties; Definition of Eligible Contract", the trust
depositor will represent and warrant as of April 1, 1999, the initial cutoff
date as follows:
(1) the aggregate discounted contract balance of all end-user contracts
which finance, lease or are related to software will not exceed 11.84%
of the aggregate discounted contract balance of the contracts;
(2) the aggregate discounted contract balance of all end-user contracts with
obligors who comprise the five largest obligors (measured by aggregate
discounted contract balance) does not exceed 7.56% of the aggregate
discounted contract balance of the contracts; and
(3) the aggregate discounted contract balance of all end-user contracts with
obligors located in a single State of the United States does not exceed
21.80% the aggregate discounted contract balance of the contracts.
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On the date a substitute contract is added to the trust's assets the trust
depositor will make the foregoing representations and warranties as of the
initial closing date of the transfer of the contracts to the trust. We will
treat the Substitute Contract as though it, and not the replaced contract, was
included in the contracts on the initial closing date; however, the discounted
contract balance of such substitute contract shall be equal to its discounted
contract balance as of the actual cutoff date.
If there is a breach of any of the foregoing representations or warranties
(an "Excess Contract"), which breach has not been cured or waived in all
material respects, the removal of which shall remedy such breach, the servicer
will select a contract, and the indenture trustee shall reassign such contract
to the trust depositor, and the originators will be jointly and severally
obligated to purchase such contract from the trust depositor. Such purchase
shall occur no later than 90 days after the trust depositor or any originator
becomes aware, or receives written notice from the servicer or the trust
depositor, of such breach. This purchase obligation will constitute the sole
remedy against the originators and trust depositor available to you for a breach
of one of the foregoing representations or warranties.
An Excess Contract shall be reassigned to the trust depositor and the trust
depositor shall make a deposit in the collection account in immediately
available funds in an amount equal to the discounted contract balance of the
Excess Contract together with accrued interest and any outstanding servicer
advances on the contract. Any amount deposited into the collection account in
connection with the reassignment of an Excess Contract shall be considered
payment in full of the Excess Contract and shall be treated as an amount
available for distribution to you. In the alternative, the trust depositor may
instead cause the originators, or either of them, to convey to the trust
depositor, a substitute contract in replacement for the Excess Contract, which
shall thereupon be deemed released by the trust and reconveyed through the trust
depositor to the applicable originator. See "--Substitute Contracts".
Material Modifications to Contracts
Under the terms of the sale and servicing agreement, the servicer may vary
the provisions of a contract, some of which constitute material modifications.
Under the sale and servicing agreement, only the following modifications are
permitted:
. waivers and other modifications that:
(1) conform with the servicer's customary and usual practices and
(2) do not have the effect of accelerating, delaying, reducing or extending
the dates for scheduled payments for the contract; however, the rating
agencies may waive this requirement;
. to the extent consistent with the servicer's past practices, the servicer may
reduce one to three scheduled payments for a contract if additional payments
are added to the scheduled payments subsequently due and the discounted
contract balance of the contract as modified equals or exceeds the discounted
contract balance prior to the modification; provided, that the discounted
contract balances of all contracts which have similarly reduced scheduled
payments does not exceed 5% of the aggregate discounted contract balance of
the contracts as of the initial cutoff date and no payments are deferred
beyond January 31, 2006;
. waiver of any late payment charge and other service fees that may be
collected in the ordinary course of servicing the contract; or
. permit prepayment of a contract that is not otherwise prepayable by its
terms. The prepayment may include, without limitation, a full or partial buy
out of the equipment which is the subject of the contract, or an equipment
upgrade. In the event of an early termination of a contract which has been
prepaid in full, the trust depositor will have the option to cause the trust
to reinvest the proceeds of the contract in one
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or more contracts having similar characteristics to the terminated contract.
See "--Substitute Contracts". The servicer is not authorized to permit an
early termination of a contract, without the addition to the trust of a
substitute contract, unless the amount to be prepaid, whether by the related
obligor, or through a combination of payments from the related obligor and
from the originator or servicer, on such terminated contract is equal at
least to the then discounted contract balance of the contract, plus accrued
and unpaid interest.
Non-material adjustments or modifications in contract terms may be effected by
the servicer on behalf of the trust without your consent and without affecting
the status of the contract as part of the trust.
Substitute Contracts
In the event we subsequently determine that a contract is not eligible
contract or a contract becomes a prepaid contract, a materially modified
contract or an Excess Contract, the originator will have the option to
substitute for that contract another contract having similar characteristics.
See "--Remedies for Breaches of Representations and Warranties; Definitions of
Inlegible Contract;" "--Concentration Amounts; Definitions of Excess Contracts"
and "--Material Modifications to Contracts". The ability to substitute contracts
is subject to an overall limit, in respect of the materially modified contracts,
of an aggregate amount not to exceed 10% of the aggregate discounted contract
balance of the contracts as of April 1, 1999, the initial cutoff date.
The substitute contracts will have a discounted contract balance equal to or
greater than that of the contracts being substituted and shall have a similar
weighted average life. In addition, either the final payment on the substitute
contract will be on or prior to January 31, 2006, or, to the extent the final
payment on such contract is due after January 31, 2006, only scheduled payments
due on or prior to such date may be included in the discounted contract balance
of the contract for the purpose of making any calculation under the Indenture or
the Sale and Servicing Agreement.
Definition of Defaulted Contracts
A contract will automatically be deemed to be a defaulted contract on the
earlier occurrence of either (1) or (2) below:
(1) a full contractual payment has not been received from the obligor or the
vendor, if there is vendor recourse, for 120 days or a shorter period as
the originators may determine consistent with their respective
collection policy; or
(2) if at any time the servicer determines, under its customary and usual
practices, that the contract is not collectible after taking into
account any available vendor recourse.
The current policy of the servicer with respect to writing off contracts is
described in "Heller Financial, Inc. and Heller Financial Leasing, Inc.--
Global Vendor Finance--Collection Process/Vendor Recourse" and "Heller
Financial, Inc. and Heller Financial Leasing, Inc.--Commercial Equipment
Finance--Collection/Servicing" above.
Upon classification as a defaulted contract, the servicer shall accelerate
all payments due thereunder or take any other action as the servicer reasonably
believes will maximize the amount of recoveries and shall otherwise follow its
customary and usual collection procedures, which may include the repossession
and sale of any related equipment or other security on behalf of the trust.
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Indemnification
The sale and servicing agreement provides that the servicer will indemnify
the trust depositor, the trust, the owner trustee, and the indenture trustee
from and against any loss, liability, expense, damage or injury suffered or
sustained arising out of the servicer's actions or omissions with respect to the
trust.
Under the sale and servicing agreement, the trust depositor has agreed to be
liable directly to an injured party for the entire amount of any losses, claims,
damages or liabilities arising out of or based on the arrangement created by the
sale and servicing agreement as though such agreement created a partnership
under the Illinois Uniform Limited Partnership Act in which the trust depositor
was a general partner. However, the trust depositor is not liable to you for any
losses, claims, damages or liabilities incurred by you in your capacity as an
investor in the notes. In the event a successor servicer is appointed, the
successor servicer will indemnify and hold harmless the trust depositor for any
losses, claims, damages and liabilities of the trust depositor as described in
this paragraph arising from the actions or omissions of the successor servicer.
Except as provided in the preceding paragraph, the sale and servicing agreement
provides that none of the trust depositor, the servicer or any of their
directors, officers, employees or agents will be under any other liability to
the trust, the owner trustee, the indenture trustee, the noteholders or any
other person for any action taken, or for refraining from taking any action, in
good faith under the sale and servicing agreement. However, none of the trust
depositor, the servicer or any of their directors, officers, employees or agents
will be protected against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence of any such person
in the performance of their duties or by reason of reckless disregard of their
obligations and duties thereunder.
In addition, the sale and servicing agreement provides that the servicer is
not under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its servicing responsibilities under the sale and
servicing agreement. The servicer may, in its sole discretion, undertake any
legal action which it may deem necessary or desirable for the benefit of the
noteholders with respect to the sale and servicing agreement and the rights and
duties of the parties thereunder.
Servicing Standard and Servicer Advances
The servicer is responsible for servicing, collecting, enforcing and
administering the contracts in a manner consistent with its customary and usual
procedures for servicing contracts comparable to the contracts. Although Heller
Financial, Inc. may delegate its servicing duties to a sub-servicer, it remains
liable for the performance or non-performance of those duties.
If the servicer determines that any scheduled payment with respect to any
contract which was due during the collection period was not received in full
prior to the end of that collection period, the servicer is required to advance
the unpaid scheduled payment if the servicer, in its sole discretion, determines
that it can recover its advance from subsequent payments on or with respect to
the contract. The servicer shall be entitled to reimbursement of the servicer
advances from subsequent payments on or with respect to the contract, including
collections of any prepayment amount, amounts deposited in the collection
account for the repurchase of ineligible contracts or recoveries with respect to
the contract, and, if the servicer determines that its advances will not be
recovered from the contracts to which its advances were related, from other
contracts included in the trust. If any entity, other than an affiliate of
Heller Financial, Inc., becomes a successor servicer, that entity shall have no
obligation to make the advances described in this paragraph.
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Servicer Resignation
The servicer may not resign from its obligations and duties under the sale
and servicing agreement, except upon determination that its duties are no longer
permissible under applicable law. No such resignation will become effective
until a successor to the servicer has assumed the servicer's responsibilities
and obligations under the sale and servicing agreement.
Assuming that the action complies with the sale and servicing agreement
(1) any person into which Heller Financial, Inc. or the servicer may be
merged or consolidated or consolidated;
(2) any person resulting from any merger or consolidation to which Heller
Financial Inc., or the servicer is a party; or
(3) any person succeeding to the business of Heller Financial Inc., or the
servicer will be the successor to Heller Financial, Inc., as the
servicer, under the sale and servicing agreement.
Servicer Default
In the event of any servicer default, either the indenture trustee or the
Required Holders, by written notice to the servicer and the owner trustee, and
to the indenture trustee, if given by the noteholders, may terminate all of the
rights and obligations of the servicer, as servicer, under the sale and
servicing agreement. If the indenture trustee within 60 days of receipt of the
termination notice is unable to obtain any bids from eligible servicers and the
servicer delivers an officer's certificate to the effect that the servicer
cannot in good faith cure the servicer default which gave rise to the
termination notice, then the indenture trustee shall offer the trust depositor
the right at its option to accept retransfer of the trust's assets on the
following note interest and principal payment date. The purchase price for the
retransfer of the trust's assets shall be equal to the sum of the aggregate
principal amount of all notes and certificate on such payment date plus accrued
and unpaid interest at the applicable interest rate through the date of the
retransfer. The purchase price may also include interest on interest payments
that were due but not paid when due.
The indenture trustee shall, as promptly as possible after giving a
termination notice, appoint a successor servicer and if no successor servicer
has been appointed by the indenture trustee and has accepted the appointment by
the time the servicer ceases to act as servicer, all rights, authority, power
and obligations of the servicer under the sale and servicing agreement shall
pass to and be vested in the indenture trustee. Prior to any appointment of the
successor, the indenture trustee will seek to obtain bids from potential
servicers meeting the eligibility requirements set forth in the sale and
servicing agreement to serve as a successor servicer for servicing compensation
not in excess of the servicing fee "Description of the Notes and Indenture--
Servicing Compensation and Payment of Expenses". The rights and interest of the
trust depositor under the sale and servicing agreement as holder of the
certificate will not be affected by any the termination or appointment of a
successor to the servicer.
A "servicer default" refers to any of the following events:
(a) any failure by the servicer to make any payment, transfer or deposit
or to give instructions or notice to the owner trustee or the
indenture trustee as required by the sale and servicing agreement on
or before the date occurring three business days after the date the
payment, transfer, deposit, or the instruction or notice or report is
required to be made or given, as the case may be, under the terms of
the sale and servicing agreement; or
(b) failure on the part of the servicer duly to observe or perform in any
material respect any other covenants or agreements of the servicer set
forth in the sale and servicing
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Agreement which has a material adverse effect on the noteholders,
which continues unremedied for a period of 30 days after the first to
occur of:
(1) the date on which written notice of such failure requiring the
same to be remedied shall have been given to the servicer by the
indenture trustee or to the servicer and the indenture trustee by
the noteholders or the indenture trustee on behalf of the holders
of notes aggregating not less than 25% of the principal amount of
any class of notes adversely affected thereby and
(2) the date on which the servicer becomes aware of the failure
and such failure continues to materially adversely affect the
noteholders for such period; or
(c) any representation, warranty or certification made by the servicer in
the sale and servicing agreement or in any certificate delivered
under the sale and servicing agreement shall prove to have been
incorrect when made, which has a material adverse effect on the
noteholders and which continues to be incorrect in any material
respect for a period of 30 days after the first to occur of:
(1) the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the
servicer and the owner trustee by the indenture trustee, or to the
servicer, the owner trustee and the indenture trustee by
noteholders or by the indenture trustee on behalf of holders of
notes aggregating not less than 25% of the principal amount of any
class adversely affected thereby and
(2) the date on which the servicer becomes aware of the
incorrectness, and such incorrectness continues to materially
adversely affect such holders for such period; or
(d) any event relating to bankruptcy, insolvency or receivership shall
occur with respect to the servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five business days or
referred to under clause (b) or (c) for a period of 60 days, in addition to any
period provided in (a), (b) or (c), shall not constitute a servicer default
until the expiration of such additional five business days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the servicer and such delay or failure was caused by an
act of God or other similar occurrences. Regardless of whether the events
described in (a)-(d) have occurred, the servicer is required to use its best
efforts to perform its obligations in a timely manner in as required by the sale
and servicing agreement. The servicer shall provide the owner trustee, the
indenture trustee and the trust depositor prompt notice of such failure or delay
by it, together with a description of its efforts to perform its obligations.
The servicer shall immediately notify the indenture trustee in writing of any
servicer default.
If an event relating to bankruptcy, insolvency or receivership occurs with
respect to the servicer and no other event which would result in a servicer
default has occurred, an unpaid creditor of the servicer or a representative of
creditors of the servicer, such as a trustee in bankruptcy, or the servicer
acting as a debtor-in-possession, would have the power to prevent either the
indenture trustee or the noteholders from appointing a successor servicer.
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Evidence as to Compliance
The sale and servicing agreement provides that on or before March 31 of
each calendar year the servicer will cause a firm of nationally recognized
independent public accountants to furnish a report to the effect that such firm
has applied the procedures agreed upon with the servicer and examined certain
documents and records relating to the servicing of the related contracts and
that, on the basis of such procedures, nothing came to the attention of such
firm that caused them to believe that the servicing was not conducted in
compliance with the sale and servicing agreement except for those exceptions or
errors as such firm shall believe to be immaterial and other exceptions set
forth in its statement. Those accountants may also render other services to the
servicer or the trust depositor.
The sale and servicing agreement provides for delivery to the indenture
trustee and each rating agency rating the notes on or before March 31 of each
calendar year of a statement signed by an officer of the servicer to the effect
that, to the best of the officer's knowledge, the servicer has performed its
obligations in all material respects under the sale and servicing agreement
throughout the preceding year or, if there has been a default in the performance
of any obligation, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the
indenture trustee may be obtained by a request in writing delivered to the
indenture trustee.
Amendments
The sale and servicing agreement may be amended from time to time by
agreement of the Owner trustee, the indenture trustee and the trust depositor
without your consent or the indenture trustee's consent, to cure any ambiguity
or to add any consistent provisions; provided, we obtain an opinion of counsel
stating that the amendment does not adversely affect in any material respect the
interests of any noteholder or holder of the certificate.
The sale and servicing agreement may also be amended from time to time by
the trust depositor, the servicer, the indenture trustee and the owner trustee
with the consent of the noteholders holding notes evidencing not less than
66 2/3% of the principal amount of the notes for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the sale and servicing agreement or of modifying in any manner your rights. No
amendment, however, may
(1) reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any note without the
consent of each noteholder affected thereby;
(2) change the definition of or the manner of calculating the "Class A-1
Principal Payment Amount", the "Class A-2 Principal Payment Amount", the
"Class A-3 Principal Payment Amount", the "Class A-4 Principal Payment
Amount", the "Class B Principal Payment Amount", the "Class C Principal
Payment Amount", the "Class D Principal Payment Amount", the "Additional
Principal", the "discounted contract balance", the "Required Holders",
the amounts available for distribution to noteholders or the principal
amount of the notes without the consent of each noteholder and holder of
the certificate; or
(3) reduce the aforesaid percentage required to consent to any amendment
without the consent of each holder of the security affected thereby; or
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(4) modify, amend or supplement the provisions of the sale and servicing
agreement relating to the allocation of collections on the contracts
without the consent of each noteholder; or
(5) make any security issued by the trust payable in money other than U.S.
dollars without the consent of each holder of the security affected
thereby.
Promptly following the execution of an amendment that requires the consent
of any noteholder, the owner trustee will furnish written notice of the
substance of such amendment to each affected noteholder.
The Owner Trustee
Wilmington Trust Company will be the owner trustee under the sale and
servicing agreement. Heller Financial, Inc. and its affiliates may from time to
time enter into banking and trustee relationships with the owner trustee and its
affiliates. Heller Financial, Inc. and its affiliates may hold notes in their
own names; however, any notes so held shall not be entitled to participate in
any decisions made or instructions given to the owner trustee by the noteholders
as a group.
For purposes of meeting the legal requirements of any jurisdictions in
which any part of the trust's assets may at the time be located, the owner
trustee will have the power to appoint a co-trustee or separate trustee of all
or any part of the trust's assets. To the extent permitted by law, all rights,
powers, duties and obligations conferred or imposed upon the owner trustee will
be conferred or imposed upon and exercised or performed by the owner trustee and
the separate trustee or co-trustee jointly. In any jurisdiction in which the
owner trustee will be incompetent or unqualified to perform specific acts, all
rights, powers, duties and obligations conferred or imposed upon owner trustee
will be conferred or imposed upon the separate trustee or co-trustee who shall
exercise and perform those rights, powers, duties and obligations solely at the
direction of the owner trustee.
The owner trustee may resign at any time, in which event a successor owner
trustee will be appointed as provided in the sale and servicing agreement. The
servicer may also remove the owner trustee if the owner trustee ceases to be
eligible to continue as the owner trustee under the sale and servicing
agreement. In such circumstances, a successor owner trustee will be appointed as
provided in the sale and servicing agreement. Any resignation or removal of the
owner trustee and appointment of a successor owner trustee does not become
effective until acceptance of the appointment by the successor owner trustee.
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a general and brief discussion of the material United
States federal income tax consequences of the purchase, ownership and
disposition of the notes offered by this prospectus. The discussion that
follows, and the opinion described below of Winston & Strawn, special tax
counsel to the trust depositor, are based upon current provisions of the
Internal Revenue Code of 1986, as amended, existing and proposed Treasury
Regulations, current administrative rulings, judicial decisions and other
applicable authorities in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. There are no cases, regulations, or
Internal Revenue Service rulings on comparable transactions or instruments
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to those described in this prospectus. As a results, there can be no assurance
that the IRS will not challenge the conclusions reached in this description of
Federal Income Tax Consequences, and no ruling from the IRS has been or will be
sought on any of the issues discussed below. Furthermore, legislative, judicial
or administrative changes may occur, perhaps with retroactive effect, which
could affect the accuracy of the statements set forth below.
The following is a summary of material federal income tax consequences and
therefore it does not attempt to explain fully every relevant technical aspect
of the applicable tax provisions. Additionally, some of the complex technical
rules which would not be applicable to most investors but may apply to some
specific types of investors, such as dealers in securities, have not been
included. Also, the descriptions of the relevant tax rules are intended to
explain the general application of the rules. Because this summary of material
federal income tax consequences is intended to be general in nature, it is
recommended that prospective investors consult with their own tax advisors as to
the federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of the notes.
This summary material federal income tax matters is divided into two parts.
The first part describes the classification of the notes as debt and the
treatment of the trust as a pass-thru entity rather than as a corporation or
other entity subject to tax at the entity level. The second part describes the
taxation of an investor in the notes. Under the caption "General Tax Treatment
of Noteholders" is a description of the tax consequences for what is expected to
be the typical investment situation. The description of General Tax Treatment of
Noteholders provides a summary of federal income tax consequences for investors
who are citizens or residents of the United States who purchase U.S. dollar
denominated notes for investment at a purchase price equal to the principal
amount of the notes plus accrued interest, if any. There are a variety of
technical tax rules which can be expected to apply only to some investors or in
special circumstances. Those rules are separately described under the caption
"Special Tax Rules". Those special rules apply, for example, to investors who
are foreign persons or who purchase a note at a price which is higher or lower
than a note's principal amount. It is recommended that each prospective investor
consult a tax advisor to determine whether any of the special tax rules are
applicable.
Classification of the notes and the trust
In connection with the issuance of the notes, Winston & Strawn has delivered
its opinion that, for federal income tax purposes, under existing law the trust
will not be treated as an association (or publicly traded partnership) taxable
as a corporation and the notes will be treated as indebtedness. In rendering
these opinions, Winston & Strawn has assumed that the terms of the various
documents relating to the issuance of the notes will be complied with by all of
the parties to the transaction. Those terms include a requirement, which each
investor agrees to by virtue of acquiring ownership of any beneficial interest
in a note, that the trust and the investors in the notes treat the notes a
indebtedness for federal income tax purposes. The opinion of Winston & Strawn
does not foreclose the possibility of a contrary determination by the IRS or by
a court of competent jurisdiction, or of a contrary position by the IRS or
Treasury Department in regulations or rulings issued in the future.
Although it is the opinion of Winston & Strawn that the trust will not be
treated as an association or publicly traded partnership taxable as a
corporation and the notes will be characterized as indebtedness for federal
income tax purposes, no assurance can be given that this characterization of the
trust or the notes will prevail. If, contrary to the opinion of Winston &
Strawn, the IRS successfully asserted that one or more of the notes did not
represent debt for federal income tax purposes, such notes might be treated as
equity interests
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in the trust. As a result, the trust might be classified as a publicly traded
partnership taxable as a corporation. If the trust were classified as a publicly
traded partnership taxable as a corporation, the trust would be subject to
United States federal income tax on its net income. An imposition of the
corporate-level income tax could materially reduce the amount of cash that would
be available to make payments of principal and interest on the notes.
Alternatively, if the trust were classified as a partnership other than a
publicly traded partnership taxable as a corporation, the trust itself would not
be subject to United States federal income tax. Instead, holders of notes that
were determined to be equity interests in the partnership would be required to
take into account their allocable share of the trust's income and deductions.
Such treatment may have adverse federal income tax consequences for some
noteholders. For example:
(1) income to some tax-exempt entities, including pension funds, may
constitute "unrelated business taxable income,"
(2) income to foreign holders is often subject to U.S. tax and U.S. tax
return filing and withholding requirements,
(3) individual holders might be subject to limits on their ability to deduct
their share of trust expenses, and
(4) income from the trust's assets would be taxable to noteholders without
regard to whether cash distributions are actually made by the trust or
any particular noteholder's method of tax accounting.
The discussion that follows assumes that the notes will be treated as
indebtedness for federal income tax purposes.
General Tax Treatment of Noteholders
Payments of Interest. An investor will be taxed on the amount of payments of
interest on a note as ordinary interest income at the time it accrues or is
received in a manner that is consistent with the investor's regular method of
accounting for United States federal income tax purposes.
Sale or Other Disposition of a Note. An investor who disposes of a note,
whether by sale, exchange for other property, or payment by the trust, will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale or other disposition, not including any amount attributable
to accrued but unpaid interest, and the investor's adjusted tax basis in the
note. In general, an investor's adjusted tax basis in a note will be equal to
the initial purchase price. Any gain or loss recognized upon the sale or other
disposition of a note will be capital gain or loss. For non-corporate investors,
capital gain recognized on the sale or other disposition of a note held by the
investor for more than one year will be taxed at a maximum rate of 20%. Capital
gain for a note held for one year or less is taxed at the rates applicable to
ordinary income, i.e., up to 39.6%. Taxpayers must aggregate capital gains and
losses for each taxable year. In the event a taxpayer realizes a net capital
loss for any year there are limits on the amount of capital losses which can be
deducted.
Information Reporting and Backup Withholding. The trust will be required to
report annually to the IRS, and to each non-corporate noteholder, the amount of
interest paid on the notes for each calendar year. Each non-corporate
noteholder, other than noteholders who are not subject to the reporting
requirements, will be required to provide, under penalties of perjury, a
certificate (Form W-9) containing the noteholder's name, address, correct
federal taxpayer identification number and a statement that the noteholder is
not subject to backup withholding. Should a non-exempt noteholder fail to
provide the required certification, the trust will
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be required to withhold or cause to be withheld 31% of the interest otherwise
payable to the noteholder and remit the withheld amounts to the IRS as a redact
against the noteholder's federal income tax liability.
Special Tax Rules
Special Types of investors. The reference to United States citizens or
residents in the description of General Tax Treatment of Noteholders set forth
above applies not only to individuals but also to any investor who is:
. a corporation or partnership created or organized in or under the laws
of the United States or of any political subdivision thereof,
. an estate the income of which is subject to the United States federal
income taxation regardless of its sources, or
. a trust if a court within the United States is able to exercise primary
jurisdiction over the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial
decisions of the trust.
Any investor which is not a United States citizen or resident should review the
summary below for investment in notes by foreign persons. Also, neither the
description of General Tax Treatment of Noteholders above nor this discussion of
Special Tax Rules describes tax consequences to special classes of investors,
including investors who are dealers in securities or currencies, persons holding
notes as a part of a hedging transaction, some financial institutions or
insurance companies. Those particular types of investors are subject to specific
federal income tax treatment which is not generally applicable to other
investors. This summary of Material Federal Income Tax Consequences does not
describe tax consequences for those types of investors.
Purchase at a Discount. An investor who purchases a note as part of the
initial offering by the trust for an issue price that is less than its "stated
redemption price at maturity" will be considered to have purchased the note at
an original issue discount for United States federal income tax purposes,
referred to as "OID". In general, the stated redemption price at maturity for
a note is equal to the principal amount. If a note is acquired with OID the
investor will be required to include in income each year, taxable as ordinary
income in the same manner as cash interest payments, a portion of the OID. For
cash basis investors, such as individuals, the requirement that OID be accrued
as income each year means the investor recognizes taxable income even though the
investor does not receive cash corresponding to that income. The amount of OID
accrued as income each year is based upon a formula which looks at the constant
yield on the notes and the term to maturity so as to annually allocate a
proportionate share of OID. Under these rules, investors will be required to
include in income increasingly greater amounts of OID in successive accrual
periods.
In determining whether a note has OID, the issue price of the note may not
necessarily equal the investor's purchase price, although they generally should
be approximately the same. The issue price of a note will equal the initial
offering price to the public at which price a substantial amount of the notes is
sold not including bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters or wholesalers.
If an investor acquires a note in a secondary market transaction for a
purchase price which is less than the principal amount or other amount payable
at maturity of the note, the difference is referred to for tax purposes as
market discount. Similarly to OID, an investor must accrue a portion of the
market discount each year. The amount of market discount which accrues annually
will be calculated on a straight-line basis over
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<PAGE>
the remaining term to maturity of the note unless the investor elects to accrue
market discount using the constant yield method, i.e., the OID method. Unlike
OID, however, an investor does not include accrued market discount in ordinary
income each year. Rather, the aggregate amount of accrued market discount is
included in income when an investor sells or otherwise disposes of the note. At
that time, the portion of the amount realized by the investor on the sale or
other disposition of the note equal to accrued market discount is taxed as
ordinary income (maximum tax rate of 39.6%) rather than long term capital gain
(maximum tax rate of 20%).
If an investor would prefer to be taxed on the annual accrual of market
discount each year rather than being taxed on the aggregate amount of all
accrued market discount when the note is sold or otherwise disposed of, the
investor can file an election to do so. Such an election would apply to all of
the investor's debt investments acquired in or after the taxable year in which
the notes are acquired and not just to the notes.
Whenever an investor accrues and includes in income an amount of OID or
market discount, the investor's adjusted basis in the corresponding note is
increased by that same amount. As a result, the investor would recognize a lower
capital gain or greater capital loss on the sale or other disposition of the
note.
In general, if the amount of OID or market discount would be less than 1/4th
of one percent of the note's principal or other stated redemption price at
maturity, the investor can disregard the OID or market discount rules.
Purchase at a Premium. If an investor purchases a note for a price that
exceeds the principal amount or other amount payable at maturity, the investor
will be considered to have an amortizable bond premium. An investor can elect to
accrue a portion of the premium each year as a deduction to offset interest
income on the corresponding note. The amount of premium which can be amortized
and deducted each year is calculated using a constant yield method over the
remaining term to maturity of the note. The deduction is available only to
offset interest income on the corresponding note; it cannot be used as a
deduction to the extent it exceeds taxable note interest. The adjusted tax basis
which an investor has in a note must be reduced by the amount of premium for
which a deduction is claimed. Because the basis is reduced, the investor would
recognize a larger taxable capital gain or a smaller capital loss on the sale or
other disposition of the note. If an investor elects to amortize and deduct
premium, the election will apply to all of the investor's debt investments and
not just to the notes.
Non-Standard Interest Rates. The description of General Tax treatment of
Noteholders assumes that the investor's notes provide for payment of interest at
a fixed rate or a variable rate which is tied to LIBOR, U.S. Treasury rates,
bank prime rates or similar benchmark rates. Those types of interest payable are
referred to for some federal income tax purposes as qualified stated interest.
If a note provides for interest other than qualified stated interest, the tax
consequences to an investor may differ from those described previously in this
summary. If the trust issues notes which provide for interest other than
qualified stated interest, the tax consequences will be described in the
applicable Pricing Supplement.
Foreign Currency Notes. The description of General Tax Treatment of
Noteholders assumes the notes are denominated in U.S. dollars. Special rules
apply to notes which are denominated in or determined by reference to the value
of currency units other than the U.S. dollar.
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<PAGE>
An interest payment on a foreign currency note will includible in income by
the investor based on the U.S. dollar value of the foreign currency payment
determined on the date the payment is received, regardless of whether the
payment is in fact converted to U.S. dollars at that time.
In the case of interest income on a foreign currency note that is required to
be included in income by the investor prior to receipt of payment (e.g., OID
accrual) the investor will be required to include in income the U.S. dollar
value of the amount of interest income that has accrued. Unless the investor
makes the election discussed in the next paragraph, the U.S. dollar value of
such accrued income will be determined by translating such income at the average
rate of exchange for the accrual period. Subsequently, when the investor
actually receives cash corresponding to the accrued income, the investor will
recognize, as ordinary gain or loss, foreign currency exchange gain or loss
reflecting fluctuations in currency exchange rates between the last day of the
relevant accrual period and the date of payment.
Under the so-called "spot rate convention election", an investor may elect to
translate accrued interest income into U.S. dollars at the exchange rate in
effect on the last day of the relevant accrual period. Additionally, if a
payment of the income is actually received within five business days of the last
day of the accrual period or taxable year, an electing investor may instead
translate the income into U.S. dollars at the exchange rate in effect on the day
of actual receipt. Any such election will apply to all debt instruments held by
the investor at the beginning of the first taxable year to which the election
applies or those debt instruments acquired subsequent to the election.
In order for an investor to calculate the amount of gain or loss recognized
on the sale or other disposition of a note denominated in or by reference to a
foreign currency, the investor must know the adjusted tax basis in U.S. dollars.
In general, if an investor pays for a note with foreign currency, the investor's
basis in the note is equal to the U.S. dollar value of the foreign currency on
the purchase date. An investor that purchases a foreign currency note will
recognize ordinary income or loss in an amount equal to the difference, if any,
between the investor's tax basis in the foreign currency and the U.S. dollar
market value of the foreign currency note on the date of purchase.
For purposes of determining the amount of any gain or loss recognized by the
investor on the sale or other disposition of a foreign currency note, the amount
realized by the investor from the sale or other disposition will be the U.S.
dollar value of the foreign currency received determined on the date of
disposition in the case of an accrual basis investor and on the date payment is
received in the case of a cash basis investor.
The portion of any gain or loss realized upon the sale or other disposition
of a foreign currency note that is attributable to fluctuations in currency
exchange rates will be ordinary income or loss. Such portion will equal the
difference between the U.S. dollar value of the foreign currency principal
amount of the note determined on the date the note is disposed of and the U.S.
dollar value of the foreign currency principal amount of the note determined at
the exchange rate on the date the investor acquired the note. Such foreign
currency gain or loss will be recognized only to the extent of the total gain or
loss realized by an investor on the sale or other disposition of the foreign
currency note. Any gain or loss recognized in excess of the foreign currency
gain or loss will be capital gain or loss.
Discount and premium calculations with respect to foreign currency note are
determined in the relevant foreign currency. The amount of discount or premium
that is included in or reduces income currently is determined for any accrual
period in the relevant foreign currency and then translated into U.S. dollars on
the basis of the average exchange rate in effect during the accrual period or
with reference to the spot rate
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<PAGE>
convention election as described above. Exchange gain or loss realized with
respect to the accrued discount or premium is determined and recognized as
required by the rules described above.
Foreign Investors. Special tax rules apply to the purchase of notes by
foreign persons. For U.S. tax purposes, foreign investors include any person who
is not:
. a citizen or resident of the United States,
. a corporation, partnership or other entity organized in or under the
laws of the United States or any political subdivision thereof,
. an estate the income of which is includible in gross income for U.S.
federal income tax purposes, regardless of its sources, or
. a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial
decisions of the trust.
Interest paid or accrued to a foreign investor that is not effectively
connected with the conduct of a trade or business within the United States by
the investor will generally be considered "portfolio interest" and usually will
not be subject to United States federal income tax or withholding tax as long as
the foreign investor is not actually or constructively a 10 percent shareholder
of the trust or a controlled foreign corporation related to the trust through
stock ownership and provides an appropriate statement (Form W-8) to the trust or
paying agent that is signed under penalties of perjury, certifying that the
beneficial owner of the note is a foreign person and providing that foreign
person's name and address. If the information provided in this statement
changes, the foreign investor must provide a new Form W-8 within 30 days. The
Form W-8 is effective for three years. If the foreign investor fails to satisfy
these requirements so that interest on the investor's notes was not portfolio
interest, interest payments would be subject to United States federal income and
withholding tax treaty, the foreign investor must provide the paying agent with
Form 1001. This form is also effective for three years.
Any capital gain realized on the sale or other taxable disposition of a note
by a foreign investor will be exempt from United States federal income and
withholding tax, provided that:
(1) the gain is not effectively connected with the conduct of a trade or
business in the Unites States by the investor and
(2) in the case of an individual foreign investor, the investor is not
present in the United States for 183 days or more during the taxable
year. If an individual foreign investor is present in the U.S. for 183
days or more during the taxable year, the gain on the sale or other
disposition of the notes could be subject to a 30% withholding tax
unless reduced by treaty.
If the interest, gain or income on a note held by a foreign investor is
effectively connected with the conduct of a trade or business in the United
States by the investor, the noteholder will be subject to United States federal
income tax on the interest, gain or income at regular federal income tax rates.
At the same time, the noteholder may be exempt from withholding tax if a Form
4224 is furnished to the paying agent. Form 4224 is effective for only one
calendar year. In addition, if the foreign investor is a foreign corporation, it
may be subject to a branch profits tax equal to 30% of its "effectively
connected earnings and profits" for the taxable year, as adjusted, unless it
qualifies for a lower rate under an applicable tax treaty.
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<PAGE>
Regardless of when a foreign investor acquired the note, Treasury Regulations
which will become effective for note payments made after December 31, 1999 may
change reporting requirements for some withholding agents.
If a foreign investor fails to provide necessary documentation to the trust
or its paying agent regarding the investor's taxpayer identification number or
certification of exempt status, a 31% backup withholding tax may be applied to
note payments to that investor. Any amounts withheld under the backup
withholding rules will be allowed as a refund or a credit against the foreign
investor's U.S. federal income tax liability provided the required information
is furnished to the Internal Revenue Service.
State and Local Tax Consequences
Because of the differences in state and local tax laws and their
applicability to different investors, it is not possible to summarize the
potential, state and local tax consequences of purchasing, holding or disposing
of the notes and no opinions of counsel have been obtained regarding state tax
matters. Accordingly, it is recommended that each prospective investor consult a
tax advisor regarding the state and local tax consequences of the purchase,
ownership and disposition of notes.
ERISA Considerations
The Employee Retirement Income Security Act of 1974, as amended, imposes
specific requirements on employee benefit plans subject to ERISA and prohibits
some transactions between ERISA regulated plans and persons who are "parties in
interest" (as defined under ERISA) with respect to assets of such plans. Section
4975 of the Internal Revenue Code prohibits a similar set of transactions
between specified plans or individual retirement accounts and persons who are
"disqualified persons" (as defined in the Internal Revenue Code) with respect to
Internal Revenue Code-regulated plans. Some employee benefit plans, such as
governmental plans and church plans, if no election has been made under Section
410(d) of the Internal Revenue Code, are not subject to the requirements of
ERISA or Section 4975 of the Internal Revenue Code, and assets of such plans may
be invested in the notes, subject to the provisions of other applicable federal
and state law. Any such plan which is qualified under Section 401(a) of the
Internal Revenue Code and exempt from taxation under Section 501(a) of the
Internal Revenue Code is, however, subject to the prohibited transaction rules
set forth in Section 503 of the Internal Revenue Code.
Investments by ERISA regulated plans are subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that investments comply with the terms of
the documents governing the ERISA regulated plan. Before investing in the notes,
an ERISA regulated plan fiduciary should consider, among other factors, whether
to do so is appropriate in view of the overall investment policy and liquidity
needs of the ERISA Plan.
Prohibited Transactions
In addition, Section 406 of ERISA and Section 4975 of the Internal Revenue
Code prohibit parties in interest and disqualified persons with respect to ERISA
Plans and Code Plans from engaging in some transactions involving such Plans or
"plan assets" of such Plans, unless a statutory or administrative exemption
applies to the transaction. Section 4975 of the Internal Revenue Code of 1986,
as amended and Sections 502(i) and 502(1) of ERISA provide for the imposition of
excise taxes and civil penalties on persons that
119
<PAGE>
engage or participate in such prohibited transactions. The trust depositor, the
underwriters, the servicer, the indenture trustee or the Owner trustee or their
affiliates may be considered or may become parties in interest or disqualified
persons with respect to a Plan. If so, the acquisition or holding of the notes
by, on behalf of or with "plan assets" of such Plan may be considered to give
rise to a "prohibited transaction" within the meaning of ERISA and/or Section
4975 of the Internal Revenue Code, unless an administrative exemption described
below or some other exemption is available.
The notes may not be purchased with the assets of a Plan if the trust
depositor, the underwriters, the servicer, the indenture trustee, or the owner
trustee or any of their affiliates either:
(a) has discretionary authority or control with respect to the investment
or management of such assets; or
(b) has authority or responsibility to give, or regularly gives,
investment advice with respect to such assets pursuant to an agreement
or understanding that such advice will serve as a primary basis for
investment decisions with respect to such assets and that such advice
will be based on the particular needs of the Plan; or
(c) is an employer of employees covered under the Plan unless such
investment is made through an insurance company general or pooled
separate account or a bank collective investment fund and an exemption
is available.
Depending on the relevant facts and circumstances, some prohibited
transaction exemptions may apply to the purchase or holding of the notes - for
example, Prohibited Transaction Class Exemption ("PTCE") 96-23, which exempts
transactions effected on behalf of a Plan by an "in-house asset manager;" PTCE
95-60, which exempts transactions between insurance company general accounts and
parties in interest; PTCE 91-38, which exempts transactions between bank
collective investment funds and parties in interest; PTCE 90-1, which exempts
certain transactions between insurance company pooled separate accounts and
parties in interest; or PTCE 84-14, which exempts transactions effected on
behalf of a Plan by a "qualified professional asset manager." There can be no
assurance that any of these exemptions will apply with respect to any Plan's
investment in the notes or, even if an exemption were deemed to apply, that any
exemption would apply to all prohibited transactions that may occur in
connection with such investment.
Due to the complexity of these rules and the penalties imposed, any
fiduciary or other Plan investor who proposes to invest assets of a Plan in the
notes should consult with its counsel with respect to the potential consequences
under ERISA and Section 4975 of the Internal Revenue Code of doing so.
Plan of Distribution
General
Under the terms of an underwriting agreement dated , 1999 for the sale of
the notes offered by this prospectus, the trust depositor has agreed to sell to
the underwriters has separately agreed to purchase from the trust depositor, the
principal amount of the notes set forth opposite its name below.
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Aggregate Principal Amount to be Purchased
Class A-1 Receivable-Backed Notes, Series 1999-1
------------------------------------------------
First Union Capital Markets Corp. $
Credit Suisse First Boston Corporation $
Morgan Stanley & Co. Incorporated $
Aggregate Principal Amount to be Purchased
Class A-2 Receivable-Backed Notes, Series 1999-1
Class A-3 Receivable-Backed Notes, Series 1999-1
Class A-4 Receivable-Backed Notes, Series 1999-1
------------------------------------------------
Credit Suisse First Boston Corporation $
First Union Capital Markets Corp. $
Morgan Stanley & Co. Incorporated $
Aggregate Principal Amount to be Purchased
Class B Receivable-Backed Notes, Series 1999-1
----------------------------------------------
Credit Suisse First Boston Corporation $
First Union Capital Markets Corp. $
Morgan Stanley & Co. Incorporated $
Aggregate Principal Amount to be Purchased
Class C Receivable-Backed Notes, Series 1999-1
----------------------------------------------
Credit Suisse First Boston Corporation $
First Union Capital Markets Corp. $
Morgan Stanley & Co. Incorporated $
</TABLE>
In the respective underwriting agreements, the underwriters respectively have
agreed, subject to the terms and conditions set forth the agreements, to
purchase all the notes offered by this prospectus if any of the notes are
purchased.
The underwriters of the notes have advised the trust and the trust
depositor that the underwriters propose initially to offer the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes to the public at the price
set forth on the cover page hereof and to dealers at such price less a selling
concession not in excess of [ ]% of the initial principal amount of the Class A-
1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes. The underwriters
may allow and the dealers may reallow a concession not in excess of [ ]% of the
initial principal amount of such classes of notes.
The underwriters of the Class B Notes have advised the trust and the trust
depositor that the underwriters propose initially to offer the Class B Notes to
the public at the price set forth on the cover page hereof and to dealers at
such price less a selling concession not in excess of [ ]% of the initial
principal amount of the Class B Notes. The underwriter may allow and the dealers
may reallow a concession not in excess of [ ]% of the initial principal amount
of the Class B Notes.
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<PAGE>
The underwriters of the Class C Notes have advised the trust and the trust
depositor that the underwriters propose initially to offer the Class C Notes to
the public at the price set forth on the cover page hereof and to dealers at
such price less a selling concession not in excess of [ ]% of the initial
principal amount of the Class C Notes. The underwriters may allow and the
dealers may reallow a concession not in excess of [ ]% of the initial principal
amount of the Class C Notes.
The respective underwriting agreements provide that Heller Financial and
the trust depositor, jointly and severally, will indemnify the underwriters of
the offered notes against some civil liabilities, including liabilities under
the Securities Act of 1933, as amended, or contribute to payments the respective
underwriters may be required to make.
There is currently no secondary market for the notes and you should not
assume that one will develop. The underwriters currently expect, but are not
obligated to make a market in the offered notes. You should not assume that any
such market will develop, or if one does develop, that it will continue or
provide sufficient liquidity.
Until the distribution of the offered notes is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
some selling group members to bid for and purchase the offered notes. As an
exception to these rules, the underwriters are permitted to engage in some
transactions that stabilize the price of the offered notes. These transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the offered notes.
Some of the persons participating in this offering may engage in
transactions that affect the price of the offered notes. These transactions may
include the purchase of the offered notes to cover syndicate short positions. If
the underwriters create a short position in the offered notes in connection with
the offering, i.e., if it sells more notes than are set forth on the cover page
of this prospectus, the underwriters may reduce that short position by
purchasing such classes of notes in the open market. In general, purchases of a
security to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither the originators nor the underwriters make any representations or
prediction as to the direction or magnitude of any effect that the transactions
described above, if engaged in, may have on the prices of the offered notes. In
addition, neither the originators nor the underwriters make any representation
that the underwriters will engage in those transactions or that those
transactions, once commenced, will not be discontinued without notice.
In addition, [ ] will act as the private placement agent for the trust
depositor in connection with the sale of the Class D Notes and will receive
compensation therefor.
In the ordinary course of its business, the underwriters and their
affiliates have engaged and may engage in commercial banking and investment
banking transactions with Heller Financial and its affiliates, including the
trust depositor and Heller Financial Leasing, Inc.
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Rating of the Notes
It is a condition to the issuance of the notes that they receive the
following ratings from the following rating agencies:
<TABLE>
<CAPTION>
Class Moody's Investors Service Fitch IBCA, Inc. Duff & Phelps Credit Rating Co.
- --------------- ------------------------- ---------------- -------------------------------
<S> <C> <C> <C>
Class A-1 Notes P-1 F1+/AAA D-1+
Class A-2 Notes Aaa AAA AAA
Class A-3 Notes Aaa AAA AAA
Class A-4 Notes Aaa AAA AAA
Class B Notes A1 A+ A+
Class C Notes Baa2 BBB BBB
</TABLE>
The rating will reflect only the views of the rating agencies and will be
based primarily on the subordination of some classes of notes to other classes
of notes as described in this prospectus, as well as the value and
creditworthiness of the contracts and equipment. The ratings are not a
recommendation to purchase, hold or sell the notes, since the ratings do not
comment as to market price or suitability for a particular investor. Each rating
may be subject to revision or withdrawal at any time by the assigning rating
agency. There is no assurance that any rating will continue for any period of
time or that it will not be lowered or withdrawn entirely by the rating agency
if, in its judgment, circumstances so warrant. A revision or withdrawal of the
rating may have an adverse affect on the market price of the notes. The rating
of the notes addresses the likelihood of the timely payment of interest and the
ultimate payment of principal on the notes as required by their terms. The
rating does not address the rate of prepayments that may be experienced on the
contracts and, therefore, does not address the effect of the rate of prepayments
on the return of principal to you.
Legal Matters
Winston & Strawn, Chicago, Illinois will provide a legal opinion relating
to the notes in its capacity as special counsel to the trust, the trust
depositor, the originators, the servicer and the administrator. Other legal
matters for the underwriters will be passed upon by Cadwalader, Wickersham &
Taft, New York, New York.
Experts
The balance sheet and footnote of Heller Equipment Asset Receivables Trust
1999-1 as of March 2, 1999 included in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report on page 124 and are included in
this prospectus in reliance upon the authority of Arthur Andersen LLP as experts
in giving said reports.
123
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To Heller Equipment Asset Receivables Trust 1999-1:
We have audited the accompanying balance sheet of Heller Equipment Asset
Receivables Trust 1999-1 (a Delaware corporation) as of inception, March 2,
1999. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Heller Equipment Asset Receivables
Trust 1999-1 as of inception, March 2, 1999, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Chicago, Illinois
March 26, 1999
124
<PAGE>
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
BALANCE SHEET AS OF MARCH 2, 1999
<TABLE>
<CAPTION>
<S> <C>
Assets-Cash $0
Beneficial Equity $0
Liabilities $0
</TABLE>
NOTES TO THE BALANCE SHEET
Heller Equipment Asset Receivables Trust 1999-1 (the "Trust") is limited purpose
business trust established under the laws of the State of Delaware and was
formed on March 2, 1999 by Heller Funding Corporation II (the "Trust
Depositor"), and Wilmington Trust Company (the "Owner Trustee") pursuant to the
Trust Agreement dated as of March 2, 1999 between the Trust Depositor and the
Owner Trustee. The activities of the Trust are limited by the terms of the Trust
Agreement to acquiring, owning and managing lease and loan contracts and related
assets, issuing and making payments on notes and subordinate securities and
other activities related thereto. Prior to and including March 2, 1999, the
Trust did not conduct any activities.
The Trust Depositor will pay all fees and expenses related to the organization
and operations of the Trust (including any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States or any other domestic taxing authority upon the Trust). The
Trust Depositor has also agreed to indemnify the Trustees and certain other
persons.
125
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
<S> <C>
Additional Principal................................................ 80
CEDEL............................................................... 95
Class A Percentage.................................................. 81
Class A Principal Payment Amount.................................... 81
Class A Target Investor Principal Amount............................ 81
Class B Floor....................................................... 81
Class B Percentage.................................................. 82
Class B Principal Payment Amount.................................... 82
Class B Target Investor Principal Amount............................ 82
Class C Floor....................................................... 82
Class C Percentage.................................................. 82
Class C Principal Payment Amount.................................... 82,83
Class D Percentage.................................................. 83
Class D Principal Payment Amount.................................... 83
Class D Target Investor Principal Amount............................ 83
Code Plans.......................................................... 119
Cumulative Loss Amount.............................................. 83
DTC................................................................. 95
ERISA Plans......................................................... 119
Euroclear........................................................... 95
Excess Contract..................................................... 105
Excluded Amounts.................................................... 76
Overcollaterization Balance......................................... 84
Plans............................................................... 119
PTCE................................................................ 120
Required Holders.................................................... 88
Required Reserve Amount............................................. 84
</TABLE>
126
<PAGE>
Until 90 days after the date of this prospectus, all dealers effecting
transactions in the securities offered by this prospectus, whether or not
participating in this distribution, may be required to deliver this prospectus.
This is in addition to the obligation of dealers to deliver this prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
$380,471,421
Heller Equipment Asset Receivables Trust 1999-1
$129,943,946 [ ]% Class A-1 Receivable-Backed Notes, Series 1999-1
$ 65,665,118 [ ]% Class A-2 Receivable-Backed Notes, Series 1999-1
$137,124,218 [ ]% Class A-3 Receivable-Backed Notes, Series 1999-1
$ 30,356,196 [ ]% Class A-4 Receivable-Backed Notes, Series 1999-1
$ 9,656,635 [ ]% Class B Receivable-Backed Notes, Series 1999-1
$ 7,725,308 [ ]% Class C Receivable-Backed Notes, Series 1999-1
Heller Funding Corporation II,
trust depositor
Heller Financial, Inc.,
servicer
------------------------------------
PROSPECTUS
------------------------------------
FIRST UNION CAPITAL MARKETS CORP.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be incurred in
connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $110,244
Printing and Engraving Expenses 45,000
Trustee's Fees and Expenses 20,000
Legal Fees and Expenses 200,000
Blue Sky Fees and Expenses 8,000
Accountants' Fees and Expenses 45,000
Rating Agency Fees 107,000
Miscellaneous Fees 32,500
Total $567,744
</TABLE>
___________________________
* All amounts except the SEC Registration Fee are estimates of expenses incurred
or to be incurred in connection with the issuance and distribution of the
offered notes in an aggregate principal amount assumed for these purposes to
be equal to $396,563,800 of Securities registered hereby.
Item 14. Indemnification of Directors and Officers
The General Corporation Law of Delaware (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes said corporation to buy director's
and officers' liability insurance. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
Heller Financial has also purchased liability policies which indemnify the
Registrant's officers and directors against loss arising from claims by reason
of their legal liability for acts as officers and directors, subject to
limitations and conditions as set forth in the policies.
Pursuant to agreements which the Registrant may enter into with underwriters or
agents (forms of which will be included as exhibits to this registration
statement), officers and directors of the Registrant, and affiliates thereof,
may be entitled to indemnification by such underwriters or agents against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, arising from information which has been or will be furnished to the
Registrant by such underwriters or agents that appears in the registration
statement or any prospectus.
Item 15. Recent Sales of Unregistered Securities
The Registrant intends to offer to sell approximately $8,052,057 aggregate
principal amount of Class D Receivable-Backed Notes, Series 1999-1 to accredited
investors pursuant to Section 4(2) of the Securities Act of 1933, as amended.
The private placement agent for such securities will be First Union Capital
Markets Corp.
Item 16. Exhibits and Financial Statements
<TABLE>
<CAPTION>
Exhibits
<S> <C>
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the trust depositor
3.2 Bylaws of the trust depositor
4.1 Form of Trust Agreement (including form of certificate)
4.2 Form of Indenture (including form of notes)
5.1 Opinion of Winston & Strawn with respect to legality**
</TABLE>
1
<PAGE>
8.1 Opinion of Winston & Strawn with respect to tax matters**
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)*
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (included on signature page)*
25.1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939 of indenture trustee
__________________________________
*Previously filed.
**Replaces previously filed exhibit
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(a) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 14
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the act and
will be governed by the final adjudication of such issue.
(b) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(c) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois, on March 29, 1999.
Heller Equipment Asset Receivables Trust 1999-1
By: Heller Funding Corporation II, as trust depositor
By: /s/ David R. Schmuck
----------------------------------------
Title: Vice President
Heller Funding Corporation II, as the trust depositor
By: /s/ David R. Schmuck
----------------------------------------
Title: Vice President
Pursuant to the requirements of the Act, this registration statement has
been signed by the following persons in the capacities indicated on March 29,
1999:
Signature Title
- --------- -----
*** Chief Executive Officer and Director (Principal
- --------------------------- Executive Officer)
Name: Lauralee E. Martin
*** Chief Financial Officer (Principal Financial and
- --------------------------- Accounting Officer)
Name: Lawrence G. Hund
*** Director
- ---------------------------
Name: Deepak Rai
*** Director
- ---------------------------
Name: Peter Sorensen
***/s/ David R. Schmuck
------------------------
David R. Schmuck
Attorney-in-Fact
3
<PAGE>
Registration No. 333-70507
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
HELLER FUNDING CORPORATION II
(Exact name of Registrant as specified in its charter)
_____________________
EXHIBIT VOLUME
<PAGE>
EXHIBIT INDEX
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the trust depositor
3.2 Bylaws of the Company
4.1 Form of Trust Agreement (including form of certificate)
4.2 Form of Indenture (including form of notes)
5.1 Opinion of Winston & Strawn with respect to legality**
8.1 Opinion of Winston & Strawn with respect to tax matters**
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)*
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (included on signature page)*
25.1 Statement of Eligibility and Qualification under the Trust Indenture Act
of 1939 of indenture trustee
__________________________________
*Previously filed
**Replaces previously filed exhibit
<PAGE>
Exhibit 1.1
HELLER FUNDING CORPORATION II (Trust Depositor)
HELLER FINANCIAL, INC. (Servicer)
UNDERWRITING AGREEMENT
[________________], 1999
First Union Capital Markets Corp.
[Other Underwriters]
c/o First Union Capital Markets Corp.
301 South College Street, TW-9
Charlotte, North Carolina 28288-0610
Ladies and Gentlemen:
Heller Funding Corporation II, a Delaware corporation (the "Trust
Depositor"), proposes to cause the Heller Equipment Asset Receivables Trust
1999-1 (the "Trust") to issue the asset backed notes identified in Schedule I
hereto (the "Notes"). The Notes will be issued pursuant to and secured by an
indenture (the "Indenture") to be entered into between the Trust and Norwest
Bank Minnesota, National Association as trustee (the "Indenture Trustee"), the
form of which has been filed as an exhibit to the Registration Statement (as
defined below). The Notes identified in Schedule I hereto will be sold in a
public offering through the underwriters listed in Schedule II hereto, one or
more of which may act as representative of such underwriters (any underwriter
through which Notes are sold shall be referred to herein as an "Underwriter" or,
collectively, all such Underwriters may be referred to as the "Underwriters";
any representatives thereof may be referred to herein as a "Representative"). To
the extent not defined herein, capitalized terms used herein have the meanings
assigned to such terms in the Sale and Servicing Agreement among the Trust
Depositor, the Trust, the Indenture Trustee and Heller Financial, Inc., as
Servicer (the "Servicer"), dated as of [_______________], 1999.
Section 1. Representations and Warranties. The Trust Depositor and the
Servicer, jointly and severally, represent and warrant to each Underwriter that:
(a) The Trust Depositor has prepared and filed with the Securities
and Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Securities
Act"), a registration statement on Form S-1
<PAGE>
First Union Capital Market Corp.
[_______________], 1999
(registration number 333-70507), including a form of prospectus, relating
to the Notes. The registration statement, and any post-effective amendment
thereto, each in the form heretofore delivered to you and, excluding
exhibits thereto, have been declared effective by the Commission. As used
in this Agreement, "Effective Time" means the date and the time as of which
such registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission and "Effective
Date" means the date of the Effective Time. The Trust Depositor has
furnished to you, for use by the Underwriters, copies of one or more
preliminary prospectuses (each, a "Preliminary Prospectus"), relating to
the Notes. Except where the context otherwise requires, the registration
statement, as amended at the Effective Time, including all documents filed
as a part thereof, and including any information contained in a prospectus
subsequently filed with the Commission pursuant to Rule 424(b) under the
Act and deemed to be part of the registration statement as of the Effective
Time pursuant to Rule 430A under the Act, is herein called the
"Registration Statement", and the prospectus, in the form filed by the
Trust Depositor with the Commission pursuant to Rule 424(b) under the Act
or, if no such filing is required, the form of final prospectus included in
the Registration Statement at the time it became effective, is hereinafter
called the "Prospectus".
(b) The Registration Statement relating to the Notes, has been filed
with the Commission and such Registration Statement has become effective.
No stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose has been instituted or,
to the knowledge of the Trust Depositor or Servicer, threatened by the
Commission.
(c) The Registration Statement conforms, and any amendments or
supplements thereto and the Prospectus will conform, in all material
respects to the requirements of the Securities Act and the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), and do not and will
not, as of the applicable effective date as to the Registration Statement
and any amendment thereto, as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, and as of the Closing
Date, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein no misleading; provided, however, that this
representation and warranty shall not apply to (i) that part of the
Registration Statement which shall constitute the Statement of Eligibility
and Qualification (Form T-1) of the Indenture Trustee under the Trust
Indenture Act or (ii) any Underwriters' Information (as defined in Section
10(d) hereof) contained therein. The Indenture conforms in all respects to
the requirements of the Trust Indenture Act and the rules and regulations
of the Commission thereunder.
(d) The representations and warranties of the Trust Depositor in
Section 3.01 of the Sale and Servicing Agreement will be true and correct
as of the Closing Date.
(e) The representations and warranties of the Servicer in Section
3.02 of the Sale and Servicing Agreement will be true and correct as of the
Closing Date.
-2-
<PAGE>
First Union Capital Market Corp.
[_______________], 1999
(f) The Servicer and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are duly
qualified to do business and are in good standing as foreign corporations
in each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or hold
their respective properties and to conduct the businesses in which they are
engaged, except where the failure to so qualify or have such power or
authority could not have, individually or in the aggregate, a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of the Servicer and its subsidiaries
taken as a whole.
(g) All the outstanding shares of capital stock of the Trust
Depositor have been duly authorized and validly issued, are fully paid and
nonassessable and, except to the extent set forth in the Registration
Statement, are owned by the Servicer directly or indirectly through one or
more wholly-owned subsidiaries, free and clear of any claim, lien,
encumbrance, security interest, restriction upon voting or transfer or any
other claim of any third party.
(h) (i) the Sale and Servicing Agreement, when duly executed by the
Trust Depositor and the Servicer and delivered by such parties, will
constitute a valid and binding agreement of the Trust Depositor and the
Servicer enforceable against them in accordance with its terms; (ii) the
Indenture, when duly executed by the Indenture Trustee and delivered by the
Indenture Trustee, will constitute a valid and binding agreement of the
Trust enforceable against the Trust in accordance with its terms; (iii) the
Notes, when duly executed, authenticated, issued and delivered as provided
in the Indenture, will be duly and validly issued and outstanding and will
constitute valid and binding obligations of the Trust entitled to the
benefits of the Indenture and enforceable in accordance with its terms; and
(iv) the Indenture, the Sale and Servicing Agreement, the Trust Agreement
between the Trust Depositor and Wilmington Trust Company, as Owner Trustee
and the Transfer and Sale Agreement among Heller Financial, Inc. as the
Servicer and a Seller, Heller Financial Leasing, Inc., as a Seller, and
together with Heller Financial, Inc., the "Sellers", and the Trust
Depositor (collectively, the "Transaction Agreements") and the Notes
conform to the descriptions thereof contained in the Prospectus.
(i) The execution, delivery and performance of this Agreement, the
Transaction Agreements to which the Servicer or its subsidiary, as the case
may be, is a party and the issuance and sale of the Notes, the consummation
of the transactions contemplated hereby and thereby will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Servicer or any of
its subsidiaries is bound or to which any of the property or assets of the
Servicer of any of its subsidiaries is subject, nor will such actions
result in any violation of the provisions of the charter or by-laws of the
Servicer or any of its subsidiaries or any statute or any order, rule or
regulation of any court or governmental
-3-
<PAGE>
First Union Capital Market Corp.
[_______________], 1999
agency or body having jurisdiction over the Servicer or any of its
subsidiaries or any of their properties or assets; and except for the
registration of the Notes under the Securities Act, the qualification of
the Indenture under the Trust Indenture Act, such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Exchange Act and applicable state securities laws in connection with
the purchase and distribution of the Notes by the Underwriters and the
filing of any financing statements required to perfect the Trust's interest
in the Trust Assets, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or body
is required for the execution, delivery and performance of this Agreement
or the Transaction Agreements, the issuance and sale of the Notes and the
consummation of the transactions contemplated hereby and thereby.
(j) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act and which have not been so described or
filed.
(k) There are no legal or governmental proceedings pending to which
the Servicer or any of its subsidiaries is a party or of which any property
or assets of the Servicer or any of its subsidiaries is the subject which,
individually or in the aggregate, if determined adversely to the Servicer
or any of its subsidiaries, are reasonably likely to have a material
adverse effect on the condition (financial or otherwise), results of
operations, business or prospects of the Servicer's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(l) Neither the Servicer nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its property
or assets is subject or (iii) is in violation in any respect of any law,
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject, except any violation or default that
could not have a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the Servicer
and its subsidiaries taken as a whole.
(m) This Agreement has been duly authorized, executed and delivered
by each of the Trust Depositor and the Servicer; and
(n) Neither the Trust nor the Trust Depositor is required to be
registered under the Investment Company Act of 1940, as amended.
Section 2. Purchase and Sale. Subject to the terms and conditions
and in reliance upon the covenants, representations and warranties herein set
forth, the Trust Depositor agrees to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Trust
Depositor, the principal amount of Notes set forth opposite
-4-
<PAGE>
First Union Capital Market Corp.
[_______________], 1999
such Underwriter's name in Schedule II hereto. The purchase price for the Notes
shall be as set forth in Schedule I hereto.
Section 3. Delivery and Payment. Payment for the Notes shall be made
to the Trust Depositor or to its order by wire transfer of same day funds at the
office of Winston & Strawn in Chicago, Illinois at 9:00 A.M., Illinois time, on
the Closing Date (as hereinafter defined), or at such other time on the same or
such other date as the Representative and the Trust Depositor may agree upon.
The time and date of such payment for the Notes as specified in Schedule I
hereto are referred to herein as the "Closing Date." As used herein, the term
"Business Day" means any day other than a day on which banks are permitted or
required to be closed in New York City.
Payment for the Notes shall be made against delivery to the
Representative for the respective accounts of the several Underwriters of the
Notes registered in the name of Cede & Co. as nominee of The Depository Trust
Company and in such denominations as the Representative shall request in writing
not later than two full Business Days prior to the Closing Date. The Trust
Depositor shall make the Notes available for inspection by the Representative in
New York, New York not later than one full Business Day prior to the Closing
Date.
Section 4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Notes for sale to the public, which
may include selected dealers, as set forth in the Prospectus.
Section 5. Covenants of the Trust Depositor. The Trust Depositor and
the Servicer, jointly and severally, covenant and agree with each Underwriter as
follows:
(a) The Trust Depositor will prepare the Prospectus in a form
approved by the Representative and to file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than the Commission's close of
business on the second business day following the execution and delivery of
this Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act.
(b) During the period that a prospectus relating to the Notes is
required to be delivered under the Securities Act in connection with sales
of such Notes (such period being hereinafter sometimes referred to as the
"prospectus delivery period"), before filing any amendment or supplement to
the Registration Statement or the Prospectus, the Trust Depositor will
furnish to the Representative a copy of the proposed amendment or
supplement for review and will not file any such proposed amendment or
supplement to which the Representative reasonably objects.
(c) During the prospectus delivery period, the Trust Depositor will
advise the Representative promptly after it receives notice thereof, (i)
when any amendment to the Registration Statement shall have become
effective; (ii) of any request by the Commission for any amendment or
supplement to the Registration Statement or the Prospectus or for any
additional information; (iii) of the issuance by the Commission of
-5-
<PAGE>
First Union Capital Market Corp.
[_____________________], 1999
any stop order suspending the effectiveness of the Registration Statement
or the initiation or threatening of any proceeding for that purpose, (iv)
of the issuance by the Commission of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or the initiation or
threatening of any proceedings for that purpose and (v) of any notification
with respect to any suspension of the qualification of the Notes for offer
and sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and will use its best efforts to prevent the
issuance of any such stop order or suspension and, if any is issued, will
promptly use its best efforts to obtain the withdrawal thereof.
(d) If, at any time during the prospectus delivery period, any event
occurs as a result of which the Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply with the
Securities Act, the Trust Depositor promptly will prepare and file with the
Commission, an amendment or a supplement which will correct such statement
or omission or effect such compliance.
(e) The Trust Depositor will endeavor to qualify the Notes for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and will continue such
qualification in effect so long as reasonably required for distribution of
the Notes; provided, however, that the Trust Depositor shall not be
obligated to qualify to do business in any jurisdiction in which it is not
currently so qualified; and provided, further, that the Trust Depositor
shall not be required to file a general consent to service of process in
any jurisdiction.
(f) The Trust Depositor will furnish to the Representative, without
charge, two copies of the Registration Statement (including exhibits
thereto), one of which will be signed, and to each Underwriter conformed
copies of the Registration Statement (without exhibits thereto) and, during
the prospectus delivery period, as many copies of any Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Underwriters may reasonably request.
(g) For a period from the date of this Agreement until the retirement
of the Notes, or until such time as the Underwriters shall cease to
maintain a secondary market in the Notes, whichever first occurs, the Trust
Depositor will deliver to the Underwriters (i) the annual statements of
compliance, (ii) the annual independent certified public accountants'
reports furnished to the Indenture Trustee, (iii) all documents required to
be distributed to Noteholders of the Trust and (iv) all documents filed
with the Commission pursuant to the Exchange Act or any order of the
Commission thereunder, in each case as provided to the Indenture Trustee or
filed with the Commission, as soon as such statements and reports are
furnished to the Indenture Trustee or filed or as soon thereafter as
practicable.
-6-
<PAGE>
First Union Capital Market Corp.
[_____________________], 1999
(h) To the extent, if any, that the rating provided with respect to
the Notes by the rating agency or agencies that initially rate the Notes is
conditional upon the furnishing of documents or the taking of any other
actions by the Trust Depositor, the Trust Depositor shall furnish such
documents and take any such other actions.
(i) The Trust Depositor will cause the Trust to make generally
available to Noteholders and to the Representative as soon as practicable
an earnings statement covering a period of at least twelve months beginning
with the first fiscal quarter of the Trust occurring after the Effective
Date of the Registration Statement, which shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder.
(j) For a period of 90 days from the date hereof, the Trust Depositor
will not offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or announce
any offering of, any securities collateralized by, or evidencing an
ownership interest in, any asset-backed securities of the Trust Depositor
or the Trust (other than the Notes purchased hereunder) without the prior
written consent of the Underwriters.
Section 6. Conditions to the Obligations of the Underwriters. The
respective obligations of the several Underwriters hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations and
warranties of the Trust Depositor and the Servicer contained herein, to the
accuracy of the statements of the Trust Depositor and the Servicer made in any
certificates pursuant to the provisions hereof, to the performance by the Trust
Depositor and the Servicer of their respective obligations hereunder and to each
of the following additional terms and conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424 in the manner and within the applicable time period prescribed
for such filing by the rules and regulations of the Commission under the
Securities Act and in accordance with Section 5(a) of this Agreement; and,
prior to the Closing Date, no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and
no proceedings for such purpose shall have been initiated or threatened by
the Commission; and all requests for additional information from the
Commission with respect to the Registration Statement shall have been
complied with to the reasonable satisfaction of the Representative.
(b) (i) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Transaction
Agreements, the Notes, the Registration Statement, the Preliminary
Prospectus and the Prospectus, and all other legal matters relating to such
agreements and the transactions contemplated hereby and thereby shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Trust Depositor shall have furnished to such counsel
all documents and information that they may reasonably request to enable
them to pass upon such matters and (ii) prior to or contemporaneously with
the purchase of Notes
-7-
<PAGE>
First Union Capital Market Corp.
[_____________________], 1999
hereunder, all transactions contemplated to be consummated under such
Transaction Documents on the Closing Date (including, without limitation,
the issuance and placement of any subordinated, privately-placed
securities) shall have been so consummated to the reasonable satisfaction
of the Underwriters.
(c) Winston & Strawn shall have furnished to the Representative their
written opinion, as U.S. counsel to the Trust Depositor and the Servicer,
addressed to the Underwriters and dated the Closing Date, in form and
substance reasonably satisfactory to the Underwriters.
(d) [ ] shall have furnished to the Representative his written
opinion, as Senior Counsel to the Servicer, addressed to the Underwriters
and dated the Closing Date, in form and substance reasonably satisfactory
to the Underwriters.
(e) Winston & Strawn shall have furnished to the Representative their
written opinion, as U.S. counsel to the Trust Depositor and the Servicer,
addressed to the Underwriters and dated the Closing Date, in form and
substance reasonably satisfactory to the Underwriters, with respect to the
characterization of the transfer of the Assets by the Sellers to the Trust
Depositor pursuant to the Transfer and Sale Agreement as a sale and the
non-consolidation of the Trust Depositor and the Servicer.
(f) The Representative shall have received from Cadwalader,
Wickersham & Taft, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Underwriters
may require, and the Trust Depositor shall have furnished to such counsel
such documents as they reasonably request for enabling them to pass upon
such matters.
(g) (i) [ ] shall have furnished to the Representative his
written opinion, as Senior Counsel to the Indenture Trustee, addressed to
the Underwriters and dated the Closing Date, in form and substance
reasonably satisfactory to the Underwriters and (ii) [ ] shall have
furnished to the Representative their written opinion, as counsel to the
Owner Trustee, addressed to the Underwriters and dated the Closing Date, in
form and substance reasonably satisfactory to the Underwriters.
(h) Each of the Trust Depositor and the Servicer shall have furnished
to the Representative a certificate, dated the Closing Date, of any of its
Chairman of the Board, President or Vice President and its chief financial
officer stating that (i) such officers have carefully examined the
Registration Statement and the Prospectus, (ii) the Prospectus does not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that each of the Trust Depositor and the
Servicer may exclude the Underwriters' Information (as defined in Section
10(d) herein) from such representation), (iii) the representations and
warranties of the Servicer or the Trust Depositor, as the case may be,
contained in this Agreement and the Transaction Agreements are true and
correct in all material respects on and as of the Closing Date,
-8-
<PAGE>
First Union Capital Market Corp.
[_____________________], 1999
(iv) the Servicer or the Trust Depositor, as the case may be, has complied
in all material respects with all agreements and satisfied in all material
respects all conditions on its part to be performed or satisfied hereunder
and under such agreements at or prior to the Closing Date, (v) no stop
order suspending the effectiveness of the Registration Statement has been
issued and is outstanding and no proceedings for that purpose have been
instituted and not terminated or, to the best of his or her knowledge, are
contemplated by the Commission, and (vi) since the date of its most recent
financial statements, there has been no material adverse change in the
financial position or results of operations of the Servicer or the Trust
Depositor, as applicable, or the Trust or any change, or any development
including a prospective change, in or affecting the condition (financial or
otherwise), results of operations or business of the Servicer, the Trust
Depositor or the Trust except as set forth in or contemplated by the
Registration Statement and the Prospectus.
(i) Subsequent to the date of this Agreement, there shall not have
occurred (i) any change, or any development involving a prospective change,
in or affecting particularly the business or properties of the Trust
Depositor or the Servicer which materially impairs the investment quality
of the Notes; (ii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the over-the-counter market shall
have been suspended or limited, or minimum prices shall have been
established on either of such exchanges or such market by the Commission,
by such exchange or by any other regulatory body or governmental authority
having jurisdiction, or trading in securities of the Trust Depositor or the
Servicer on any exchange or in the over-the-counter market shall have been
suspended or (iii) a general moratorium on commercial banking activities
shall have been declared by Federal or New York State authorities or (iv)
an outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the public offering or the
delivery of the Notes on the terms and in the manner contemplated in the
Prospectus.
(j) With respect to the letter of [Arthur Andersen LLP,] delivered to
the Underwriters concurrently with the execution of this Agreement (the
"initial letter"), the Trust Depositor shall have furnished to the
Underwriters a letter (the "bring-down letter") of such accountants,
addressed to the Underwriters and dated the Closing Date (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualifications of accountants under Rule 2-01 of Regulation
S-X of the Commission, (ii) stating, as of the date of the bring-down
letter (or with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the date
of such bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by its
initial letter and (iii)
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First Union Capital Market Corp.
[_____________________], 1999
confirming in all material respects the conclusions and findings set forth
in its initial letter.
(k) The Underwriters shall receive evidence satisfactory to them
that, on or before the Closing Date, UCC-1 financing statements have been
or are being filed in each office in each jurisdiction in which such
financing statements are required to perfect the first priority security
interests created by the Sale and Servicing Agreement reflecting the
interest of the Trust Depositor in the Receivables and the proceeds
thereof.
(l) Subsequent to the execution and delivery of this Agreement, (i)
no downgrade, withdrawal or qualification shall have occurred with respect
to the rating accorded the Notes or any of the Trust Depositor's other debt
securities by any "nationally recognized statistical rating organization",
as that term is defined by the Commission for purposes of Rule 436(g)(2) of
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Notes or any of the Trust Depositor's other debt securities.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 7. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representative, in its absolute discretion, by notice given
to and received by the Trust Depositor and the Servicer prior to delivery of and
payment for the Notes if, prior to that time, any of the events described in
Section 6(i) or Section 6(m) shall have occurred.
Section 8. Defaulting Underwriters. (a) If, on the Closing Date, any
Underwriter or Underwriters default in the performance of its or their
obligations under this Agreement, the Representative may make arrangements for
the purchase of such Notes by other persons satisfactory to the Trust Depositor
and the Representative, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, then each remaining non-defaulting
Underwriter shall be severally obligated to purchase the Notes which the
defaulting Underwriter or Underwriters agreed but failed to purchase on the
Closing Date in the respective proportions which the principal amount of Notes
set forth opposite the name of each remaining non-defaulting Underwriter in
Schedule I hereto bears to the aggregate principal amount of Notes set forth
opposite the names of all the remaining non-defaulting Underwriters in Schedule
I hereto; provided, however, that the remaining non-defaulting Underwriters
shall not be obligated to purchase any of the Notes on the Closing Date if the
aggregate principal amount of Notes which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds one-eleventh of
the aggregate principal amount of the Notes to be purchased on the Closing Date,
and any remaining non-defaulting Underwriter shall not be obligated to purchase
in total more than 110% of the principal amount of the Notes which it agreed to
purchase on the Closing Date pursuant to the terms of Section 2. If the
foregoing
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First Union Capital Market Corp.
[_____________________], 1999
maximums are exceeded and the remaining Underwriters or other underwriters
satisfactory to the Representative and the Trust Depositor do not elect to
purchase the Notes which the defaulting Underwriter or Underwriters agreed but
failed to purchase, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter or the Trust Depositor, except that the
provisions of Sections 9 and 13 shall not terminate and shall remain in effect.
As used in this Agreement, the term "Underwriter" includes, for all purposes of
this Agreement unless the context otherwise requires, any party not listed in
Schedule I hereto who, pursuant to this Section 8, purchases Notes which a
defaulting Underwriter agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have for damages caused by its default. If other
Underwriters are obligated or agree to purchase the Notes of a defaulting
Underwriter, either the Representative or the Trust Depositor may postpone
the Closing Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Trust Depositor or counsel
for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement, and the Trust Depositor
agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus that effects any such changes.
Section 9. Reimbursement of Underwriters' Expenses. If (i) the Trust
Depositor shall fail to tender the Notes for delivery to the Underwriters for
any reason permitted under this Agreement or (ii) the Underwriters shall decline
to purchase the Notes for any reason permitted under this Agreement, the Trust
Depositor shall reimburse the Underwriters for the fees and expenses of their
counsel and for such other out-of-pocket expenses as shall have been reasonably
incurred by them in connection with this Agreement and the proposed purchase of
the Notes, and upon demand the Trust Depositor shall pay the full amount thereof
to the Representative. If this Agreement is terminated pursuant to Section 8 by
reason of the default of one or more Underwriters, the Trust Depositor shall not
be obligated to reimburse any defaulting Underwriter on account of those
expenses.
Section 10. Indemnification. (a) The Servicer and the Trust Depositor
shall, jointly and severally, indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act (collectively referred to for the purposes of this Section 10 as
the Underwriter) against any loss, claim, damage or liability, joint or several,
or any action in respect thereof, to which that Underwriter may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement as originally filed or in any amendment thereof or supplement thereto,
or in any Preliminary Prospectus or the Prospectus or in any amendment thereof
or supplement thereto or (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each Underwriter for any
legal or other expenses reasonably incurred by that Underwriter directly in
connection with investigating or preparing to defend or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
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First Union Capital Market Corp.
[_____________________], 1999
that neither the Servicer nor the Trust Depositor shall be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any Registration Statement as originally filed
or in any amendment thereof or supplement thereto, or in any Preliminary
Prospectus or the Prospectus or in any amendment thereof or supplement thereto
in reliance upon and in conformity with the Underwriters' Information (as
defined in Section 10(d) herein).
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Trust Depositor, each of its directors, each officer of
the Trust Depositor who signed the Registration Statement and each person,
if any, who controls the Trust Depositor within the meaning of the
Securities Act (collectively referred to for the purposes of this Section
10 as the Trust Depositor), against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Trust
Depositor may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of or
is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed
or in any amendment thereof or supplement thereto, or in any Preliminary
Prospectus or the Prospectus or in any amendment thereof or supplement
thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with the Underwriters'
Information (as defined in Section 10(d) herein), and shall reimburse the
Trust Depositor for any legal or other expenses reasonably incurred by the
Trust Depositor in connection with investigating or preparing to defend or
defending against or appearing as third party witness in connection with
any such loss, claim, damage or liability (or any action in respect
thereof) as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 10, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 10 except to the extent it has been materially prejudiced by such
failure; and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 10. If any
such claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the
Representative shall have
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First Union Capital Market Corp.
[_____________________], 1999
the right to employ counsel to represent jointly the Representative and the
other Underwriters (and their respective controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity
may be sought under this Section 10) if, in the reasonable judgment of the
Representative, it is advisable for the Representative and the other
Underwriters and controlling persons to be jointly represented by separate
counsel, and in that event the fees and expenses of such separate counsel
shall be paid by the Trust Depositor and the Servicer. Each indemnified
party, as a condition of the indemnity agreements contained in Sections
10(a) and 10(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there
be a final judgment of the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment.
(d) The Underwriters confirm that the information (such information,
the "Underwriters' Information") set forth (i) in the [paragraph
immediately preceding] the caption "Reports to Noteholders" on page [2] and
(ii) in the [third and fourth] paragraphs under the caption "Plan of
Distribution" in the Prospectus is correct and constitutes the only
information furnished in writing to the Trust Depositor and the Servicer by
or on behalf of the Underwriters specifically for inclusion in the
Registration Statement and the Prospectus.
(e) The obligations of the Servicer, the Trust Depositor and the
Underwriters in this Section 10 are in addition to any other liability
which the Servicer, the Trust Depositor or the Underwriters, as the case
may be, may otherwise have.
Section 11. Contribution. If the indemnification provided for in
this Section 11 is unavailable or insufficient to hold harmless an indemnified
party under Section 10(a) or (b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
any action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Servicer and the Trust Depositor
on the one hand and the Underwriters on the other from the offering of the Notes
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Servicer and the Trust Depositor on the one hand and the Underwriters on the
other with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or any action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Servicer and the Trust Depositor on the one hand and the Underwriters on the
other with respect to such offering shall be deemed to be in the same proportion
as the total net proceeds from the offering of the Notes purchased hereunder
(before deducting expenses) received by the Trust Depositor bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Notes purchased hereunder, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things,
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First Union Capital Market Corp.
[_____________________], 1999
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Servicer or the Trust Depositor on the one hand or the
Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Servicer, the Trust Depositor and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 11 were to be determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability referred to above in
this Section 11 shall be deemed to include for purposes of this Section 11, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim or any action.
Notwithstanding the provisions of this Section 11, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes underwritten by it and distributed to the public were
offered to the public less the amount of any damages which such Underwriter has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to indemnify and
contribute as provided in this Section 11 are several in proportion to their
respective underwriting obligations and not joint.
Section 12. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Trust
Depositor, the Servicer, and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriters, the Trust Depositor
and the Servicer and their respective successors and the controlling persons and
officers and directors referred to in Sections 10 and 11 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
Section 13. Expenses. The Trust Depositor and the Servicer, jointly
and severally, agrees with the Underwriters to pay (i) the costs incident to the
authorization, issuance, sale, preparation and delivery of the Notes and any
taxes payable in that connection; (ii) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (iii) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus and the Prospectus, all as provided in this Agreement;
(iv) the costs of reproducing and distributing this Agreement and any other
underwriting and selling group documents by mail, telex or other means of
communications; (v) the fees and expenses of qualifying the Notes under the
securities laws of the several jurisdictions as provided in Section 5(e) and of
preparing, printing and distributing Blue Sky Memoranda and Legal Investment
Surveys (including the related reasonable and documented fees and expenses of
counsel to the
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First Union Capital Market Corp.
[_____________________], 1999
Underwriters); (vi) any fees charged by rating agencies for rating the Notes;
(vii) all fees and expenses of the Indenture Trustee and its counsel; (viii) any
transfer taxes payable in connection with its sale of the Notes pursuant to this
Agreement; and (ix) all other costs and expenses incident to the performance of
the obligations of the Trust Depositor and the Servicer under this Agreement;
provided that, except as otherwise provided in this Section 13, the Underwriters
shall, pay their own costs and expenses, including, the costs and expenses of
their counsel and the expenses of advertising any offering of the Notes made by
the Underwriters.
Section 14. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Trust Depositor,
the Servicer and the Underwriters contained in this Agreement or made by or on
their behalf, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Notes and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any person controlling any
of them.
Section 15. Notices. All communication hereunder shall be in writing
and, (i) if sent to the Underwriters will be mailed, delivered or telecopied and
confirmed to them at First Union Capital Markets Corp., Asset Securitization
Division, 301 South College Street, TW-9, Charlotte, North Carolina, 28288-0610,
Telecopy Number: (704) 374-3254; provided, however, that any notice to an
Underwriter pursuant to Section 9(c) shall be delivered or sent by mail,
delivery or telecopy to such Underwriter at its address set forth in its
acceptance telex to the Representative, which address will be supplied to any
other party hereto by the Representative upon request; if sent to the Trust
Depositor, will be mailed, delivered or telecopied and confirmed to them at the
address of the Trust Depositor set forth in the Registration Statement,
Attention: Chief Financial Officer; and (iii) if sent to the Servicer, will be
mailed, delivered or telecopied and confirmed to them at the address of the
Servicer set forth in the Registration Statement, Attention: Vice President and
Treasurer. Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The Trust Depositor and the Servicer
shall be entitled to act and rely upon any request, consent, notice or agreement
given or made on behalf of the Underwriters by the Representative.
Section 16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
Section 17. Submission to Jurisdiction Appointment of Agent for
Service; Currency Indemnity. (a) To the fullest extent permitted by applicable
law, each of the Trust Depositor and the Servicer irrevocably submits to the
jurisdiction of any Federal or State court in the City, County and State of New
York, United States of America, in any suit or proceeding based on or arising
under this Agreement, and irrevocably agrees that all claims in respect of such
suit or proceeding may be determined in any such court. Each of the Trust
Depositor and the Servicer hereby irrevocably and fully waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. Each of the
Trust Depositor and the Servicer hereby irrevocably designates and appoints CT
Corporation (the "Process Agent"), as its authorized agent upon whom process may
be served in any such suit or proceeding, it being
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First Union Capital Market Corp.
[_____________________], 1999
understood that the designation and appointment of CT Corporation as such
authorized agent shall become effective immediately without any further action
on the part of the Trust Depositor or the Servicer. Each of the Trust Depositor
and the Servicer represents to each Underwriter that it has notified the Process
Agent of such designation and appointment and that the Process Agent has
accepted the same in writing. Each of the Trust Depositor and the Servicer
hereby irrevocably authorizes and directs the Process Agent to accept such
service. Each of the Trust Depositor and the Servicer further agrees that
service of process upon the Process Agent and written notice of said service to
the Trust Depositor or the Servicer, as the case may be, mailed by first class
mail or delivered to the Process Agent at its principal office, shall be deemed
in every respect effective service of process upon the Trust Depositor or the
Servicer, as the case may be, in any such suit or proceeding. Nothing herein
shall affect the right of any Underwriter or any person controlling any
Underwriter to serve process in any other manner permitted by law. Each of the
Trust Depositor and the Servicer agrees that a final action in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other lawful manner.
(b) The obligation of the parties to make payments hereunder is in
U.S. dollars (U.S. dollars and such other currencies referred to above being
called the "Obligation Currency") and such obligation shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any currency other than the Obligation Currency or any other
realization in such other currency, whether as proceeds of set-off, security,
guarantee, distributions, or otherwise, except to the extent to which such
tender, recovery or realization shall result in the effective receipt by the
party which is to receive such payment of the full amount of the Obligation
Currency expressed to be payable hereunder, and the party liable to make such
payment agrees to indemnify the party which is to receive such payment (as an
additional, separate and independent cause of action) for the amount (if any) by
which such effective receipt shall fall short of the full amount of the
Obligation Currency expressed to be payable hereunder and such obligation to
indemnify shall not be affected by judgment being obtained for any other sums
due under this Agreement.
Section 18. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall. together constitute one and the same instrument.
Section 19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
Section 20. Effectiveness. This Agreement shall become effective
upon execution and delivery.
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<PAGE>
If you are in agreement with the foregoing, please sign the
counterpart hereof and return it to the Trust Depositor, whereupon this letter
and your acceptance shall become a binding agreement among the Trust Depositor,
the Servicer and the several Underwriters.
Very truly yours,
HELLER FUNDING CORPORATION II
By: _______________________________
Name:
Title:
HELLER FINANCIAL, INC.
By: _______________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date hereof.
FIRST UNION CAPITAL MARKETS CORP., as
Representative of the Underwriters
named in Section II hereto
By: _______________________________
Name:
Title:
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<PAGE>
If you are in agreement with the foregoing, please sign the
counterpart hereof and return it to the Trust Depositor, whereupon this letter
and your acceptance shall become a binding agreement among the Trust Depositor,
the Servicer and the several Underwriters.
Very truly yours,
HELLER FUNDING CORPORATION II
By: _______________________________
Name:
Title:
HELLER FINANCIAL, INC.
By: _______________________________
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date hereof.
FIRST UNION CAPITAL MARKETS CORP., as
Representative of the Underwriters
named in Section II hereto
By: _______________________________
Name:
Title:
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SCHEDULE I
Date of Underwriting Agreement: [____________], 1999
Underwriters: First Union Capital Markets Corp.
[Other Underwriters]
Representative and Address: First Union Capital Markets Corp.
One First Union Center, TW-9
301 South College Street
Charlotte, NC 28288-0610
Title, Purchase Price and Description of Notes:
Class A-1 Notes
---------------
Title: $[____________] [____]% Class A-1 Receivable-Backed
Notes, Series 1999-1
Price to public: $[____________]
Purchase price: $[____________]
Underwriting discount: $[____________]
Distribution Dates: The 25th calendar day of each month (if such day is
not a Business Day, then next succeeding Business
Day), commencing
[____________], 1999
Maturity: [____________] Distribution Date
Redemption provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date
at the Trust Depositor's option if the ADCB of the
Contract Pool at such time is less than [10]% of
the initial ADCB of the Contract Pool as of the
Cutoff Date.
Class A-2 Notes
---------------
Title: $[____________] [_____]% Class A-2 Receivable-
Backed Notes, Series 1999-1
Price to public: $[____________]
Purchase price: $[____________]
Underwriting discount: $[____________]
Distribution Dates: The 25th calendar day of each month (if such day is
not a Business Day, then next succeeding Business
Day), commencing [____________], 1999
Maturity: [____________] Distribution Date
Redemption provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date at
the Trust Depositor's option if the ADCB of the
Contract Pool at such time is less than [10]% of
the initial ADCB of the Contract Pool as of the
Cutoff Date.
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First Union Capital Market Corp.
[____________________], 1999
Class A-3 Notes
---------------
Title: $[____________] [____]% Class A-3 Receivable-
Backed Notes, Series 1999-1
Price to public: $[____________]
Purchase price: $[____________]
Underwriting discount: $[____________]
Distribution Dates: The 25th calendar day of each month (if such day
is not a Business Day, then next succeeding
Business Day), commencing [____________], 1999
Maturity: [____________] Distribution Date
Redemption provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date
at the Trust Depositor's option if the ADCB of
the Contract Pool at such time is less than
[10]% of the initial ADCB of the Contract Pool
as of the Cutoff Date.
Class A-4 Notes
---------------
Title: $[____________] [_____]% Class A-4 Receivable-
Backed Notes, Series 1999-1
Price to public: $[____________]
Purchase price: $[____________]
Underwriting discount: $[____________]
Distribution Dates: The 25th calendar day of each month (if such day
is not a Business Day, then next succeeding
Business Day), commencing [____________], 1999
Maturity: [____________] Distribution Date
Redemption provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date
at the Trust Depositor's option if the ADCB of
the Contract Pool at such time is less than
[10]% of the initial ADCB of the Contract Pool
as of the Cutoff Date.
Class B Notes
-------------
Title: $[ ] [ ]% Class B Receivable-Backed
Notes, Series 1999-1
Price to public: $[ ]
Purchase price: $[ ]
Underwriting discount: $[ ]
Distribution Dates: The 25th calendar day of each month (if such day
is not a Business Day, then next succeeding
Business Day), commencing [____________], 1999
Maturity: [____________] Distribution Date
Redemption provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date
at the Trust
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First Union Capital Market Corp.
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Depositor's option if the ADCB of the Contract
Pool at such time is less than [10]% of the
initial ADCB of the Contract Pool as of the
Cutoff Date.
Class C Notes
-------------
Title: $[____________] [____]% Class C Receivable-
Backed Notes, Series 1999-1
Price to public: $[____________]
Purchase price: $[____________]
Underwriting discount: $[____________]
Distribution Dates: The 25th calendar day of each month (if such day
is not a Business Day, then next succeeding
Business Day), commencing [____________], 1999
Maturity: [____________] Distribution Date
Redemption provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date
at the Trust Depositor's option if the ADCB of
the Contract Pool at such time is less than
[10]% of the initial ADCB of the Contract Pool
as of the Cutoff Date.
Class D Notes
-------------
Title: $[____________] [____]% Class D Receivable-
Backed Notes, Series 1999-1
Price to public: $[____________]
Purchase price: $[____________]
Underwriting discount: $[____________]
Distribution Dates: The 25th calendar day of each month (if such day
is not a Business Day, then next succeeding
Business Day), commencing [____________], 1999
Maturity: [____________] Distribution Date
Redemption provisions: Notes remaining outstanding may be redeemed in
whole, but not in part, on any Distribution Date
at the Trust Depositor's option if the ADCB of
the Contract Pool at such time is less than
[10]% of the initial ADCB of the Contract Pool
as of the Cutoff Date.
Closing Date, Time and Location:
Date: [____________], 1999
Time: 9:00 Chicago Time
Location:
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<PAGE>
SCHEDULE II
UNDERWRITERS
$[____________] Principal Amount of Class A-1 Notes to be Purchased
Principal Amount
----------------
First Union Capital Markets Corp. $[_____________]
[Other Underwriter] $[_____________]
[Other Underwriter] $[_____________]
UNDERWRITERS
$[____________] Principal Amount of Class A-2 Notes to be Purchased
Principal Amount
----------------
First Union Capital Markets Corp. $[_____________]
[Other Underwriter] $[_____________]
[Other Underwriter] $[_____________]
UNDERWRITERS
$[____________] Principal Amount of Class A-3 Notes to be Purchased
Principal Amount
----------------
First Union Capital Markets Corp. $[_____________]
[Other Underwriter] $[_____________]
[Other Underwriter] $[_____________]
UNDERWRITERS
$[____________] Principal Amount of Class A-4 Notes to be Purchased
Principal Amount
----------------
First Union Capital Markets Corp. $[_____________]
[Other Underwriter] $[_____________]
[Other Underwriter] $[_____________]
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<PAGE>
First Union Capital Market Corp.
[____________________], 1999
UNDERWRITER
$[____________] Principal Amount of Class B Notes to be Purchased
Principal Amount
----------------
First Union Capital Markets Corp. $[_____________]
UNDERWRITER
$[____________] Principal Amount of Class C Notes to be Purchased
Principal Amount
----------------
First Union Capital Markets Corp. $[_____________]
UNDERWRITER
$[____________] Principal Amount of Class D Notes to be Purchased
Principal Amount
----------------
First Union Capital Markets Corp. $[_____________]
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<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
HELLER FUNDING CORPORATION II
ARTICLE I
NAME
The name of the corporation (hereinafter called the "Corporation") is
Heller Funding Corporation II.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the State of Delaware
is 1013 Centre Road, Wilmington, County of New Castle. The name of its
registered agent at such address is Corporation Service Company.
ARTICLE III
CORPORATE PURPOSES
The nature of the business to be conducted or promoted by the Corporation
is to engage in the following activities:
(a) to purchase or otherwise acquire, own, hold, transfer or sell
interests in, or interests in pools of, accounts, drafts, notes receivable,
installment sale agreements, conditional sale agreements, promissory notes
with or without related security agreements, operating and finance leases,
installment payment agreements and similar types of financing agreements or
obligations or rights to payment thereunder or arising in connection
therewith, including monies paid, due or to become due thereunder or in
connection therewith, and together with any related collateral security or
contract rights, whether constituting real or personal property, securing
such agreements or obligations or supporting the payment thereof (including
the acquisition of ownership interests in real or personal property the
subject of leases) (collectively, any of the foregoing the "Assets");
(b) to enter into, and perform its obligations under, any agreements
with affiliates relating to or effecting the transfers and conveyances of
Assets as described above;
(c) to transfer the Assets or interests therein, pursuant to one or
more indentures, pooling agreements, pooling and servicing agreements, sale
agreements, receivables purchase agreements, sale and servicing agreements
or other agreements ("Agreements")
<PAGE>
entered into by and among, among others, the Corporation, Variable Funding
Capital Corporation and Alpine Securitization Corporation as well as
certain other financing entities (collectively hereinafter referred to as
the "Entities"), and to perform its obligations under any such Agreements;
(d) to hold and enjoy any and all of the rights and privileges of any
certificates ("Certificates"), notes ("Notes"), participation interests
("Participation Interests"), deferred payments ("Deferred Payments") or
other ownership interests ("Ownership Interests") issued by or sold by the
Entities to the Corporation under the related Agreements and to hold and
enjoy all of the rights and privileges of any class of any series of
Certificates, Notes, Participation Interests, Deferred Payments or
Ownership Interests including any class of Certificates, Notes,
Participation Interests, Deferred Payments or Ownership Interests which may
be subordinate to any other class of Certificates, Notes, Participation
Interests, Deferred Payments or Ownership Interests and except to the
extent otherwise provided in any Certificates, Notes, Participation
Interests, Deferred Pavements, Ownership Interests or Agreement, to sell,
assign, pledge or otherwise transfer any such Certificates, Notes,
Participation Interests, Deferred Payments or Ownership Interests or any
interest therein;
(e) to perform its obligations under the Agreements pursuant to which
any Certificates, Notes, Participation Interests, Deferred Payments or
other Ownership Interests are issued, sold or serviced;
(f) to invest the proceeds derived from the sale or ownership of the
Assets as determined by the Corporation's Board of Directors;
(g) to enter into hedging arrangements in connection with the purchase
or sale of any Assets; and
(h) to enter into any additional agreements or undertakings, engage in
any further activities, and to exercise any other powers permitted to
corporations organized under the laws of the State of Delaware, that are
related or incidental to the foregoing and necessary, convenient or
advisable to accomplish the foregoing.
ARTICLE IV
COMMON STOCK
The total number of shares of capital stock which the Corporation has
authority to issue is one thousand (1,000) shares, designated as Common Stock,
and all of such shares shall be without par value.
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<PAGE>
ARTICLE V
DENIAL OF PREEMPTIVE RIGHTS
No holder of any class of capital stock of the Corporation, whether now or
hereafter authorized, shall be entitled, as such, as a matter of right, to
subscribe for or purchase any part of any new or additional issue of capital
stock of the Corporation of any class whatsoever, or of securities convertible
into or exchangeable for capital stock of the Corporation of any class
whatsoever, whether now or hereafter authorized, or whether issued for cash,
property or services.
ARTICLE VI
POWERS OF BOARD OF DIRECTORS
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws, except as otherwise
expressly provided in any By-Law made by the holders of the capital stock
of the Corporation entitled to vote thereon. Any By-Law may be altered,
amended or repealed by the holders of the capital stock of the Corporation
entitled to vote thereon at any annual meeting or at any special meeting
called for that purpose; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the Board of
Directors which would have been valid if such By-Laws had not been adopted.
(b) Subject to the provisions of Article III, to take, lease, purchase
or otherwise acquire, and to own, use, hold, sell, convey, exchange, lease,
mortgage or otherwise encumber, work, improve, develop, divide and
otherwise handle, deal in, or dispose of real estate, real and personal
property and any interest or right therein.
(c) To determine the use and disposition of any surplus and net
profits of the Corporation, including the determination of the amount of
working capital required, to set apart out of any of the funds of the
Corporation, whether or not available for dividends, a reserve or reserves
for any proper purpose and to abolish any such reserve in the manner in
which it was created.
(d) To designate, by resolution passed by a majority of the whole
Board of Directors, one or more committees, each committee to consist of
one or more directors of the Corporation, which, to the extent provided in
the resolution designating the committee or in the By-Laws of the
Corporation, shall, subject to the limitations prescribed by law, have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to
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<PAGE>
be affixed to all papers which may require it. Such committee or committees
shall have such name or names as may be determined from time to time by
resolution adopted by a majority of the whole Board of Directors.
(e) To exercise, in addition to the powers and authorities
hereinbefore or by law conferred upon it, any such powers and authorities
and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the laws of the
State of Delaware and of the Certificate of Incorporation, including
without limitation Article III hereof and of the By-Laws of the
Corporation.
ARTICLE VII
CORPORATE RESTRICTIONS
(a) At all times that the Corporation has outstanding obligations to the
Entities relating to the Assets, the Board of Directors shall include at least
one individual who is an Independent Director. As used herein, an "Independent
Director" shall be an individual who: (i) is not and has not been employed by
Heller Financial, Inc. ("Heller Financial") or any of its subsidiaries or
affiliates, as a director, officer, employee, partner, attorney or counsel
within the five years immediately prior to such individual's appointment as an
Independent Director; (ii) is not (and is not affiliated with a company or a
firm that is) a significant advisor or consultant to Heller Financial or any of
its subsidiaries and affiliates; (iii) is not affiliated with a significant
customer or supplier of Heller Financial or any of its subsidiaries or
affiliates; (iv) is not affiliated with a company of which Heller Financial or
any of its subsidiaries and affiliates is a significant customer or supplier,
(v) does not have significant personal services contract(s) with Heller
Financial or any of its subsidiaries or affiliates; (vi) is not affiliated with
a tax-exempt entity that receives significant contributions from Heller
Financial or any of its subsidiaries or affiliates; (vii) is not the beneficial
owner at the time of such individual's appointment as an Independent Director,
or at any time thereafter while serving as an Independent Director, of such
number of shares of any classes of common stock of Heller Financial the value of
which constitutes more than 5% of the outstanding common stock of Heller
Financial; (viii) does not at any time hold any beneficial or economic interest
in the Corporation; and (ix) is not a spouse, parent, sibling or child of any
person described in clauses (i) through (viii).
(b) As used in paragraph (a) of this Article VII, the following terms shall
have the following meanings:
(i) an "affiliate" of a person, or a person "affiliated with," a
specified person, shall mean a person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, the specified person.
(ii) The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through
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<PAGE>
the ownership of voting securities, by contract, or otherwise; provided,
however, that a person shall not be deemed to control another person solely
because he or she is a director of such other person.
(iii) The term "person" shall mean any individual, partnership, firm,
corporation, association, trust, unincorporated organization or other
entity, as well as any syndicate or group deemed to be a person pursuant to
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, as in
effect on the date of incorporation of the Corporation.
(iv) A "subsidiary" of Heller Financial shall mean any corporation a
majority of the voting stock of which is owned, directly or indirectly
through one or more other subsidiaries by Heller Financial.
(v) A person shall be deemed to be, or to be affiliated with, a
company or firm that is a "significant advisor or consultant to Heller
Financial or any of its subsidiaries or affiliates" if he, she, or it, as
the case may be, received or would receive fees or similar compensation
from Heller Financial or any of its subsidiaries or affiliates in excess of
the lesser of (A) 3% of the consolidated gross revenues which Heller
Financial and its subsidiaries received for the sale of their products and
services during the last fiscal year of Heller Financial; (B) 5% of the
gross revenues of the person during the last calendar year if such person
is a self-employed individual; and (C) 5% of the consolidated gross
revenues received by such company or firm for the sale of its products and
services during its last fiscal year, if the person is a company or firm;
provided, however, that director's fees and expense reimbursements shall
not be included in the gross revenues of an individual for purposes of this
determination.
(vi) A "significant customer of Heller Financial or any of its
subsidiaries or affiliates" shall mean a customer from which Heller
Financial and any of its subsidiaries or affiliates collectively in the
last fiscal year of Heller Financial received payments in consideration for
the products and services of Heller Financial and its subsidiaries or
affiliates which are in excess of 3% of the consolidated gross revenues of
Heller Financial and its subsidiaries during such fiscal year.
(vii) A "significant supplier of Heller Financial or any of its
subsidiaries or affiliates" shall mean a supplier to which Heller Financial
and any of its subsidiaries or affiliates collectively in the last fiscal
year of Heller Financial made payments in consideration for the supplier's
products and services in excess of 3% of the consolidated gross revenues of
Heller Financial and its subsidiaries during such fiscal year.
(viii) Heller Financial or any of its subsidiaries and affiliated
shall be deemed a "significant customer" of a company if Heller Financial
and any of its subsidiaries and affiliates collectively were the direct
source during such company's last fiscal year of in excess of 5% of the
gross revenues which such company received for the sale of its products and
services during such fiscal year.
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<PAGE>
(ix) Heller Financial or any of its subsidiaries and affiliates shall
be deemed a "significant supplier" of a company if Heller Financial and any
of its subsidiaries and affiliates collectively received in such company's
last fiscal year payments from such company in excess of 5% of the gross
revenues which such company received during such fiscal year for the sale
of its products and services.
(x) A person shall be deemed to have "significant personal services
contract(s) which Heller Financial or any of its subsidiaries or
affiliates" if the fees and other compensation received by the person
pursuant to personal services contract(s) with Heller Financial and any of
its subsidiaries or affiliates exceed or would exceed 5% of his or her
gross revenues during the last calendar year.
(xi) A tax-exempt entity shall be deemed to receive significant
contributions from Heller Financial or any of its subsidiaries or
affiliates if such tax-exempt entity received during its last fiscal year
contributions from Heller Financial or its subsidiaries or affiliates in
excess of the lesser of (A) 3% of the consolidated gross revenues of Heller
Financial and its subsidiaries during such fiscal year and (B) 5% of the
contributions received by the tax-exempt entity during such fiscal year.
(c) Notwithstanding any other provision of the Certificate of Incorporation
or any provision of law that otherwise so empowers the Corporation, the
Corporation shall not, without (i) the affirmative vote of 100% of the members
of the Board of Directors of the Corporation, (ii) the affirmative vote of
shareholders holding at least two-thirds (2/3) of the total number of
outstanding shares of Common Stock of the Corporation, and (iii) written
confirmation, from each nationally recognized rating agency which has rated
Securities issued by the Corporation or by any Trust established or funded by
the Corporation, that the then current ratings on such Securities will not be
reduced or withdrawn as a result thereof, do any of the following:
(A) engage in any business or activity other than those set forth in
Article III;
(B) incur any indebtedness for borrowed money, or assume or guaranty any
indebtedness of any other entity, other than (x) indebtedness evidenced by, or
incurred in connection with, any issue of Securities, (y) indebtedness not
exceeding 1% of the Corporation's total assets at such time on account of
incidentals or services supplied or furnished to the Corporation in the ordinary
course of its business, and (z) indebtedness to Heller Financial or any
affiliate thereof incurred in connection with the acquisition of Assets, which
indebtedness shall be subordinated to all obligations under the Agreements;
(C) dissolve or liquidate, in whole or in part; or consolidate or merge
with or into any other entity or convey, transfer or lease its properties and
assets substantially as an entirety to any entity, or permit any entity to merge
into it or convey, transfer or lease its properties and assets substantially as
an entirety to it, unless:
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<PAGE>
(y) the entity (if other than the Corporation) formed or surviving the
consolidation or merger or which acquires the properties and assets of the
Corporation is organized and existing under the laws of any State of the
United States or the District of Columbia; expressly assumes the due and
punctual payment of, and all obligations of the Corporation, including
those obligations of the Corporation under any Agreement; and has a
Certificate of Incorporation containing provisions substantially identical
to the provisions of Article III, this Article VII, Article XIV, and
Article XV; and
(z) immediately after giving effect to the transaction, no default or
event of default has occurred and is continuing under any indebtedness of
the Corporation or any agreement relating to such indebtedness.
(d) Notwithstanding any other provision of the Certificate of Incorporation
or any provision of law that otherwise so empowers the Corporation, the
Corporation shall not, for so long as the Corporation is able to pay its debts
generally as they become due, and without the affirmative vote of 100% of the
members of the Board of Directors of the Corporation, (i) institute proceedings
to be adjudicated bankrupt or insolvent, (ii) consent to the institution of
bankruptcy or insolvency proceedings against it, (iii) file a petition seeking
or consent to reorganization or relief under any applicable federal or state law
relating to bankruptcy, (iv) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, or sequestrator (or other similar official) of
the Corporation or a substantial part of its property, (v) make any assignment
for the benefit of creditors or admit its inability to pay its debts generally
as they become due, or (vi) authorize or take corporate action in furtherance of
any such action. If there shall not be, as and to the extent required by this
Article VII, an Independent Director then in office and acting as required by
this Article VII, a vote on any matter set forth in this paragraph (d) shall not
be taken unless and until an Independent Director meeting the requirements of
this Article VII shall have been appointed and qualified.
ARTICLE VIII
DIRECTORS PROTECTED
A member of the Board of Directors of the Corporation, or a member of any
committee designated by the Board of Directors, shall, in the performance of
his/her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information, opinions,
report or statements as are presented to the Corporation by any of the
Corporation's officers or employees or committees of the Board of Directors, or
by any other person as to matters the member reasonably believes are within such
other person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Corporation. Neither the amendment nor
repeal of this Article VIII, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this Article VIII, shall
eliminate or reduce the effect of this Article VIII in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article
VIII, would accrue or arise prior to such amendment, repeal or adoption of an
inconsistent provision.
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<PAGE>
ARTICLE IX
CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
ARTICLE X
NO LIABILITY OF HOLDERS OF CAPITAL STOCK
FOR CORPORATE DEBTS
The holder or holders of the capital stock of the Corporation shall not be
personally or directly liable for the payment of the Corporation's debts and the
private property of the holders of the capital stock of the Corporation shall
not be subjected to the payment of debts of the Corporation to any extent
whatsoever.
ARTICLE XI
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the Board of
Directors or committee thereof which authorizes the contract or transaction, or
solely because his/her or their votes are counted for such purpose, if: (1) the
material facts as to the relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good faith authorizes the
contract or transaction by the affirmative vote of a majority of disinterested
directors, even though the disinterested directors be less than a quorum; or (2)
the material facts as to the relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by the vote of the stockholders; or (3) the contract or transaction is fair as
to the Corporation as of the time it is authorized, approved or ratified by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or of a committee thereof which authorizes the
contract or transaction.
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<PAGE>
ARTICLE XII
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
(a) Any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that he/she is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent (for
purposes of this Article, such person shall include a trustee) of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless by the Corporation to the fullest extent legally
permissible under the General Corporation Law of the State of Delaware, as
amended from time to time, against all expenses, liabilities and losses
(including attorneys' fees and disbursements), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he/she acted in good faith and in a manner
he/she reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; provided, that any amounts
payable by the Corporation in accordance with this subsection (a) of Article XII
hereof, shall be payable solely to the extent of funds actually received by the
Corporation in excess of funds necessary to pay in full all outstanding
Securities rated by a nationally recognized rating agency. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person seeking indemnification did not act in good faith
and in a manner which he/she reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his/her conduct was unlawful.
Entry of a judgment by consent as part of a settlement shall not be deemed a
final adjudication of liability for negligence or misconduct in the performance
of duty, nor of any other issue or matter.
(b) To the extent that a director, officer, employee or agent of, or
serving at the request of, the Corporation (as described in clause (a) of this
Article XII) has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in clause (a), or in defense of any
claim, issue or matter therein, he/she shall be indemnified by the Corporation
against expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by him/her in connection therewith without the necessity of
any action being taken by the Corporation other than the determination, in good
faith, that such defense has been successful. In all other cases wherein
indemnification is provided by this Article XII, unless ordered by a court,
indemnification shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he/she has met
the applicable standard of conduct specified in this Article XII. 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 that a quorum, or
(2) if there are no such directors, or if such directors
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<PAGE>
so direct, by independent legal counsel in a written opinion, or (3) by the
holders of a majority of the shares of capital stock of the Corporation entitled
to vote thereon.
(c) Expenses (including attorneys' fees and disbursements) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of any
undertaking by or on behalf of such director or officer to repay such amount
unless it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation. Expenses (including attorneys' fees and
disbursements) incurred by other employees or agents in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding upon such terms and conditions, if any, as the Board of Directors
deems appropriate.
(d) No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this clause (d) of this
Article XII shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
(e) The indemnification and advancement of expenses provided by this
Article XII shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in an official capacity and as to action in another capacity while
holding such office, and shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
(f) By action of the Board of Directors, notwithstanding any interest of
the directors in such action, the Corporation may purchase and maintain
insurance, in such amounts as the Board of Directors deems appropriate, on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against
him/her and incurred by him/her in any such capacity, or arising out of his/her
status as such, whether or not the Corporation shall have the power to indemnify
him against such liability under the provisions of this Article XII.
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ARTICLE XIII
COMPROMISE OR ARRANGEMENT BETWEEN CORPORATION
AND ITS CREDITORS OR STOCKHOLDERS
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting
of the creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
ARTICLE XIV
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
The Corporation shall not amend, alter, change or repeal Article III,
Article VII, this Article XIV or Article XV unless it has received (i) prior
written confirmation from each nationally recognized rating agency which has
rated any Securities that the current ratings on such Securities will not be
reduced or withdrawn as a result of such amendment, alteration, change or
repeal, (ii) the affirmative vote of 100% of the members of the Board of
Directors (which shall include an Independent Director) of the Corporation, and
(iii) the affirmative vote of shareholders holding at least two-thirds (2/3) of
the total number of outstanding shares of capital stock of the Corporation
entitled to vote thereon. Subject to the foregoing limitation, the Corporation
reserves the right to amend, alter, change or repeal any provision contained in
this Certificate of Incorporation, in the manner now or hereafter prescribed by
the law of the State of Delaware, and all the provisions of this Certificate of
Incorporation and all rights and powers conferred in this Certificate of
Incorporation on stockholders, directors and officers are subject to this
reserved power.
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ARTICLE XV
CORPORATE PROCEDURES
(a) The Corporation's assets will not be commingled with those of any
direct or ultimate parent of the Corporation or any other person or entity and
will hold all of its assets in its own name;
(b) The Corporation will maintain separate corporate records and books of
account from those of any subsidiaries, affiliates, or the direct or ultimate
parent of the Corporation or any other person or entity;
(c) The Corporation will not transfer any direct or indirect ownership
interest of more than a 49% interest therein, unless such transfer is
conditioned upon the delivery of a non-consolidation opinion acceptable to the
Entities;
(d) The Corporation will maintain bank accounts separate from any other
person or entity;
(e) The Corporation will maintain separate financial statements, showing
its assets and liabilities separate and apart from those of any other person or
entity and not to have its assets listed on the financial statement of any other
entity;
(f) The Corporation will pay its own liabilities and expenses solely out of
its own funds;
(g) The Corporation will observe all corporate and other organizational
formalities;
(h) The Corporation will maintain an arm's length relationship with its
affiliates and to enter into transactions with affiliates only on a commercially
reasonable basis;
(i) The Corporation will pay the salaries of its own employees from its own
funds;
(j) The Corporation will maintain a sufficient number of employees in light
of its contemplated business operations;
(k) The Corporation will not guarantee or become obligated for the debts of
any other entity or person;
(l) The Corporation will not hold out its credit as being available to
satisfy the obligations of any other person or entity;
(m) The Corporation will not acquire the obligations or securities of its
affiliates or owners, including partners, members or shareholders, as
appropriate;
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(n) The Corporation will not make loans to any other person or entity or to
buy or hold evidence of indebtedness issued by any other person or entity (other
than cash, investment grade securities or from the Entities);
(o) The Corporation will allocate fairly and reasonably any overhead
expenses that are shared with an affiliate, including paying for office space
and services performed by any employee of an affiliate;
(p) The Corporation will hold itself out as a separate entity;
(q) The Corporation will correct any known misunderstanding regarding its
separate identity;
(r) The Corporation will not identify itself as a division of any other
person or entity; and
(s) The Corporation will maintain adequate capital in light of its
contemplated business purposes.
ARTICLE XVI
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the By-Laws of
the Corporation shall so provide.
ARTICLE XVII
RECORDS OUTSIDE STATE
The books and records of the Corporation may, subject to any statutory
requirements, be kept at a location or locations outside the State of Delaware
as may be designated by the Board of Directors or in the By-Laws of the
Corporation.
ARTICLE XVIII
SECTION 203 ELECTION
The Corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
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ARTICLE XIX
INCORPORATOR
The name and the mailing address of the Incorporator are as follows:
NAME MAILING ADDRESS
Brendan P. Head Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
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The undersigned, being the Incorporator named above, in order to form a
corporation pursuant to the General Corporation Law of the State of Delaware,
does hereby certify that this is my act and deed and that the facts herein
stated are true, and accordingly have hereunto set my hand this ____ day of
December, 1998.
______________________________________
Brendan P. Head
Sole Incorporator
STATE OF ILLINOIS)
) SS.
COUNTY OF COOK )
On this ___ day of __________, 1998 personally appeared before me, a Notary
Public in and for the State of and County aforesaid, Brendan P. Head, known to
me to be the person who executed the foregoing Certificate of Incorporation, and
who acknowledged to me that he executed the same freely and voluntarily and for
the uses and purposes therein described.
WITNESS my hand and official seal, this ____ day of December, 1998.
_______________________________________
Notary Public
My commission expires:
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<PAGE>
Exhibit 3.2
BY-LAWS
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OF
HELLER FUNDING CORPORATION II
-----------------------------
ARTICLE I
---------
OFFICES
-------
Section 1.1. Registered Office. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 1.2. Other Offices. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
----------
STOCKHOLDERS' MEETING
---------------------
Section 2.1. Place of Meetings. All meetings of the stockholders,
whether annual or special, shall be held in the City of Chicago, State of
Illinois, at such place as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of Delaware
as may be designated from time to time by the Board of Directors and stated in
the notice of meeting.
Section 2.2. Annual Meetings. An annual meeting of the
stockholders, commencing with the year 2000, shall be held on the second Monday
in June in each year, if not a legal holiday, and if a legal holiday then on the
next secular day following, at 10:00 a.m., or at such other date and time as
shall be designated by the Board of Directors and stated in the notice of
meeting, at which they shall elect a Board of Directors, and transact such other
business as may properly be brought before the meeting.
Section 2.3. Notice of Meeting. Written notice of the annual
meeting stating the place, date and hour of the meeting, shall be given not less
than ten or more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
<PAGE>
Section 2.4. Stockholders' List. At least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
said meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each stockholder,
shall be prepared by the Secretary. Such list shall be open to the examination
of any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting at the
place within the city where the meeting is to be held which place shall be
specified in the notice of meeting, or if not so specified, at the place where
the meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
Section 2.5. Special Meetings. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of Incorporation, may be called by the President
and shall be called by the Secretary at the request of a majority of the Board
of Directors, or at the request in writing of stockholders owning at least a
majority of the number of shares of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting. Business transacted at any special meeting shall be limited to
the purposes stated in the notice of special meeting.
Section 2.6. Notice of Special Meeting. Written notice of a special
meeting, stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting. If mailed, notice is given when deposited in the United
States mail, postage prepaid, directed to the stockholder at his address as it
appears on the records of the Corporation.
Section 2.7. Quorum. The holders of a majority of the shares issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall be requisite and shall constitute a quorum at all meetings of
the stockholders for the transaction of business except as otherwise provided by
statute, by the Certificate of Incorporation or by these By-Laws. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the stockholder entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, of the place, date
and hour of the adjourned meeting, until a quorum shall again be present or
represented by proxy. At the adjourned meeting at which a quorum shall be
present or represented by proxy, the Corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment, a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.8. Voting. When a quorum is present at any meeting, the
vote of the holders of a majority of the shares having voting power, present in
person or represented by proxy, shall decide any question brought before such
meeting, unless the question is one upon which, by
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express provision of the statutes or of the Certificate of Incorporation or of
these By-Laws, a different vote is required in which case such express provision
shall govern and control the decision of such question. Each stockholder shall
have one vote for each share of stock having voting power registered in his name
on the books of the Corporation, except as otherwise provided in the Certificate
of Incorporation.
Section 2.9. Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 2.10. Unanimous Consent. Whenever the vote of stockholders
at a meeting thereof is required or permitted to be taken for or in connection
with any corporate action by any provisions of the statutes or of the
Certificate of Incorporation or these By-Laws, the meeting, notice of the
meeting, and vote of stockholders may be dispensed with if all the stockholders
who would have been entitled to vote upon the action, if such meeting were held,
shall consent in writing to such corporate action being taken.
ARTICLE III
-----------
DIRECTORS
---------
Section 3.1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of Directors
which may exercise all such powers of the Corporation and do all such acts and
things as are not by the Delaware General Corporation Law nor by the Certificate
of Incorporation nor by these By-Laws directed or required to be exercised or
done by the stockholders.
Section 3.2. Number of Directors. The number of directors which
shall constitute the whole Board shall be not less than three (3) nor more than
eight (8). Each director shall be elected at the annual meeting of the
stockholders, and shall hold office until his successor is elected and qualified
or until his earlier resignation or removal.
Section 3.3. Vacancies. If the office of a director becomes vacant
by reason of death, resignation, retirement disqualification, removal from
office, or otherwise, or a new directorship is created, the holders of a
plurality of shares issued and outstanding and entitled to vote in elections of
directors, shall choose a successor or successors, or a director to fill the
newly created directorship, who shall hold office for the unexpired term or
until the next election of directors.
Section 3.4. Place of Meetings. The Board of Directors may hold its
meetings outside of the State of Delaware, at the office of the Corporation or
at such other places as they may
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from time to time determine, or as shall be fixed in the respective notices or
waivers of notice of such meetings.
Section 3.5. Committees of Directors. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board, designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power of authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amendment to the By-Laws, of the Corporation; and, unless the resolution, By-
Laws, or Certificate of Incorporation expressly so provide, no such committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board of
Directors. The committees shall keep regular minutes of their proceedings and
report the same to the Board of Directors when required.
Section 3.6. Compensation of Directors. Directors, as such, may
receive such stated salary for their services and/or such fixed sums and
expenses of attendance for attendance at each regular or special meeting of the
Board of Directors as may be established by resolution of the Board; provided
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 3.7. Annual Meeting. The annual meeting of the Board of
Directors shall be held within ten days after the annual meeting of the
stockholders in each year. Notice of such meeting, unless waived, shall be given
by mail or telegram to each director elected at such annual meeting, at his
address as the same may appear on the records of the Corporation, or in the
absence of such address, at his residence or usual place of business, at least
three days before the day on which such meeting is to be held. Said meeting may
be held at such place as the Board may fix from time to time or as may be
specified or fixed in such notice or waiver thereof.
Section 3.8. Special Meetings. Special meetings of the Board of
Directors may be held at any time on the call of the President or at the request
in writing of at least 40% of the directors. Notice of any such meeting, unless
waived, shall be given by mail or telegram to each director at his address as
the same appears on the records of the Corporation not less than one day prior
to the day on which such meeting is to be held if such notice is by telegram,
and not less than two days prior to the day on which the meeting is to be held
if such notice is by mail. If the
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Secretary shall fail or refuse to give such notice, then the notice may be given
by the officer or any one of the directors making the call. Any such meeting may
be held at such place as the Board may fix from time to time or as may be
specified or fixed in such notice or waiver thereof. Any meeting of the Board of
Directors shall be a legal meeting without any notice thereof having been given,
if all the directors shall be present thereat, and no notice of a meeting shall
be required to be given to any directors who shall attend such meeting.
Section 3.9. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting, if a written consent to such action is
signed by all members of the Board or such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors. Members of the Board of Directors, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
Section 3.10. Quorum and Manner of Acting. Except as otherwise
provided in these By-Laws, a majority of the total number of directors as at the
time specified by the By-Laws shall constitute a quorum at any regular or
special meeting of the Board of Directors. Except as otherwise provided by
statute, by the Certificate of Incorporation or by these By-Laws, the vote of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum, a
majority of the directors present may adjourn the meeting from time to time
until a quorum shall be present. Notice of any adjourned meeting need not be
given, except that notice shall be given to all directors if the adjournment is
for more than thirty days.
ARTICLE IV
----------
OFFICERS
--------
Section 4.1. Executive Officers. The executive officers of the
Corporation shall be a President, such number of Vice Presidents, if any, as the
Board of Directors may determine, a Secretary and a Treasurer. One person may
hold any number of said offices.
Section 4.2. Election, Term of Office and Eligibility. The
executive officers of the Corporation shall be elected annually by the Board of
Directors at its annual meeting or at a special meeting held in lieu thereof.
Each officer, except such officers as may be appointed in accordance with the
provisions of Section 4.3, shall hold office until his successor shall have been
duly chosen and qualified or until his death, resignation or removal. None of
the officers need be members of the Board.
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Section 4.3 Subordinate Officers. The Board of Directors may appoint
such Assistant Secretaries, Assistant Treasurers, Controller and other officers,
and such agents as the Board may determine, to hold office for such period and
with such authority and to perform such duties as the Board may from time to
time determine. The Board may, by specific resolution, empower the chief
executive officer of the Corporation or the Executive Committee to appoint any
such subordinate officers or agents.
Section 4.4 Removal. The President, any Vice President, the Secretary
and/or the Treasurer may be removed at any time, either with or without cause,
but only by the affirmative vote of the majority of the total number of
directors as at the time specified by the By-Laws. Any subordinate officer
appointed pursuant to Section 4.3 may be removed at any time, either with or
without cause, by the majority vote of the directors present at any meeting of
the Board or by any committee or officer empowered to appoint such subordinate
officers.
Section 4.5 The President. The President shall be the chief executive
officer of the Corporation. He shall have executive authority to see that all
orders and resolutions of the Board of Directors are carried into effect and,
subject to the control vested in the Board of Directors by statute, by the
Certificate of Incorporation, or by these By-Laws, shall administer and be
responsible for the management of the business and affairs of the Corporation.
He shall preside at all meetings of the stockholders and the Board of Directors;
and in general shall perform all duties incident to the office of the President
and such other duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
Section 4.6 The Vice Presidents. In the event of the absence or
disability of the President, each Vice President, in the order designated, or in
the absence of any designation, then in the order of their election, shall
perform the duties of the President. The Vice Presidents shall also perform such
other duties as from time to time may be assigned to the them by the Board of
Directors or by the chief executive officer of the Corporation.
Section 4.7 The Secretary. The Secretary shall:
(a) Keep the minutes of the meetings of the stockholders and of the
Board of Directors;
(b) See that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
(c) Be custodian of the records and of the seal of the Corporation and
see that the seal or a facsimile or equivalent thereof is affixed to or
reproduced on all documents, the execution of which on behalf of the
Corporation under its seal is duly authorized;
(d) Have charge of the stock record books of the Corporation;
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(e) In general, perform all duties incident to the office of
Secretary, and such other duties as are provided by these By-Laws and as
from time to time are assigned to him by the Board of Directors or by the
chief executive officer of the Corporation.
Section 4.7. The Assistant Secretaries. If one or more Assistant
Secretaries shall be appointed pursuant to the provisions of Section 4.3
respecting subordinate officers, then, at the request of the Secretary, or in
his absence or disability, the Assistant Secretary designated by the Secretary
(or in the absence of such designations, then any one of such Assistant
Secretaries) shall perform the duties of the Secretary and when so acting shall
have all the powers of, and be subject to all the restrictions upon, the
Secretary.
Section 4.8. The Treasurer. The Treasurer shall:
(a) Receive and be responsible for all funds of and securities owned
or held by the Corporation and, in connection therewith, among other
things: keep or cause to be kept full and accurate records and accounts for
the Corporation; deposit or cause to be deposited to the credit of the
Corporation all moneys, funds and securities so received in such bank or
other depositary as the Board of Directors or an officer designated by the
Board may from time to time establish; and disburse or supervise the
disbursement of the funds of the Corporation as may be properly authorized.
(b) Render to the Board of Directors at any meeting thereof, or from
time to time when ever the Board of Directors or the chief executive
officer of the Corporation may require, financial and other appropriate
reports on the condition of the Corporation;
(c) In general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him
by the Board of Directors or by the chief executive officer of the
Corporation.
Section 4.9. The Assistant Treasurers. If one or more Assistant
Treasurers shall be appointed pursuant to the provisions of Section 4.3
respecting subordinate officers, then, at the request of the Treasurer, or in
his absence or disability, the Assistant Treasurer designated by the Treasurer
(or in the absence of such designation, then any one of such Assistant
Treasurers) shall perform all the duties of the Treasurer and when so acting
shall have all the powers of and be subject to all the restrictions upon, the
Treasurer.
Section 4.10. Salaries. The salaries of the officers shall be fixed
from time to time by the Board of Directors, and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director of
the Corporation.
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Section 4.11. Bonds. If the Board of Directors or the chief executive
officer shall so require, any officer or agent of the Corporation shall give
bond to the Corporation in such amount and with such surety as the Board of
Directors or the chief executive officer, as the case may be, may deem
sufficient, conditioned upon the faithful performance of their respective duties
and offices.
Section 4.12. Delegation of Duties. In case of the absence of any
officer of the Corporation or for any other reason which may seem sufficient to
the Board of Directors, the Board of Directors may, for the time being, delegate
his powers and duties, or any of them, to any other officer or to any director.
ARTICLE V
SHARES OF STOCK
Section 5.1. Regulation. Subject to the terms of any contract of the
Corporation, the Board of Directors may make such rules and regulations as it
may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the stock of the Corporation, including the issue of
new certificates for lost, stolen or destroyed certificates, and including the
appointment of transfer agents and registrars.
Section 5.2. Stock Certificates. Certificates for shares of the stock
of the Corporation shall be respectively numbered serially for each class of
stock, or series thereof, as they are issued, shall be impressed with the
corporate seal or a facsimile thereof, and shall be signed by the President or a
Vice President, and by the Secretary or Treasurer, or an Assistant Secretary or
an Assistant Treasurer, provided that such signatures may be facsimiles on any
certificate countersigned by a transfer agent other than the Corporation or its
employee. Each certificate shall exhibit the name of the Corporation, the class
(or series of any class) and number of shares represented thereby, and the name
of the holder. Each certificate shall be otherwise in such form as may be
prescribed by the Board of Directors.
Section 5.3. Restriction on Transfer of Securities. A restriction on
the transfer or registration of transfer of securities of the Corporation may be
imposed either by the Certificate of Incorporation or by these By-Laws or by an
agreement among any number of security holders or among such holders and the
Corporation. No restriction so imposed shall be binding with respect to
securities issued prior to the adoption of the restriction unless the holders of
the securities are parties to an agreement or voted in favor of the restriction.
A restriction on the transfer of securities of the Corporation is
permitted by this Section if it:
(a) Obligates the holder of the restricted securities to offer to the
Corporation or to any other holders of securities of the Corporation or to
any other person or to any
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combination of the foregoing a prior opportunity, to be exercised within a
reasonable time, to acquire the restricted securities; or
(b) Obligates the Corporation or any holder of securities of the
Corporation or any other person or any combination of the foregoing to
purchase the securities which are the subject of an agreement respecting
the purchase and sale of the restricted securities; or
(c) Requires the Corporation or the holders of any class of
securities of the Corporation to consent to any proposed transfer of the
restricted securities or to approve the proposed transferee of the
restricted securities; or
(d) Prohibits the transfer of the restricted securities to designated
persons or classes of persons; and such designation is not manifestly
unreasonable; or
(e) Restricts transfer or registration of transfer in any other
lawful manner.
Unless noted conspicuously on the security, a restriction, even though
permitted by this Section, is ineffective except against a person with actual
knowledge of the restriction.
Section 5.4. Transfer of Shares. Subject to the restrictions
permitted by Section 5.3, shares of the capital stock of the Corporation shall
be transferable on the books of the Corporation by the holder thereof in person
or by his duly authorized attorney, upon the surrender or cancellation of a
certificate or certificates for a like number of shares. As against the
Corporation, a transfer of shares can be made only on the books of the
Corporation and in the manner hereinabove provided, and the Corporation shall be
entitled to treat the registered holder of any share as the owner thereof and
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the statutes of the State
of Delaware.
Section 5.5. Fixing Date for Determination of Stockholders of
Record. (a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
is fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; providing, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
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(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by the Delaware Corporation Law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings by
stockholders are recorded. Delivery made to a Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by the Delaware General Corporation Law, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect to
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
Section 5.6. Lost Certificate. Any stockholder claiming that a
certificate representing shares of stock has been lost, stolen or destroyed may
make an affidavit or affirmation of the fact and, if the Board of Directors so
requires, advertise the same in a manner designated by the Board, and give the
Corporation a bond of indemnity in form and with security for an amount
satisfactory to the Board (or an officer or officers designated by the Board),
whereupon a new certificate may be issued of the same tenor and representing the
same number, class and/or series of shares as were represented by the
certificate alleged to have been lost, stolen or destroyed.
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ARTICLE VI
----------
BOOKS AND RECORDS
-----------------
Section 6.1. Location. The books, accounts and records of the
Corporation may be kept at such place or places within or without the State of
Delaware as the Board of Directors may from time to time determine.
Section 6.2. Inspection. The books, accounts, and records of the
Corporation shall be open to inspection by any member of the Board of Directors
at all times; and open to inspection by the stockholders at such times, and
subject to such regulations as the Board of Directors may prescribe, except as
otherwise provided by statute.
ARTICLE VII
-----------
DIVIDENDS AND RESERVES
----------------------
Section 7.1. Dividends. The Board of Directors of the Corporation,
subject to any restrictions contained in the Certificate of Incorporation and
other lawful commitments of the Corporation, may declare and pay dividends upon
the shares of its capital stock either out of the surplus of the Corporation, as
defined in and computed in accordance with the Delaware General Corporation Law,
or in case there shall be no such surplus, out of the net profits of the
Corporation for the fiscal year in which the dividend is declared and/or the
preceding fiscal year. If the capital of the Corporation, computed in accordance
with the Delaware General Corporation Law, shall have been diminished by
depreciation in the value of its property, or by losses, or otherwise, to an
amount less than the aggregate amount of the capital represented by the issued
and outstanding stock of all classes having a preference upon the distribution
of assets, the Board of Directors of the Corporation shall not declare and pay
out of such net profits any dividends upon any shares of any classes of its
capital stock until the deficiency in the amount of capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of assets shall have been repaired. Dividends may be paid in cash,
in property, or in shares of the Corporation's capital stock.
Section 7.2. Reserves. The Board of Directors of the Corporation
may set apart, out of any of the funds of the Corporation available for
dividends, a reserve or reserves for any proper purpose and may abolish any such
reserve.
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ARTICLE VII
-----------
MISCELLANEOUS PROVISIONS
------------------------
Section 8.1. Fiscal Year. The fiscal year of the Corporation shall
be fixed by resolution of the Board of Directors.
Section 8.2. Depositories. The Board of Directors or an officer
designated by the Board shall appoint banks, trust companies, or other
depositories in which shall be deposited from time to time the money or
securities of the Corporation.
Section 8.3. Checks, Drafts and Notes. All checks, drafts, or other
orders for the payment of money and all notes or other evidence or indebtedness
issued in the name of the Corporation shall be signed by such officer or
officers or agent or agents as shall from time to time be designated by
resolution of the Board of Directors or by an officer appointed by the Board.
Section 8.4. Contracts and Other Instruments. The Board of
Directors may authorize any officer, agent or agents to enter into any contract
or execute and deliver any instrument in the name and on behalf of the
Corporation and such authority may be general or confined to specific instances.
Section 8.5. Insurance. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the Delaware General Corporation Law.
Section 8.6. Notices. Whenever under the provisions of the statutes
or of the Certificate of Incorporation or of these By-Laws notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, by depositing
the same in post office or letter box, in a postpaid sealed wrapper, or by
delivery to a telegraph company, addressed to such director or stockholder at
such address as appears on the records of the Corporation, and such notice shall
be deemed to be given at the time when the same shall be thus mailed or
delivered to a telegraph company. Notice may also be given by facsimile
transmission provided that such notice shall be immediately confirmed by a
telephone call to the recipient at the number specified in the records of the
Corporation and such notice shall be deemed to be given at the time when the
same shall be transmitted by facsimile machine.
Section 8.7. Waivers of Notice. Whenever any notice is required to
be given under the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the
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time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders,
directors or members of a committee of directors need be specified in any
written waiver of notice.
Section 8.8. Stock in Other Corporations. Any shares of stock in
any other Corporation which may be from time to time be held by this Corporation
may be represented and voted at any meeting of shareholders of such Corporation
by the President or a Vice President, or by any other person or persons
thereunto authorized by the Board of Directors, or by any proxy designated by
written instrument of appointment executed in the name of this Corporation by
its President or a Vice President. Shares of stock belonging to the Corporation
need not stand in the name of the Corporation, but may be held for the benefit
of the Corporation in the individual name of the Treasurer of any other nominee
designated for the purpose by the Board of Directors. Certificates for shares so
held for the benefit of the Corporation shall be endorsed in blank or have
proper stock powers attached so that said certificates are at all times in due
form for transfer, and shall be held for safekeeping in such manner as shall be
determined from time to time by the Board of Directors.
Section 8.9. Amendment of By-Laws. The stockholders, by the
affirmative vote of the holders of a majority of the stock issued and
outstanding and having voting power may, at any annual or special meeting if
notice of such alteration or amendment of the By-Laws is contained in the notice
of such meeting, adopt, amend, or repeal these By-Laws, and alterations or
amendments of By-Laws made by the stockholders shall not be altered or amended
by the Board of Directors.
The Board of Directors, by the affirmative vote of a majority of the
whole Board, may adopt, amend, or repeal these By-Laws at any meeting, except as
provided in the above paragraph. By-Laws made by the Board of Directors may be
altered or repealed by the stockholders.
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Exhibit 4.1
TRUST AGREEMENT
by and between
HELLER FUNDING CORPORATION II
as Trust Depositor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of ______, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE ONE Page
DEFINITIONS..................................................................................1
Section 1.01. Capitalized Terms..........................................................1
Section 1.02. Other Definitional Provisions..............................................3
Section 1.03. Usage of Terms.............................................................3
Section 1.04. Section References.........................................................3
Section 1.05. Accounting Terms...........................................................3
ARTICLE TWO
ORGANIZATION.................................................................................4
Section 2.01. Name.......................................................................4
Section 2.02. Office.....................................................................4
Section 2.03. Purposes and Powers........................................................4
Section 2.04. Appointment of Owner Trustee...............................................4
Section 2.05. Capital Contribution of Owner Trust Estate.................................5
Section 2.06. Declaration of Trust.......................................................5
Section 2.07. Liability of Trust Depositor...............................................5
Section 2.08. Title to Trust Property....................................................5
Section 2.09. Situs of Trust.............................................................5
Section 2.10. Representations and Warranties of the Trust Depositor......................5
Section 2.11. Federal Income Tax Treatment...............................................6
ARTICLE THREE
TRUST CERTIFICATE AND TRANSFER OF INTEREST...................................................8
Section 3.01. Ownership..................................................................8
Section 3.02. The Trust Certificate......................................................8
Section 3.03. Authentication and Delivery of Trust Certificate...........................8
Section 3.04. Registration of Transfer and Exchange of Trust Certificate.................8
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates....................9
Section 3.06. Persons Deemed Owners......................................................9
Section 3.07. Access to List of Certificateholder's Name and Addresses...................9
Section 3.08. Maintenance of Office or Agency............................................9
Section 3.09. Temporary Trust Certificate................................................9
Section 3.10. Appointment of Paying Agent...............................................10
Section 3.11. Ownership by Trust Depositor of Trust Certificate.........................10
ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE....................................................................11
Section 4.01. Prior Notice to Certificateholder with Respect to Certain Matters............11
Section 4.02. Action by Owner with Respect to Certain Matters..............................11
Section 4.03. Action by Owner with Respect to Bankruptcy...................................11
Section 4.04. Restrictions on Owner's Power................................................11
</TABLE>
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ARTICLE FIVE
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES..................................................13
Section 5.01. Establishment of Trust Account...............................................13
Section 5.02. Application of Trust Funds...................................................13
Section 5.03. Method of Payment............................................................13
Section 5.04. No Segregation of Moneys; No Interest........................................13
Section 5.05. Accounting and Reports to the Certificateholder, the Internal Revenue
Service and Others........................................................13
Section 5.06. Signature on Returns; Tax Matters Partner....................................14
ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE.......................................................15
Section 6.01. General Authority............................................................15
Section 6.02. General Duties...............................................................15
Section 6.03. Action Upon Instruction......................................................15
Section 6.04. No Duties Except as Specified in this Agreement or in Instructions...........16
Section 6.05. No Action Except Under Specified Documents or Instructions...................16
Section 6.06. Restrictions.................................................................16
ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE................................................................17
Section 7.01. Acceptance of Trusts and Duties..............................................17
Section 7.02. Furnishing of Documents......................................................18
Section 7.03. Representations and Warranties...............................................18
Section 7.04. Reliance; Advice of Counsel..................................................18
Section 7.05. Not Acting in Individual Capacity............................................18
Section 7.06. Owner Trustee Not Liable for Trust Certificate, Notes or Contracts...........19
Section 7.07. Owner Trustee May Own Trust Certificate and Notes............................19
ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE...............................................................20
Section 8.01. Owner Trustee's Fees and Expenses............................................20
Section 8.02. Indemnification..............................................................20
Section 8.03. Payments to the Owner Trustee................................................20
ARTICLE NINE
TERMINATION OF TRUST AGREEMENT..............................................................21
Section 9.01. Termination of Trust Agreement...............................................21
Section 9.02. Dissolution upon Bankruptcy of Trust Depositor or Withdrawal or
Removal of Trust Depositor................................................21
ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES......................................23
Section 10.01. Eligibility Requirements for Owner Trustee..................................23
Section 10.02. Resignation or Removal of Owner Trustee.....................................23
</TABLE>
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Section 10.03. Successor Owner Trustee.....................................................23
Section 10.04. Merger or Consolidation of Owner Trustee....................................24
Section 10.05. Appointment of Co-Trustee or Separate Trustee...............................24
ARTICLE ELEVEN
MISCELLANEOUS...............................................................................26
Section 11.01. Supplements and Amendments..................................................26
Section 11.02. No Legal Title to Trust Estate in Owner.....................................26
Section 11.03. Limitations on Rights of Others.............................................26
Section 11.04. Notices.....................................................................27
Section 11.05. Severability of Provisions..................................................28
Section 11.06. Counterparts................................................................28
Section 11.07. Successors and Assigns......................................................28
Section 11.08. No Petition.................................................................28
Section 11.9. No Recourse.................................................................28
Section 11.10. Headings...................................................................29
Section 11.11. Governing Law..............................................................29
Section 11.12. Trust Certificate Transfer Restrictions....................................29
Section 11.13. Trust Depositor Payment Obligation.........................................29
EXHIBITS
Exhibit A - Form of Certificate of Trust.............................................A-1
Exhibit B - Form of Trust Certificate................................................B-1
</TABLE>
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This TRUST AGREEMENT dated as of [_____________] 1999, is between
HELLER FUNDING CORPORATION II, a Delaware corporation, as Trust Depositor (the
"Trust Depositor"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as owner trustee (the "Owner Trustee").
WHEREAS, in connection herewith, the Trust Depositor is willing to
assume certain obligations pursuant hereto; and
WHEREAS, in connection herewith, the Trust Depositor is willing to
purchase the Trust Certificate (as defined herein) to be issued pursuant to this
Agreement and to assume certain obligations pursuant hereto;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Capitalized Terms. Except as otherwise provided in
this Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Administration Agreement" means the Administration Agreement, dated as
of the date hereof, among the Trust, the Trust Depositor, the Indenture Trustee
and Heller Financial, Inc., as administrator.
"Agreement" means this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Applicant" shall have the meaning set forth in Section 3.07.
"Benefit Plan" means (i) an employee benefit plan (as such term is
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as the same may be amended from time to
time.
"Certificate Balance" means $[__________].
"Certificate Distribution Account" means the account established and
maintained as such pursuant to Section 5.01.
"Certificate of Trust" means the Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute, substantially
in the form of Exhibit A hereto.
"Certificate Register" and "Certificate Registrar" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"Certificateholder" or "Holder" means with respect to a Definitive
Trust Certificate the Person in whose name the Trust Certificate is registered
in the Certificate Register.
"Closing Date" means [April ______] 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Definitive Trust Certificate" shall have the meaning set forth in
Section 3.09.
<PAGE>
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" shall have the meaning assigned to such term in Section
8.02.
"Foreign Person" means any Person other than (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision thereof,
(iii) an estate the income of which is subject to U.S. federal income taxation
regardless of its source, or (iv) a trust whose administration is subject to the
primary supervision of a court within the United States and which has one or
more U.S. fiduciaries who have authority to control all substantial decisions of
the Trust.
"Heller Financial" means Heller Financial, Inc., a Delaware
corporation.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.
"Indenture" means the Indenture dated as of the date hereof between the
Trust and Norwest Bank Minnesota, N.A., as Indenture Trustee.
"Note Depository Agreement" means the Agreement dated as of the Closing
Date among the Trust, the Indenture Trustee, the Administrator and DTC, as the
Clearing Agency, relating to the Notes, as the same may be amended and
supplemented from time to time.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D
Notes in each case issued pursuant to the Indenture.
"Owner" means the Holder of the Trust Certificate.
"Owner Trustee" means Wilmington Trust Company, a Delaware corporation,
not in its individual capacity but solely as owner trustee under this Agreement,
and any successor Owner Trustee hereunder.
"Owner Trustee Corporate Trust Office" means the office of the Owner
Trustee at which its corporate trust business shall be administered, which
initially shall be 1100 North Market Street, Wilmington, Delaware 19890, Attn:
Corporate Trust Administration, or such other office at such other address as
the Owner Trustee may designate from time to time by notice to the
Certificateholder, the Servicer, the Indenture Trustee, the Trust Depositor and
Heller Financial.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 3.10.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof) unincorporated organization or government or any agency or political
subdivision thereof.
"Record Date" means, with respect to any Distribution Date, the last
Business Day of the preceding calendar month.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of the date hereof, among the Trust, the Trust Depositor, Heller
Financial, as Servicer and as an Originator and Heller Financial Leasing, Inc.,
as an Originator thereunder, and the Indenture Trustee named therein, as the
same may be amended or supplemented from time to time.
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"Secretary of State" means the Secretary of State of the State of
Delaware.
"Tax Matters Partner" shall have the meaning provided in Section
5.06(b) hereof.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" means the trust established by this Agreement.
"Trust Certificate" means the trust certificate evidencing the
beneficial equity interest of an Owner in the Trust, substantially in the form
of Exhibit B hereto.
"Trust Depositor" means Heller Funding Corporation II in its capacity
as Trust Depositor hereunder, and its successors.
"Trust Estate" means all right, title and interest of the Trust in and
to the property and rights assigned to the Trust pursuant to Article Two of the
Sale and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and the Certificate Distribution Account and all other property
of the Trust from time to time, including any rights of the Owner Trustee and
the Trust pursuant to the Sale and Servicing Agreement and the Administration
Agreement.
"Underwriters" means First Union Capital Markets Corp., [Bear, Stearns
& Co. Inc. and Lehman Brothers.]
Section 1.02. Other Definitional Provisions. Capitalized terms used
that are not otherwise defined herein shall have the meanings ascribed thereto
in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
Section 1.03. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation".
Section 1.04. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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ARTICLE TWO
ORGANIZATION
Section 2.01. Name. The Trust created hereby shall be known as "Heller
Equipment Asset Receivables Trust 1999-1", in which name the Owner Trustee may
conduct the activities of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the Trust shall be in care of the
Owner Trustee at the Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Owner and the Trust Depositor.
Section 2.03. Purposes and Powers.
(a) The sole purpose of the Trust is, and the Trust shall have the
power and authority, to manage the Trust Estate and collect and disburse the
periodic income therefrom for the use and benefit of the Owner, and in
furtherance of such purpose to engage in the following ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the
Trust Certificate pursuant to this Agreement and to
sell the Notes and the Trust Certificate;
(ii) with the proceeds of the sale of the Notes and the
Trust Certificate, to purchase the Contracts and
other Trust Assets, and to pay the organizational,
start-up and transactional expenses of the Trust and
to pay the balance to the Trust Depositor pursuant to
the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Trust Estate pursuant to the Indenture and
to hold, manage and distribute to the Owner pursuant
to the Sale and Servicing Agreement any portion of
the Trust Estate released from the Lien of, and
remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Transaction Documents to which it is to be a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or
convenient to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Transaction Documents,
to engage in such other activities as may be required
in connection with conservation of the Trust Estate
and the making of distributions to the Owner and the
Noteholders.
The Trust shall not engage in any activities other than in connection with the
foregoing. Nothing contained herein shall be deemed to authorize the Owner
Trustee to engage in any business operations or any activities other than those
set forth in the introductory sentence of this Section. Specifically, the Owner
Trustee shall have no authority to engage in any business operations, or acquire
any assets other than those specifically included in the Trust Estate under
Section 1.01, or otherwise vary the assets held by the Trust. Similarly, the
Owner Trustee shall have no discretionary duties other than performing those
ministerial acts set forth above necessary to accomplish the purpose of this
Trust as set forth in the introductory sentence of this Section.
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Section 2.04. Appointment of Owner Trustee. The Trust Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee hereby accepts such appointment.
Section 2.05. Capital Contribution of Owner Trust Estate. The Trust
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Trust Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Trust Estate
(prior to giving effect to the conveyances described in the Sale and Servicing
Agreement) and shall be deposited in the Certificate Distribution Account. The
Trust Depositor shall pay organizational expenses of the Trust as they may arise
or shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust Estate in trust upon and subject to the conditions
set forth herein for the sole purpose of conserving the Trust Estate and
collecting and disbursing the periodic income therefrom for the use and benefit
of the Owner, subject to the obligations of the Trust under the Transaction
Documents. It is the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that the Trust be disregarded as a separate entity for
federal income tax purposes pursuant to Treasury Regulation Section
301.7701-3(b)(1)(ii) as in effect for periods after January 1, 1997. The parties
agree not to take any action inconsistent with such intended federal income tax
treatment. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute for
the sole purpose and to the extent necessary to accomplish the purpose of this
Trust as set forth in the introductory sentence of Section 2.03.
Section 2.07. Liability of Trust Depositor.
(a) Pursuant to Section 3803(a) of the Business Trust Statute, the
Trust Depositor shall be liable directly to and will indemnify any injured party
or any other creditor of the Trust for all losses, claims, damages, liabilities
and expenses of the Trust to the extent that the Trust Depositor would be liable
if the Trust were a partnership under the Delaware Revised Uniform Limited
Partnership Act in which Trust Depositor were a general partner (including any
Illinois personal property replacement tax that is imposed on the Trust as a
partnership); provided, however, that Trust Depositor shall not be liable for
any losses incurred by a Certificateholder in the capacity of an investor in the
Trust Certificate or a Noteholder in the capacity of an investor in the Notes.
In addition, any third party creditors of the Trust (other than in connection
with the obligations described in the immediately preceding sentence for which
the Trust Depositor shall not be liable) shall be deemed third party
beneficiaries of this paragraph. The obligations of the Trust Depositor under
this paragraph shall be evidenced by the Trust Certificate described in Section
3.11.
(b) Other than to the extent set forth in Section 2.07(a), no Owner,
solely by virtue of its being the Holder of the Trust Certificate, shall have
any personal liability for any liability or obligation of the Trust.
Section 2.08. Title to Trust Property. Legal title to the Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Trust
Estate to be vested in an Owner Trustee or Owner Trustees, in which case title
shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
Section 2.09. Situs of Trust. The Trust will be located and
administered in the State of Delaware or the State of Illinois. All bank
accounts maintained by the Owner Trustee on behalf of the Trust shall be located
in the State of Illinois or the State of Delaware. The Trust shall not have any
employees in any state other than Delaware; provided, however, that nothing
herein shall restrict or prohibit the Owner Trustee from having employees within
or without the State of Delaware. Payments will be received by the Trust only in
Delaware or Minnesota and payments will be made
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by the Trust only from Delaware or Minnesota. The only office of the Trust will
be at the Owner Trustee Corporate Trust Office.
Section 2.10. Representations and Warranties of the Trust Depositor.
The Trust Depositor hereby represents and warrants to the Owner Trustee
that:
(i) The Trust Depositor is duly organized and validly existing as
a corporation organized and existing and in good standing
under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business
and had at all relevant times, and has, power, authority and
legal right to acquire and own the Contracts.
(ii) The Trust Depositor is duly qualified to do business as a
foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its
business requires such qualifications.
(iii) The Trust Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Trust
Depositor has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the
Owner Trustee on behalf of the Trust as part of the Trust
Estate and has duly authorized such sale and assignment and
deposit with the Owner Trustee on behalf of the Trust by all
necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by the
Trust Depositor by all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse
of time) a default under, the articles of incorporation or
bylaws of the Trust Depositor, or any indenture, agreement or
other instrument to which the Trust Depositor is a party or by
which it is bound; nor result in the creation or imposition of
any Lien upon any of the properties of the Trust Depositor
pursuant to the terms of any such indenture, agreement or
other instrument (other than pursuant to the Transaction
Documents); nor violate any law or any order, rule or
regulation applicable to the Trust Depositor of any court or
of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over
the Trust Depositor or its properties.
(v) All approvals, authorizations, consents, orders or other
actions of any person or any governmental entity required in
connection with the execution and delivery of this Agreement
and the fulfillment of the terms hereof have been obtained.
(vi) There are no proceedings or investigations pending, or to the
Trust Depositor's best knowledge threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Trust Depositor
or its properties: (A) asserting the invalidity of this
Agreement, any of the other Transaction Documents or the Trust
Certificate, (B) seeking to prevent the issuance of the Trust
Certificate or the consummation of any of the transactions
contemplated by this Agreement or any of the other Transaction
Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Trust
Depositor of its obligations under, or the validity or
enforceability of, this Agreement, any of the other
Transaction Documents or the Trust Certificate or (D)
involving the Trust Depositor and which might adversely affect
the federal income tax or other federal, state or local tax
attributes of the Trust Certificate.
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Section 2.11. Federal Income Tax Treatment.
(a) It is the intention of the Trust Depositor that the Trust be
disregarded as a separate entity for federal income tax purposes pursuant to
Treasury Regulations Section 301.7701-3(b)(1)(ii) as in effect for periods after
January 1, 1997. The Trust Certificate constitutes the sole equity interest in
the Trust and must at all times be held by either the Trust Depositor or its
transferee as sole owner. The Trust Depositor agrees not to take any action
inconsistent with such intended federal income tax treatment. Because for
federal income tax purposes the Trust will be disregarded as a separate entity,
Trust items of income, gain, loss and deduction for any month as determined for
federal income tax purposes shall be allocated entirely to the Trust Depositor
(or subsequent purchaser of the Trust Certificate) as the sole
Certificateholder.
Section 2.12 Covenants of the Trust Depositor. The Trust Depositor
agrees and covenants that during the term of this Agreement, and to the fullest
extent permitted by applicable law, that:
(a) in the event that (i) the Certificate Balance shall be reduced by
realized losses and (ii) any litigation with claims in excess of $1,000,000 to
which the Trust Depositor is a party which shall be reasonably likely to result
in a material judgment against the Trust Depositor that the Trust Depositor will
not be able to satisfy shall be commenced, during the period beginning
immediately following the commencement of such litigation and continuing until
such litigation is dismissed or otherwise terminated (and, if such litigation
has resulted in a final judgment against the Trust Depositor, such judgment has
been satisfied), the Trust Depositor shall not pay any dividend to the Servicer,
or make any distribution on or in respect of its capital stock to the Servicer,
or repay the principal amount of any indebtedness of the Trust Depositor held by
the Servicer, unless (i) after giving effect to such payment, distribution or
repayment, the Trust Depositor's liquid assets shall not be less than the amount
of actual damages claimed in such litigation or (ii) the Rating Agencies shall
not downgrade the then existing rating on the Certificate with respect to any
such payment, distribution or repayment;
(b) it shall not, for any reason, institute proceedings for the Trust
to be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to the bankruptcy of the Trust, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the property of the
Trust or cause or permit the Trust to make any assignment for the benefit of
creditors, or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the debt of
the Trust or take any action in furtherance of any such action;
(c) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its articles of
incorporation, by-laws and the Transaction Documents;
(d) it shall obtain from each other party to each Transaction Document
to which it or the Trust is a party and each other agreement entered into on or
after the date hereof to which it or the Trust is a party, an agreement by each
such counterparty that prior to the occurrence of the event specified in Section
9.01(e) such counterparty shall not institute against, or join any other Person
in instituting against, it or the Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States; and
(e) it shall not, for any reason, withdraw or attempt to withdraw from
this Agreement, dissolve, institute proceedings for it to be adjudicated a
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part of
its property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or declare
or effect a moratorium on its debt or take any action in furtherance of any such
action.
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ARTICLE THREE
TRUST CERTIFICATE AND TRANSFER OF INTERESTS
Section 3.01. Ownership.
(a) Upon the formation of the Trust by the contribution by the Trust
Depositor pursuant to Section 2.05 and until the issuance of the Trust
Certificate, the Trust Depositor shall be the sole beneficiary of the Trust. The
Trust Certificate must at all times be held by either the Trust Depositor or its
transferee as sole owner.
(b) No transfer of the Trust Certificate shall be made unless such
transfer is made in a transaction which does not require registration or
qualification under the Securities Act of 1933 or qualification under any state
securities or "Blue Sky" laws. Neither the Owner Trustee nor the Certificate
Registrar shall effect the registration of any transfer of the Trust Certificate
unless, (i) prior to such transfer the Owner Trustee shall have received a Tax
Opinion, and (ii) following such transfer, there would be no more than one
holder of the Trust Certificate and the holder of the Trust Certificate would
not be a Foreign Person, a partnership, Subchapter S corporation or grantor
trust.
Section 3.02. The Trust Certificate. The Trust Certificate shall be
substantially in the form of Exhibit B hereto. The Trust Certificate shall be
issued in an amount equal to the Certificate Balance. The Trust Certificate
shall be executed by the Owner Trustee on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Owner Trustee and shall be
deemed to have been validly issued when so executed. The Trust Certificate
bearing the manual or facsimile signature of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Owner
Trustee shall be a valid and binding obligation of the Trust, notwithstanding
that such individuals or any of them have ceased to be so authorized prior to
the authentication and delivery of such Trust Certificate or did not hold such
offices at the date of such Trust Certificate. The Trust Certificate shall be
dated the date of its authentication.
Section 3.03. Authentication and Delivery of Trust Certificate. The
Owner Trustee shall cause to be authenticated and delivered upon the order of
the Trust Depositor, in exchange for the Contracts and the other Trust Assets,
simultaneously with the sale, assignment and transfer to the Trust of the
Contracts and other Trust Assets, and the constructive delivery to the Owner
Trustee of the Contract Files and the other Trust Assets, a Trust Certificate
duly authenticated by the Owner Trustee, in the amount of the Certificate
Balance evidencing the entire ownership of the Trust, and Notes issued by the
Owner Trustee and authenticated by the Indenture Trustee in aggregate principal
amount of, in the case of (i) Class A-1 Notes, $[__________], (ii) Class A-2
Notes, $[__________], (iii) Class A-3 Notes $[____________], (iv) Class A-4
Notes $[____________], (v) Class B Notes, $[__________], (vi) Class C Notes,
$[__________] and (vii) Class D Notes, $[__________]. No Trust Certificate shall
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Trust Certificate a certificate of authentication
substantially in the form set forth in the form of Trust Certificate attached
hereto as Exhibit B, executed by the Owner Trustee or its authenticating agent,
by manual signature, and such certificate upon any Trust Certificate shall be
conclusive evidence, and the only evidence, that such Trust Certificate has been
duly authenticated and delivered hereunder. Upon issuance, authorization and
delivery pursuant to the terms hereof, the Trust Certificate will be entitled to
the benefits of this Agreement.
Section 3.04. Registration of Transfer and Exchange of Trust
Certificate.
(a) The Certificate Registrar shall keep or cause to be kept, a
Certificate Register, subject to such reasonable regulations as it may
prescribe. The Certificate Register shall provide for the registration of Trust
Certificate and transfers and exchanges of the Trust Certificate as provided
herein. The Owner Trustee is hereby initially appointed Certificate Registrar
for the purpose of registering the Trust Certificate and transfers and exchanges
of the Trust Certificate as herein provided. In the event that, subsequent to
the Closing Date, the Owner Trustee notifies the Servicer that it is unable to
act as Certificate Registrar, the Servicer shall appoint another bank or trust
company, having an office
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or agency located in the City of Chicago, Illinois, agreeing to act in
accordance with the provisions of this Agreement applicable to it, and otherwise
acceptable to the Owner Trustee, to act as successor Certificate Registrar
hereunder.
(b) Upon surrender for registration of transfer of any Trust
Certificate at the Owner Trustee Corporate Trust Office, the Owner Trustee shall
execute, authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee, one new
Trust Certificate having the same aggregate principal amount.
(c) Every Trust Certificate presented or surrendered for registration
of transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer or
exchange of the Trust Certificate, but the Owner Trustee may require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer of the Trust Certificate.
(e) All Trust Certificates surrendered for registration of transfer
shall be canceled and subsequently destroyed by the Owner Trustee.
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates.
If (i) any mutilated Trust Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Trust Certificate, and (ii) there is
delivered to the Certificate Registrar and the Owner Trustee such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice that such Trust Certificate has been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Owner
Trustee or its authenticating agent shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Certificate, a new Trust Certificate of like tenor and fractional undivided
interest. In connection with the issuance of any new Trust Certificate under
this Section, the Owner Trustee may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto. Any duplicate Trust Certificate issued pursuant to this
Section shall constitute complete and indefeasible evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar and any of their respective agents may treat the Person in
whose name any Trust Certificate is registered as the owner of such Trust
Certificate for the purpose of receiving distributions pursuant to Section 5.02
and for all other purposes whatsoever, and none of the Owner Trustee, the
Certificate Registrar, any Paying Agent or any of their respective agents shall
be affected by any notice of the contrary.
Section 3.07. Access to List of Certificateholder's Name and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Servicer and the
Trust Depositor, within 15 days after receipt by the Certificate Registrar of a
written request therefor from the Servicer or the Trust Depositor, the name and
address of the Certificateholder as of the most recent Record Date in such form
as the Servicer or the Trust Depositor may reasonably require. Every
Certificateholder, by receiving and holding a Trust Certificate, agrees with the
Servicer, the Trust Depositor and the Owner Trustee that none of the Servicer,
the Trust Depositor or the Owner Trustee shall be held accountable by reason of
the disclosure of any such information as to the name and address of the
Certificateholder hereunder, regardless of the source from which such
information was derived.
Section 3.08. Maintenance of Office or Agency. The Owner Trustee shall
maintain in Delaware, an office or offices or agency or agencies where the Trust
Certificate may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Owner Trustee in respect of the Trust
Certificate and this Agreement may be served. The Owner Trustee hereby
designates the Owner Trustee Corporate Trust Office as its office for such
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purposes. The Owner Trustee shall give prompt written notice to the Trust
Depositor, the Servicer and to the Certificateholder of any change in the
location of the Certificate Register or any such office or agency.
Section 3.09. Temporary Trust Certificate. Pending the preparation of
the definitive fully registered Trust Certificate (the "Definitive Trust
Certificate"), the Owner Trustee, on behalf of the Trust, may execute,
authenticate and deliver, a temporary Trust Certificate that is printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the Definitive Trust Certificate in
lieu of which it is issued. If a temporary Trust Certificate is issued, the
Trust Depositor will cause the Definitive Trust Certificate to be prepared
without unreasonable delay. After the preparation of the Definitive Trust
Certificate, the temporary Trust Certificate shall be exchangeable for the
Definitive Trust Certificate upon surrender of the temporary Trust Certificate
at the office or agency to be maintained as provided in Section 3.08, without
charge to the Holder. Upon surrender for cancellation of the temporary Trust
Certificate, the Owner Trustee shall execute and authenticate and deliver in
exchange therefor a like principal amount of the Definitive Trust Certificate.
Until so exchanged, the temporary Trust Certificate shall in all respects be
entitled to the same benefits hereunder as a Definitive Trust Certificate.
Section 3.10. Appointment of Paying Agent. The Paying Agent shall make
distributions to the Certificateholder from the Certificate Distribution Account
pursuant to Section 5.02(a) and shall report the amounts of such distributions
to the Owner Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. The Owner Trustee may revoke such
power and remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent initially shall
be Norwest Bank Minnesota, National Association, and any co-paying agent chosen
by the Paying Agent that is acceptable to the Owner Trustee. Each Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Owner Trustee. In the event that Norwest Bank Minnesota, National Association
shall no longer be the Paying Agent, the Owner Trustee shall appoint a successor
to act as Paying Agent (which shall be a bank or trust company). The Owner
Trustee shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Owner Trustee to execute and deliver to the Owner Trustee an
instrument in which such successor Paying Agent or additional Paying Agent shall
agree with the Owner Trustee that, as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholder in trust for the benefit of the Certificateholder entitled
thereto until such sums shall be paid to such Certificateholder. The Paying
Agent shall return all unclaimed funds to the Owner Trustee and upon removal of
a Paying Agent such Paying Agent shall also return all funds in its possession
to the Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall
apply to the Owner Trustee also in its role as Paying Agent, for so long as the
Owner Trustee shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
Section 3.11. Ownership by Trust Depositor of Trust Certificate. Trust
Depositor shall on the Closing Date purchase from the Trust a Trust Certificate
representing the Certificate Balance.
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ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Certificateholder with Respect to Certain
Matters. Subject to the provisions and limitation of Section 4.04, with respect
to the following matters, the Owner Trustee shall not take action unless at
least 30 days before the taking of such action, the Owner Trustee shall have
notified the Certificateholder in writing of the proposed action, the Indenture
Trustee shall have consented to such action in the event any Notes are
outstanding and the Certificateholder shall not have notified the Owner Trustee
in writing prior to the 30th day after such notice is given that such
Certificateholder has withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection
of the Contracts) and the compromise of any action, claim or
lawsuit brought by or against the Trust (except with respect
to the aforementioned claims or lawsuits for collection of the
Contracts);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be
filed under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not
required and such amendment materially and adversely affects
the interest of the Owner;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or
supplement any provision in a manner or add any provision that
would not materially and adversely affect the interests of the
Owner; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to
this Agreement of a successor Certificate Registrar, or the
consent to the assignment by the Note Registrar, Paying Agent,
Indenture Trustee or Certificate Registrar of its obligations
under the Indenture or the Agreement, as applicable.
Section 4.02. Action by Owner with Respect to Certain Matters. Subject
to the provisions and limitations of Section 4.04, the Owner Trustee shall not
have the power, except upon the direction of the Owner, to (a) remove the
Administrator pursuant to Section 8 of the Administration Agreement, (b) appoint
a successor Administrator pursuant to Section 8 of the Administration Agreement,
(c) remove the Servicer pursuant to Section 8.01 of the Sale and Servicing
Agreement, (d) except as expressly provided in the Transaction Documents, sell
the Contracts or other Trust Assets after the termination of the Indenture, (e)
initiate any claim, suit or proceeding by the Trust or compromise any claim,
suit or proceeding brought by or against the Trust, (f) authorize the merger or
consolidation of the Trust with or into any other business trust or entity
(other than in accordance with Section 3.10 of the Indenture) or (g) amend the
Certificate of Trust. The Owner Trustee shall take the actions referred to in
the preceding sentence only upon written instructions signed by the Owner.
Section 4.03. Action by Owner with Respect to Bankruptcy. Subject to
Section 2.12(b), the Owner Trustee shall not have the power to commence a
voluntary proceeding in a bankruptcy relating to the Trust without the prior
approval of the Owner and the delivery to the Owner Trustee by such Owner of a
certificate certifying that such Owner reasonably believes that the Trust is
insolvent.
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Section 4.04. Restrictions on Owner's Power. The Owner shall not direct
the Owner Trustee to take or to refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the Transaction Documents or would be contrary to
the purpose of this Trust as set forth in Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
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ARTICLE FIVE
APPLICATION OF TRUST FUNDS;
CERTAIN DUTIES
Section 5.01. Establishment of Trust Account. The Owner Trustee, for
the benefit of the Certificateholder, shall establish and maintain in the name
of the Trust an Eligible Account (the "Certificate Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Certificateholder.
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account and
in all proceeds thereof. Except as otherwise expressly provided herein, the
Certificate Distribution Account shall be under the sole dominion and control of
the Owner Trustee for the benefit of the Certificateholder. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Account, the Owner
Trustee (or the Trust Depositor on behalf of the Owner Trustee, if the
Certificate Distribution Account is not then held by the Owner Trustee or an
Affiliate thereof) shall within ten Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent) establish a
new Certificate Distribution Account as an Eligible Account and shall transfer
any cash and/or any investments to such new Certificate Distribution Account.
Section 5.02. Application of Trust Funds.
(a) On each Distribution Date, the Paying Agent will deposit in the
Certificate Distribution Account and distribute to the Certificateholder amounts
received pursuant to Section 7.05 of the Sale and Servicing Agreement with
respect to such Distribution Date.
(b) On each Distribution Date, the Paying Agent shall send to the
Certificateholder the statement or statements provided to the Owner Trustee by
the Servicer pursuant to Section 9.01 of the Sale and Servicing Agreement with
respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocation of income) to the Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in accordance
with this Section. The Paying Agent is hereby authorized and directed to retain
from amounts otherwise distributable to the Owner sufficient funds for the
payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to the Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution, the Paying Agent may in its sole
discretion withhold such amounts in accordance with the paragraph (c).
Section 5.03. Method of Payment. Subject to Section 9.01(c) respecting
the final payment upon retirement of the Certificate, distributions required to
be made to the Certificateholder of record on the related Record Date shall be
made by check mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register.
Section 5.04. No Segregation of Moneys; No Interest. Subject to
Sections 5.01 and 5.02, moneys received by the Owner Trustee hereunder need not
be segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
Section 5.05. Accounting and Reports to the Certificateholder, the
Internal Revenue Service and Others. The Administrator shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis and the
accrual method of accounting, (b) deliver to the Owner, as may be required by
the Code and applicable Treasury
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Regulations, such information as may be required to enable the Owner to prepare
its federal and state income tax returns, (c) file such tax returns relating to
the Trust and make such elections as from time to time may be required or
appropriate under any applicable state or federal statute or any rule or
regulation thereunder so as to maintain the federal income tax treatment for the
Trust as set forth in Section 2.11, (d) cause such tax returns to be signed in
the manner required by law and (e) collect or cause to be collected any
withholding tax as described in and in accordance with Section 5.02(c) with
respect to income or distributions to Owner. The Owner Trustee shall elect under
Section 1278 of the Code to include in income currently any market discount that
accrues with respect to the Contracts. If applicable, the Owner Trustee shall
not make the election provided under Section 754 or Section 761 of the Code.
Section 5.06. Signature on Returns; Tax Matters Partner.
(a) The Trust Depositor shall sign on behalf of the Trust the tax
returns of the Trust.
(b) If Subchapter K of the Code should be applicable to the Trust, the
Certificateholder shall be designated the "tax matters partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
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ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver the Transaction Documents to which the Trust is
to be a party and each certificate or other document attached as an exhibit to
or contemplated by the Transaction Documents to which the Trust is to be a party
and any amendment or other agreement, as evidenced conclusively by the Owner
Trustee's execution thereof. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Transaction Documents. The Owner Trustee is further
authorized from time to time to take such action as the Administrator recommends
with respect to the Transaction Documents.
Section 6.02. General Duties. Subject to the provisions and limitations
of Sections 2.03 and 2.06, it shall be the duty of the Owner Trustee to
discharge (or cause to be discharged through the Administrator) all of its
responsibilities pursuant to the terms of this Agreement and the Transaction
Documents to which the Trust is a party and to administer the Trust in the
interest of the Owner, subject to the Transaction Documents and in accordance
with the provisions of this Agreement. Without limiting the foregoing, the Owner
Trustee shall on behalf of the Trust file and prove any claim or claims that may
exist against Heller Financial in connection with any claims paying procedure as
part of an insolvency or receivership proceeding involving Heller Financial.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Transaction
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Transaction Document, and the Owner Trustee shall not be
held liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.
Section 6.03. Action Upon Instruction.
(a) Subject to Article Four, in accordance with the terms of the
Transaction Documents the Owner may by written instruction direct the Owner
Trustee in the management of the Trust.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any other Transaction Document if the Owner Trustee shall
have reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or is
contrary to the terms hereof or of any other Transaction Document or is
otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any other Transaction Document, the Owner Trustee shall promptly give notice (in
such form as shall be appropriate under the circumstances) to the Owner
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Owner received, the Owner Trustee shall not be liable on
account of such action to any Person. If the Owner Trustee shall not have
received appropriate instruction within ten days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Agreement and the
other Transaction Documents, as it shall deem to be in the best interests of the
Owner, and shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
applicability of any provision of this Agreement or any other Transaction
Document or any such provision is ambiguous as to its application, or is, or
appears to be, in conflict with any other applicable provision, or in the event
that this Agreement permits any determination by the Owner Trustee or is silent
or incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances)
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to the Owner requesting instruction and, to the extent that the Owner Trustee
acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the other
Transaction Documents, as it shall deem to be in the best interests of the
Owner, and shall have no liability to any Person for such action or inaction.
(e) Notwithstanding anything contained herein to the contrary, the
Owner Trustee shall not be required to take any action in any jurisdiction other
than in the State of Delaware if the taking of such action will (i) require the
registration with, licensing by or the taking of any other similar action in
respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware by or with respect to the Trustee;
(ii) result in any fee, tax or other governmental charge under the laws of any
jurisdiction or any political subdivisions thereof in existence on the date
hereof other than the State of Delaware being payable by the Owner Trustee; or
(iii) subject the Owner Trustee to personal jurisdiction in any jurisdiction
other than the State of Delaware for causes of action arising from acts
unrelated to the consummation of the transactions by the Owner Trustee
contemplated in this Agreement. In the event that the Owner Trustee has
determined that any action set forth in clauses (i)-(iii) will result in the
consequences stated therein, the Administrator and the Owner Trustee shall
appoint one or more Persons to act as co-trustee pursuant to Section 10.05.
Section 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or any document or written instruction received by the Owner
Trustee pursuant to Section 6.03; and no implied duties or obligations shall be
read into this Agreement or any other Transaction Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any other Transaction Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Estate that result from actions by, or claims against, the Owner Trustee that
are not related to the ownership or the administration of the Trust Estate.
Section 6.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Estate except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the other Transaction
Documents and (iii) in accordance with any document or instruction delivered to
the Owner Trustee pursuant to Section 6.03.
Section 6.06. Restrictions. The Owner Trustee shall not take any action
(i) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (ii) that, to the actual knowledge of a Responsible Officer of the Owner
Trustee, would result in the Trust's becoming taxable as a corporation for
federal or state income tax purposes. The Owner shall not direct the Owner
Trustee to take actions that would violate the provisions of this Section.
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ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Trust Estate upon the terms of the Transaction Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any other Transaction Document under any circumstances, except (i) for its
own willful misconduct or negligence or (ii) in the case of the inaccuracy of
any representation or warranty contained in Section 7.03 expressly made by the
Owner Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee
which did not result from gross negligence on the part of such
responsible officer;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with
the instructions of the Administrator or any Owner;
(c) no provision of this Agreement or any other Transaction
Document shall require the Owner Trustee to expend or risk
funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder or under
any Transaction Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the
Transaction Documents, including the principal of and interest
on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the
due execution hereof by the Trust Depositor or for the form,
character, genuineness, sufficiency, value or validity of any
of the Trust Estate, or for or in respect of the validity or
sufficiency of the Transaction Documents, other than the
certificate of authentication on the Trust Certificate, and
the Owner Trustee shall in no event assume or incur any
liability, duty, or obligation to any Noteholder or to any
Owner, other than as expressly provided for herein or
expressly agreed to in the Transaction Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Trust Depositor, the
Indenture Trustee or the Servicer under any of the Transaction
Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations of the
Trust under this Agreement or the other Transaction Documents
that are required to be performed by the Administrator under
the Administration Agreement, the Indenture Trustee under the
Indenture or the Servicer, or the Trust Depositor under the
Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by the Agreement, or to
institute, conduct or defend any litigation under this
Agreement or otherwise or in relation to this Agreement or any
other Transaction Document, at the request, order or direction
of the Owner, unless such Owner has offered to the Owner
Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities that
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may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any other Transaction
Document shall not be construed as a duty, and the Owner
Trustee shall not be answerable for other than its negligence
or willful misconduct in the performance of any such act.
Section 7.02. Furnishing of Documents. The Owner Trustee shall furnish
to the Owner promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Transaction Documents.
Section 7.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Trust Depositor and the Owner that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of
Delaware. It has all requisite corporate power and authority
to execute, deliver and perform its obligations under this
Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this
Agreement will be executed and delivered by one of its
officers who is duly authorized to execute and deliver this
Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms
or provisions hereof will contravene any federal or Delaware
law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order
binding on it, or constitute any default under its charter
documents or bylaws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any
of its properties may be bound or result in the creation or
imposition of any lien, charge or encumbrance on the Trust
Estate resulting from actions by or claims against the Owner
Trustee individually which are unrelated to this Agreement or
the other Transaction Documents.
Section 7.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of determination of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the other
Transaction Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into by any of them, and the
Owner Trustee shall not be liable for the conduct or misconduct of such agents
or attorneys as shall have been selected by the Owner Trustee with reasonable
care, and (ii) may consult with counsel, accountants and other skilled persons
to be selected with reasonable care and employed by it. The Owner Trustee shall
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel, accountants
or other such persons.
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Section 7.05. Not Acting in Individual Capacity. Except as provided in
this Article Seven, in accepting the trusts hereby created, Wilmington Trust
Company acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any other Transaction
Document shall look only to the Trust Estate for payment or satisfaction
thereof.
Section 7.06. Owner Trustee Not Liable for Trust Certificate, Notes or
Contracts. The recitals contained herein and in the Trust Certificate (other
than the signature and countersignature of the Owner Trustee and the certificate
of authentication on the Trust Certificate) shall be taken as the statements of
the Trust Depositor, and the Owner Trustee assumes no responsibility for the
correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, any other Transaction Document or the
Trust Certificate (other than the signature and countersignature of the Owner
Trustee and the certificate of authentication on the Trust Certificate) or the
Notes, or of any Contract or related documents. The Owner Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Contract, or the perfection and priority of
any security interest created by any Contract in any Equipment or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust Estate or its ability to generate the payments to be
distributed to the Certificateholder under this Agreement or the Noteholders
under the Indenture, including, without limitation, the existence, condition and
ownership of any Equipment; the existence and enforceability of any insurance
thereon; the existence and contents of any Contract on any computer or other
record thereof; the validity of the assignment of any Contract to the Trust or
of any intervening assignment; the completeness of any Contract; the performance
or enforcement of any Contract; the compliance by the Trust Depositor or the
Servicer with any warranty or representation made under any Transaction Document
or in any related document or the accuracy of any such warranty or
representation; or any action of the Administrator, the Indenture Trustee or the
Servicer or any subservicer taken in the name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Trust Certificate and Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of the Trust Certificate or Notes and may deal with the Trust Depositor,
the Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
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ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon and which shall be paid consistent with Section 5.19 of
the Sale and Servicing Agreement. Additionally, the Owner Trustee shall be
entitled to be reimbursed by the Trust Depositor or Servicer for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Owner Trustee may employ in connection with the exercise and performance of its
rights and its duties hereunder.
Section 8.02. Indemnification. The Trust Depositor shall be liable as
primary obligor for, and shall indemnify the Owner Trustee and its successors,
assigns and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the other Transaction Documents, the Trust
Estate, the administration of the Trust Estate or the action or inaction of the
Owner Trustee hereunder, except only that the Trust Depositor shall not be
liable for or required to indemnify an Indemnified Party from and against
Expenses arising or resulting from any of the matters described in the third
sentence of Section 7.01. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the termination
of this Agreement. In the event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section, the Owner Trustee's choice of
legal counsel shall be subject to the approval of the Trust Depositor, which
approval shall not be unreasonably withheld.
Section 8.03. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article shall be deemed not to be a part of the
Trust Estate immediately after such payment.
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ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement.
(a) This Trust shall dissolve upon the earlier of (i) final
distribution by the Owner Trustee of all moneys or other property or proceeds of
the Trust Estate in accordance with the terms of the Indenture, the Sale and
Servicing Agreement and Article Five, (ii) the expiration of 21 years from the
death of the survivor of the descendants of Joseph P. Kennedy, the late
Ambassador of the United States to the Court of St. James's, living on the date
hereof and (iii) the time provided in Section 9.02. The bankruptcy, liquidation,
dissolution, death or incapacity of any Owner, other than the Trust Depositor as
described in Section 9.02, shall not (i) operate to terminate this Agreement or
the Trust, (ii) entitle such Owner's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of all or any part of the Trust or Trust Estate or (iii) otherwise
affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Trust Depositor
nor any Holder shall be entitled to revoke or terminate the Trust.
(c) Notice of any dissolution of the Trust, specifying the Distribution
Date upon which the Certificateholder shall surrender its Trust Certificate to
the Paying Agent for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to the Certificateholder mailed within
five Business Days of receipt of notice of termination from the Servicer given
pursuant to Section 10.01 of the Sale and Servicing Agreement, stating (i) the
Distribution Date upon or with respect to which final payment of the Trust
Certificate shall be made upon presentation and surrender of the Trust
Certificate at the office of the Paying Agent therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Trust Certificate at the office of the
Paying Agent therein specified. The Owner Trustee shall give such notice to the
Certificate Registrar (if other than the Owner Trustee) and the Paying Agent at
the time such notice is given to the Certificateholder. Upon presentation and
surrender of the Trust Certificates, the Paying Agent shall cause to be
distributed to the Certificateholder amounts distributable on such Distribution
Date pursuant to Section 5.02.
(d) In the event that the Certificateholder shall not surrender its
Trust Certificate for cancellation within six months after the date specified in
the above mentioned written notice, the Owner Trustee shall give a second
written notice to such Certificateholder to surrender its Trust Certificate for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice the Trust Certificate shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the Certificateholder
concerning surrender of its Trust Certificates, and the cost thereof shall be
paid out of the funds and other assets that shall remain subject to this
Agreement. Any funds remaining in the Trust after exhaustion of such remedies
shall be distributed by the Owner Trustee to the Trust Depositor.
(e) Upon the winding up of the Trust and payment of all liabilities in
accordance with Section 3808 of the Business Trust Statute, the Owner Trustee
shall cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Business Trust Statute at which time the Trust shall
terminate. The Administrator shall be the liquidator of the Trust.
Section 9.02. Dissolution upon Bankruptcy of Trust Depositor or
Withdrawal or Removal of Trust Depositor. In the event that an Insolvency Event
shall occur with respect to the Trust Depositor or the Trust Depositor shall
withdraw, liquidate or be removed from the Trust, this Agreement shall be
terminated in accordance with Section 9.01 90 days after the date of such event,
unless within such 90 day period, the Owner Trustee shall have received written
instructions from the Required Holders not to dissolve or terminate the Trust.
Promptly after the occurrence of any
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Insolvency Event with respect to the Trust Depositor, the Trust Depositor shall
give the Indenture Trustee and Owner Trustee written notice thereof, and the
Indenture Trustee shall give prompt written notice to the Noteholders thereof.
Upon a termination pursuant to this Section, the Owner Trustee shall direct the
Indenture Trustee promptly to sell the Trust Assets in a commercially reasonable
manner and on commercially reasonable terms. The proceeds of such a sale of the
Trust Assets shall be treated as Collections under the Sale and Servicing
Agreement.
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ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; and (a) having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's; or
(b) which the Rating Agencies have otherwise indicated in writing is an entity
acceptable to act as Owner Trustee hereunder. If such corporation shall publish
reports of condition at least annually pursuant to law or to the requirements of
the aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Owner Trustee
shall resign immediately in the manner and with the effect specified in Section
10.02.
Section 10.02. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator. Upon receiving such
notice of resignation, the Administrator shall promptly appoint a successor
Owner Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the successor
Owner Trustee. If no successor Owner Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator, may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
of the immediately preceding sentence, the Administrator shall promptly appoint
a successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee, and shall pay all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each Rating Agency.
Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective, and such successor
Owner Trustee, without any further act, deed or conveyance, shall become fully
vested with all the rights, powers, duties and obligations of its predecessor
under this Agreement, with like effect as if originally named as Owner Trustee.
The predecessor Owner Trustee shall upon payment of its fees and expenses
deliver to the successor Owner Trustee all documents and statements and monies
held by it under this Agreement; and the Administrator and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
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No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to the
Certificateholder, the Indenture Trustee, the Noteholders and each Rating
Agency. If the Administrator shall fail to mail such notice within ten days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
Section 10.04. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, without the execution or filing of any instrument or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, that such corporation shall be eligible pursuant to
Section 10.01 and, provided, further, that the Owner Trustee shall mail notice
of such merger or consolidation to each Rating Agency.
Section 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any financed Equipment may at the time be located, the
Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust or any part thereof and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner Trustee pursuant to Section 10.01 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and
exercised or performed by the Owner Trustee and such separate
trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act),
except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, the
Owner Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust
Estate or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Owner Trustee;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this
Agreement; and
(c) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate
trustee or co-trustee.
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Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
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ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Supplements and Amendments.
(a) The Agreement may be amended by the Trust Depositor, and the Owner
Trustee, without the consent of any of the Noteholders or the Certificateholder,
to cure any ambiguity, to correct or supplement any provisions in this Agreement
or to add any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement; provided, however, that any such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder or the Certificateholder.
(b) This Agreement may also be amended from time to time by the Trust
Depositor, and the Owner Trustee, with the consent of the Required Holders, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Noteholders or the Certificateholder; provided, however, that no
such amendment shall increase or reduce in any manner the amount of, or
accelerate or delay the timing of, (i) collections of payments on Contracts or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholder, or (ii) eliminate the Certificateholder
consent or reduce the aforesaid percentage of the Outstanding Amount of the
Notes required to consent to any such amendment, without the consent of the
Holders of all outstanding Notes and the Trust Certificate.
(c) Prior to the execution of any such amendment or consent, the Trust
Depositor shall furnish written notification of the substance of such amendment
or consent, together with a copy thereof, to the Indenture Trustee, the
Administrator and each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder. It shall not be necessary for
the consent of the Certificateholder, Noteholders or the Indenture Trustee
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of the Certificateholder provided for in this Agreement or in any other
Transaction Document) and of evidencing the authorization of the execution
thereof by the Certificateholder shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(f) Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment that affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
Section 11.02. No Legal Title to Trust Estate in Owner. The Owner shall
not have legal title to any part of the Trust Estate. The Owner shall be
entitled to receive distributions with respect to its undivided ownership
interest herein only in accordance with Articles Five and Nine. No transfer, by
operation of law or otherwise, of any right, title or interest of the Owner to
and in its ownership interest in the Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
Section 11.03. Limitations on Rights of Others. Except for Section
2.07, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Trust Depositor, the Owner, the Administrator and, to the extent
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expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
Section 11.04. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or (d)
on the date transmitted by legible telecopier transmission with a confirmation
of receipt, in all cases addressed to the recipient as follows:
(i) If to the Servicer or any Seller:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Asset Distribution & Investments
Fax No.: (312) 441-7170
(ii) If to the Trust Depositor:
Heller Funding Corporation II
500 West Monroe Street
Chicago, Illinois 60661
Attention: Asset Distribution & Investments
Fax No.: (312) 441-7170
(iii) If to the Indenture Trustee:
Norwest Bank Minnesota, N.A.
Norwest Center
Sixth and Marquette
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services
Fax No.: (612) 667-3539
(iv) If to the Owner Trustee:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Fax No.: (302) 651-8882
(v) If to Moody's:
Moody's Investor's Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
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Fax No.: (212) 553-0344
(vi) If to Fitch:
Fitch Investors Service, L.P.
One State Street Plaza
33rd Floor
New York, New York 10004
Attention: Asset Backed Securities Group
Fax No.: (212) 514-9879
(vii) If to the Underwriters:
First Union Capital Markets Corp.
One First Union Center, TW-6
301 South College Street
Charlotte, North Carolina 28288-0610
Attention: Asset Securitization Division
Fax No.:
(viii) If to DCR:
Duff & Phelps Credit Rating Co.
55 East Monroe Street, Suite 3800
Chicago, Illinois 60603
Attention: Asset-Backed Monitoring Group
(Equipment Lease)
Telephone No.: (312) 368-3100
Fax No.: (312) 368-2069
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 11.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Trust
Certificate or the rights of the Holder thereof.
Section 11.06. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Trust Depositor, and the Owner Trustee and their respective successors and
permitted assigns and each Owner and its successors and permitted assigns, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of such
Owner.
Section 11.08. No Petition. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Trust Certificate, and the
Indenture Trustee and each Noteholder, by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Trust Depositor or the Trust, or join in any institution against the
Trust Depositor, or the Trust of, any bankruptcy proceedings under any United
-28-
<PAGE>
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificate, the Notes, this Agreement or any
of the other Transaction Documents.
Section 11.9. No Recourse. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificate
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Trust Depositor, the Servicer, the Originators, the
Administrator, the Owner Trustee, the Indenture Trustee or any of the respective
Affiliates and no recourse may be had against such parties or their assets,
except as may be expressly set forth or contemplated in this Agreement, the
Trust Certificate or the other Transaction Documents. The Owner by accepting the
Trust Certificate (i) acknowledges that such Trust Certificate represents a
beneficial interest in the Trust and Trust Assets only and does not represent an
interest in or an obligation of the Trust Depositor, the Servicer, the
Administrator, the Owner Trustee or any Affiliate of the foregoing, and no
recourse may be had against any such party or their assets, except as may be
expressly set forth or contemplated in the Transaction Documents and (ii) enters
into the undertakings and agreements provided for such Certificateholder set
forth in Section 13.09 of the Sale and Servicing Agreement.
Section 11.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.11. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.12. Trust Certificate Transfer Restrictions. The Trust
Certificate may not be acquired by or for the account of a Benefit Plan. By
accepting and holding a Trust Certificate, the Holder thereof shall be deemed to
have represented and warranted that it is not a Benefit Plan nor will it hold
such Trust Certificate for the account of a Benefit Plan. By accepting and
holding a Trust Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
Section 11.13. Trust Depositor Payment Obligation. The Trust Depositor
shall be responsible for payment of the Administrator's compensation pursuant to
Section 3 of the Administration Agreement and shall reimburse the Administrator
for all expenses and liabilities of the Administrator incurred thereunder.
-29-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
HELLER FUNDING CORPORATION II,
as Trust Depositor
By: _________________________________
Printed Name:____________________
Title:___________________________
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:__________________________________
Printed Name:_____________________
Title ____________________________
-30-
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
This Certificate of Trust of Heller Equipment Asset Receivables Trust
1999-1 (the "Trust"), dated [_____________] 1999, is being duly executed and
filed by Wilmington Trust Company, a Delaware banking corporation, as Owner
Trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
Code, Section 3801 et seq.).
1. Name. The name of the business trust formed hereby is Heller
Equipment Asset Receivables Trust 1999-1.
2. Delaware Trustee. The name and business address of the Owner
Trustee of the Trust in the State of Delaware is Wilmington Trust Company, 1100
North Market Street, Wilmington, Delaware 19890 (Attn: Corporate Trust
Administration).
IN WITNESS WHEREOF, the undersigned, being the sole Owner Trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee
By: __________________________________
Printed Name:_____________________
Title:____________________________
A-1
<PAGE>
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES TO THE
EXTENT DESCRIBED IN THE SALE AND SERVICING AGREEMENT AND INDENTURE REFERRED TO
HEREIN.
THIS TRUST CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
HELLER FUNDING CORPORATION, HELLER FINANCIAL, INC., HELLER FINANCIAL LEASING,
INC. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH IN THE TRUST
AGREEMENT. THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
PLEDGED UNLESS THE CONDITIONS SET FORTH IN SECTION 3.04 OF THE TRUST AGREEMENT
HAVE BEEN COMPLIED WITH.
THIS CERTIFICATE IS TRANSFERRABLE ONLY IN WHOLE AND NOT IN PART.
THIS TRUST CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS TRUST
CERTIFICATE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1 CERTIFICATE
NO. 1 Trust Certificate
Principal Balance $[__________]
THIS CERTIFIES THAT Heller Funding Corporation II is the registered
owner of $[__________] of a nonassessable, fully-paid, fractional undivided
equity interest in the Heller Equipment Asset Receivables Trust 1999-1 (the
"Trust") formed by Heller Funding Corporation II, a Delaware corporation (the
"Trust Depositor").
The Trust was created pursuant to a Trust Agreement, dated as of [April
____] 1999 (as amended, restated and/or supplemented from time to time, the
"Trust Agreement"), among Heller Funding Corporation II, as Trust Depositor (the
"Trust Depositor"), and Wilmington Trust Company, as owner trustee (the "Owner
Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in (i) the Trust Agreement, (ii)
the Sale and Servicing Agreement, dated as of [_____________] 1999 (the "Sale
and Servicing Agreement"), among the Trust, Heller Funding Corporation II, as
depositor (the "Trust Depositor"), Heller Financial, Inc. ("Heller Financial"),
as Servicer (in such capacity, the "Servicer" in its capacity as an originator
and its successor and assigns "Heller Leasing", and together with Heller
Financial the "Originators", and each, an "Originator"), and Norwest Bank
Minnesota, N.A., as Indenture Trustee (the "Indenture Trustee") or (iii) the
Indenture, dated as of [______] __, 1999 (the "Indenture"), between the Trust
and the Indenture Trustee.
This Trust Certificate is the duly authorized Trust Certificate
designated as "Heller Equipment Asset Receivables Trust Receivables-Backed
Certificate" (the "Trust Certificate"). Also issued under the Indenture are five
classes of notes designated as "[_____]% Heller Equipment Asset Receivables
Trust Class A-1 Receivable- Backed Notes" and "[_____]% Heller Equipment Asset
Receivables Trust Class A-2 Receivable-Backed Notes", and "[_____]% Heller
Equipment Asset Receivables Trust Class A-3 Receivable-Backed Notes", and
"[_____]% Heller Equipment Asset Receivables Trust Class A-4 Receivable-Backed
Notes" and "[_____]% Heller Equipment Asset Receivables Trust Class B
Receivable-Backed Notes" and "[______________]% Heller Equipment Asset
Receivables Trust Class C Receivable-Backed Notes," and "[__________]% Heller
Equipment Asset Receivables Trust Class D Receivable-Backed Notes"
(collectively, the "Notes"). This Trust Certificate is issued under and is
subject to the terms, provisions and conditions
1
<PAGE>
of the Trust Agreement, to which Trust Agreement the Holder of this Trust
Certificate by virtue of its acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes, among other things, all the right,
title and interest of the Trust Depositor in and to the Contracts listed on the
List of Contracts delivered on the Closing Date (including, without limitation,
all security interests and all rights to receive payments which are collected
pursuant thereto after the Cutoff Date, including any liquidation proceeds
therefrom, but excluding any rights to receive payments which were collected
pursuant thereto on or prior to the Cutoff Date) and all interests in the
Equipment related thereto.
Under the Trust Agreement, there will be distributed on the thirteenth
day of each month or if such day is not a Business Day the next succeeding
Business Day commencing [_____________] __, 1999 (each, a "Distribution Date"),
and ending no later than the Distribution Date in [__________] to the person in
whose name this Trust Certificate is registered at the close of business on the
last day of the immediately preceding calendar month (each, a "Record Date"),
the amount to be distributed to the Certificateholder pursuant to the Trust
Agreement on such Distribution Date.
The holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders to the extent described in the
Sale and Servicing Agreement and the Indenture.
It is the intent of the Originator, the Servicer, the Trust Depositor,
Owner Trustee, Indenture Trustee and the Certificateholder that, for purposes of
federal income, state and local income and single business tax and any other
income taxes, the Trust will be disregarded as a separate entity for federal
income tax purposes pursuant to Treasury Regulations Section
301.7701-3(b)(1)(ii) and that all items of income, deduction, gain, loss or
credit of the Trust will be treated as such items of the Certificateholder. The
Trust Depositor and any other Certificateholder, by acceptance of a Trust
Certificate, agrees to treat, and to take no action inconsistent with such
treatment of, the Trust for federal income tax purposes.
Each Certificateholder, by its acceptance of a Trust Certificate or
beneficial interest in a Trust Certificate, covenants and agrees that such
Certificateholder will not at any time institute against the Trust or the Trust
Depositor, or join in any institution against the Trust or the Trust Depositor
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Trust Certificate, the Notes, the Trust Agreement or any of the other
Transaction Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee or its Agent by wire transfer or check
mailed to the Certificateholder of record in the Certificate Register without
the presentation or surrender of this Trust Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Trust Certificate will
be made after due notice by the Owner Trustee of the pendency of such
distribution and only upon presentation and surrender of this Trust Certificate
at the office or agency maintained for that purpose by the Owner Trustee in the
City of Wilmington, State of Delaware.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the holder hereof to any benefit under
the Trust Agreement or any other Transaction Document or be valid for any
purpose.
2
<PAGE>
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>
[REVERSE OF CERTIFICATE]
The Trust Certificate does not represent an obligation of, or an
interest in the Trust Depositor, Heller Financial, as an Originator or Servicer,
the Owner Trustee, the Indenture Trustee or any of their respective Affiliates
and no recourse may be had against such parties or their assets, except as
expressly set forth or contemplated herein or in the Trust Agreement or the
other Transaction Documents. In addition, this Trust Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in right
of payment to certain collections and recoveries with respect to the Contracts
and certain other amounts, in each case as more specifically set forth herein
and in the Sale and Servicing Agreement. A copy of each of the Sale and
Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of the Trust Depositor and at such other places, if any,
designated by the Trust Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Trust Depositor and the rights of the Certificateholder under the Trust
Agreement at any time by the Trust Depositor and the Owner Trustee with the
consent of the Required Holders (as defined in the Sale and Servicing
Agreement). Any such consent shall be conclusive and binding on the Holder and
on all future Holders of this Trust Certificate and of any Trust Certificate
issued upon the transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent is made upon this Trust Certificate. The Trust
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holder of the Trust Certificate or any Noteholder.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in Wilmington, Delaware, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar in Chicago, Illinois executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon a new Trust
Certificate evidencing the same aggregate interest in the Trust will be issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is the Owner Trustee.
Except as provided in the Trust Agreement, the Trust Certificate is
issuable only as a registered Trust Certificate without coupons. No service
charge will be made for any registration of transfer of such Trust Certificate,
but the Owner Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Owner Trustee, the Certificate Registrar and any of their
respective agents may treat the Person in whose name this Trust Certificate is
registered as the owner hereof for all purposes, and none of the Owner Trustee,
the Certificate Registrar or any such agent shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholder
of all amounts required to be paid to such holder pursuant to the Trust
Agreement and the Sale and Servicing Agreement and the deposition of all
property held as part of the Trust Estate. The Trust Depositor may at its option
purchase the Trust Estate at the times and at the prices specified in the Sale
and Servicing Agreement.
The Trust Certificate may not be acquired by a Benefit Plan. By
accepting and holding this Trust Certificate, the Holder hereof or, in the case
of Book-Entry Trust Certificate, by accepting a beneficial interest in this
Trust Certificate, the related Certificate Owner, shall be deemed to have
represented and warranted that it is not a Benefit Plan and is not acquiring
this Trust Certificate or an interest therein for the account of such an entity.
4
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Trust Certificate to be duly
executed.
Dated: [_____________] 1999 HELLER EQUIPMENT ASSET RECEIVABLES
TRUST 1999-1
By: Wilmington Trust Company, not in
its individual capacity but
solely as Owner Trustee
By:__________________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This the Trust Certificate referred to in the within-mentioned Trust Agreement.
Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee
By:___________________________
Authorized Signatory
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
- -------------------------------------------------------------------------------
to transfer said Trust Certificate on the books of the Certificate Registrar,
will full power of substitution in the premises.
Dated:
---------------
Signature Guaranteed:
- ----------------------------------------------
NOTICE: Signature(s) must be guaranteed by an
eligible guarantor institution.
- ----------------------------------------------
NOTICE: The signature to this assignment must
correspond with the name of the registered
owner as it appears on the face of the within
Trust Certificate in every particular, without
alteration or enlargement or any change whatever.
6
<PAGE>
Exhibit 4.2
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1,
as Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely in its capacity
as Indenture Trustee
-----------------------------------
INDENTURE
Dated as of April ___, 1999
-----------------------------------
$[___________] Class A-1 Receivable-Backed Notes
$[___________] Class A-2 Receivable-Backed Notes
$[___________] Class A-3 Receivable-Backed Notes
$[___________] Class A-4 Receivable-Backed Notes
$[____________] Class B Receivable-Backed Notes
$[____________] Class C Receivable-Backed Notes
$[____________] Class D Receivable-Backed Notes
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
Page
ARTICLE ONE ----
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.....................................................................1
Section 1.02. Incorporation by Reference of Trust Indenture Act...............................6
Section 1.03. Rules of Construction...........................................................6
ARTICLE TWO
THE NOTES
Section 2.01. Form............................................................................7
Section 2.02. Execution, Authentication and Delivery..........................................7
Section 2.03. Temporary Notes.................................................................7
Section 2.04. Registration; Registration of Transfer and Exchange; Transfer Restriction.......8
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes......................................9
Section 2.06. Persons Deemed Owner............................................................9
Section 2.07. Payment of Principal and Interest; Defaulted Interest...........................9
Section 2.08. Cancellation...................................................................10
Section 2.09. Book-Entry Notes...............................................................10
Section 2.10. Notices to Clearing Agency.....................................................11
Section 2.11. Definitive Notes...............................................................11
Section 2.12. Release of Collateral..........................................................11
Section 2.13. Tax Treatment..................................................................11
ARTICLE THREE
COVENANTS; REPRESENTATIONS AND WARRANTIES
Section 3.01. Payment of Principal and Interest..............................................12
Section 3.02. Maintenance of Office or Agency................................................12
Section 3.03. Money for Payments to be Held in Trust.........................................12
Section 3.04. Existence......................................................................13
Section 3.05. Protection of Collateral.......................................................13
Section 3.06. [Reserved].....................................................................14
Section 3.07. Performance of Obligations; Servicing of Contracts.............................14
Section 3.08. Negative Covenants.............................................................15
Section 3.09. Issuer May Consolidate, etc. Only on Certain Terms.............................15
Section 3.10. Successor or Transferee........................................................16
Section 3.11. No Other Business..............................................................17
Section 3.12. No Borrowing...................................................................17
Section 3.13. Notice of Events of Default....................................................17
Section 3.14. Further Instruments and Acts...................................................17
Section 3.15. Compliance with Laws...........................................................17
Section 3.16. Amendments of Trust Agreement..................................................17
Section 3.17. Removal of Administrator.......................................................17
Section 3.18. Representations and Warranties of Issuer.......................................17
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture........................................19
</TABLE>
i
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Section 4.02. Application of Trust Money.....................................................20
Section 4.03. Repayment of Moneys Held by Paying Agent.......................................20
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default..............................................................21
Section 5.02. Rights Upon Event of Default; Notice...........................................21
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee;
Authority of Indenture Trustee.................................................22
Section 5.04. Remedies.......................................................................24
Section 5.05. Optional Preservation of the Contracts.........................................24
Section 5.06. Priorities.....................................................................24
Section 5.07. Limitation of Suits............................................................27
Section 5.08. Unconditional Rights of Noteholders to Receive Principal and Interest..........27
Section 5.09. Restoration of Rights and Remedies.............................................27
Section 5.10. Rights and Remedies Cumulative.................................................27
Section 5.11. Delay or Omission Not a Waiver.................................................28
Section 5.12. Control by Noteholders.........................................................28
Section 5.13. Waiver of Past Defaults........................................................28
Section 5.14. Undertaking for Costs..........................................................28
Section 5.15. Waiver of Stay or Extension Laws...............................................28
Section 5.16. Action on Notes................................................................29
Section 5.17. Performance and Enforcement of Certain Obligations.............................29
ARTICLE SIX
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee....................................................30
Section 6.02. Rights of Indenture Trustee....................................................31
Section 6.03. Individual Rights of Indenture Trustee.........................................31
Section 6.04. Indenture Trustee's Disclaimer.................................................31
Section 6.05. Notice of Defaults.............................................................32
Section 6.06. Reports by Indenture Trustee to Holders........................................32
Section 6.07. Compensation and Indemnity.....................................................32
Section 6.08. Replacement of Indenture Trustee...............................................32
Section 6.09. Successor Indenture Trustee by Merger..........................................33
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee..............33
Section 6.11. Eligibility....................................................................34
Section 6.12. Preferential Collection of Claims Against Issuer...............................35
Section 6.13. Representations and Warranties of Indenture Trustee............................35
ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders.........36
Section 7.02. Preservation of Information: Communication to Noteholders......................36
Section 7.03. Reports by Issuer..............................................................36
Section 7.04. Reports by Indenture Trustee...................................................36
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money............................................................38
</TABLE>
ii
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Section 8.02. Trust Accounts.................................................................38
Section 8.03. General Provisions Regarding Accounts..........................................40
Section 8.04. Release of Collateral..........................................................40
Section 8.05. Opinion of Counsel.............................................................41
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders........................42
Section 9.02. Supplemental Indentures With Consent of Noteholders............................42
Section 9.03. Execution of Supplemental Indentures...........................................44
Section 9.04. Effect of Supplemental Indenture...............................................44
Section 9.05. Conformity With Trust Indenture Act............................................44
Section 9.06. Reference in Notes to Supplemental Indentures..................................44
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption.....................................................................45
Section 10.02. Form of Redemption Notice......................................................45
Section 10.03. Notes Payable on Redemption Date...............................................45
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc......................................46
Section 11.02. Form of Documents Delivered to Indenture Trustee...............................47
Section 11.03. Acts of Noteholders............................................................47
Section 11.04. Notices........................................................................48
Section 11.05. Notices to Noteholders; Waiver.................................................48
Section 11.06. Alternate Payment and Notice Provisions........................................48
Section 11.07. Effect of Headings and Table of Contents.......................................49
Section 11.08. Successors and Assigns.........................................................49
Section 11.09. Separability...................................................................49
Section 11.10. Benefits of Indenture..........................................................49
Section 11.11. Legal Holidays.................................................................49
Section 11.12. Governing Law..................................................................49
Section 11.13. Counterparts...................................................................49
Section 11.14. Recording of Indenture.........................................................49
Section 11.15. Trust Obligation...............................................................49
Section 11.16. No Petition....................................................................49
Section 11.17. Inspection.....................................................................50
Section 11.18. Conflict with Trust Indenture Act..............................................50
Section 11.19. Communication by Note Owners With Other Note Owners............................50
Section 11.20. Listing Restrictions...........................................................50
</TABLE>
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EXHIBITS
Exhibit A - Form of Sale and Servicing Agreement...................................................A-1
Exhibit B - Form of Class A-1 Note.................................................................B-1
Exhibit C - Form of Class A-2 Note.................................................................C-1
Exhibit D - Form of Class A-3 Note.................................................................D-1
Exhibit E - Form of Class A-4 Note.................................................................E-1
Exhibit F - Form of Class B Note...................................................................F-1
Exhibit G - Form of Class C Note...................................................................G-1
Exhibit H - Form of Class D Note...................................................................H-1
Exhibit I - Form of Note Assignment................................................................I-1
Exhibit J - Form of Note Depository Agreement......................................................J-1
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture
Act of 1939 Indenture
Section Section
- --------------- ---------
310(a).................................................................6.11
310(b).................................................................6.11
310(c).................................................................N.A.
311(a).................................................................6.12
311(b).................................................................6.12
311(c).................................................................N.A.
312(a)...........................................................7.01, 7.02
312(b).................................................................7.02
312(c).................................................................7.02
313(a).................................................................7.04
313(b).................................................................7.04
313(c)...........................................................7.03, 7.04
[314(a)...............................................................7.03]
[314(b)...............................................................3.06]
314(c)..........................................................4.04, 11.01
314(d)..........................................................8.04, 11.01
[314(e)..............................................................11.01]
314(f).................................................................N.A.
315(a).................................................................6.01
315(b).................................................................6.05
315(c).................................................................6.01
315(d).................................................................6.01
315(e).................................................................5.14
316(a)...........................................................2.07, 5.04
316(b).................................................................9.02
[316(c)...............................................................1.01]
317(a).................................................................5.03
317(b).................................................................3.03
318(a)................................................................11.18
v
<PAGE>
This Indenture, dated as of April _____,1999 (this "Indenture"), is
between Heller Equipment Asset Receivables Trust 1999-1, a Delaware business
trust (the "Issuer") and Norwest Bank Minnesota, National Association, in its
capacity as indenture trustee (the "Indenture Trustee") and not in its
individual capacity.
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Issuer's [______]% Class
A-1 Receivable-Backed Notes (the "Class A-1 Notes"), [_____]% Class A-2
Receivable-Backed Notes (the "Class A-2 Notes"), [______]% Class A-3
Receivable-Backed Notes (the "Class A-3 Notes"), [______]% Class A-4
Receivable-Backed Notes (the "Class A-4 Notes"), [______]% Class B
Receivable-Backed Notes (the "Class B Notes"), [_________] % Class C
Receivable-Backed Notes (the "Class C Notes") and [__________]% Class D
Receivable-Backed Notes (the "Class D Notes" and, together with the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and
Class C Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby grants, transfers, assigns and otherwise conveys to
the Indenture Trustee on the Closing Date, on behalf of and for the benefit of
the Holders of the Notes, without recourse, all of the Issuer's right, title and
interest in, to and under the Contract Assets as may be held from time to time
by the Issuer (as each such defined term is defined in Section 1.01)
(collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction and all other
sums owing by the Issuer hereunder or under any other Transaction Document, and
to secure compliance with the provisions of this Indenture, all as provided in
this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of
the Notes, acknowledges such Grant, accepts the trust under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the Holders of the Notes may be adequately and effectively
protected.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
(a) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth
below for all purposes of this Indenture.
"Act" shall have the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement, dated as
of the date hereof, among the Administrator, the Issuer, the Trust Depositor and
the Indenture Trustee.
"Administrator" means Heller Financial, Inc. or any successor
Administrator under the Administration Agreement.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any Vice President or more
senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
the list
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of Authorized Officers delivered by the Administrator to the Indenture Trustee
on the Closing Date (as such list may be modified or supplemented from time to
time thereafter).
"Book Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.09.
"Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions in the city of Chicago, Illinois, Wilmington,
Delaware or New York, New York are authorized or obligated by law, executive
order or governmental decree to be closed.
"Certificate of Trust" means the Class E Certificate of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Collateral" means the Collateral Granted to the Indenture Trustee
under this Indenture, including all proceeds thereof.
"Contract Assets" has the same meaning given such term in the Sale and
Servicing Agreement.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered which office at date of the execution of this Indenture is located
at Northstar West, 16th Floor, Sixth and Marquette, Minneapolis, MN 55479-0070,
Attention: Corporate Trust Services/Asset Backed Administration; or at such
other address as the Indenture Trustee may designate from time to time by notice
to the Noteholders and the Issuer, or the principal corporate trust office of
any successor Indenture Trustee (the address of which the successor Indenture
Trustee will notify the Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.09.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"General Partner" means each Certificateholder obligated to pay the
expenses of the Issuer pursuant to Section 2.07 of the Trust Agreement.
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"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" means (i) with respect to a Certificate, the Person in whose
name such Certificate is registered in the Certificate Register, and (ii) with
respect to a Note, the Person in whose name such Note is registered in the Note
Register.
"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
"Indenture Trustee" means Norwest Bank Minnesota, National Association,
as Indenture Trustee under this Indenture, or any successor Indenture Trustee
under this Indenture.
"Independent" means, when used with respect to any specified Person,
that the Person (i) is in fact independent of the Issuer, any other obligor upon
the Notes, the Trust Depositor, the Originator and any of their respective
Affiliates, (ii) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the
Originators or any of their respective Affiliates, and (iii) is not connected
with the Issuer, any such other obligor, the Originators or any Affiliate of any
of the foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01, made by
an Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Interest Rate" means, as the context may require, the Class A-1
Interest Rate, the Class A-2 Interest Rate, the Class A-3 Interest Rate, the
Class A-4 Interest Rate, the Class B Interest Rate, the Class C Interest Rate
and the Class D Interest Rate, or any of them, in each case as defined in the
Sale and Servicing Agreement.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Majority in Interest" has the same meaning given the term Required
Holders in the Sale and Servicing Agreement.
"Note Depository Agreement" means the agreement dated as of the Closing
Date, among the Issuer, the Administrator, the Indenture Trustee and DTC, as the
initial Clearing Agency, relating to the Notes, substantially in the form of
Exhibit H hereto.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency) and with
respect to a Definitive Note the Person in whose name a Note is registered on
the Note Register.
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"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to,
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Indenture Trustee
and which shall comply with any applicable requirements of Section 11.01, and
shall be in form and substance satisfactory to the Indenture Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Transaction Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Trust
Depositor, any Originator or any of their respective Affiliates shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that the Indenture Trustee knows to be so owned shall be so disregarded. Notes
so owned that have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Issuer, any other obligor upon the Notes, the Trust Depositor, any
Originator or any of their respective Affiliates.
"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any successor
trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 and is authorized by the Issuer to make the distributions from the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
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"Redemption Date" means in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to Section
10.01(b), the Distribution Date specified by the Servicer or the Issuer pursuant
to Section 10.01(a) or 10.01(b), as the case may be.
"Redemption Date Amount" means (i) in the case of a redemption of the
Notes pursuant to Section 10.01(a), an amount equal to the unpaid principal
amount of the Notes redeemed plus accrued and unpaid interest thereon at the
weighted average of the Interest Rate for each Class of Notes being so redeemed
to but excluding the Redemption Date, or (ii) in the case of a payment made to
Noteholders pursuant to Section 10.01(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (i)
above.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office (or any successor group of the
Indenture Trustee), including any Vice President, assistant secretary or other
officer or assistant officer of the Indenture Trustee customarily performing
functions similar to those performed by the people who at such time shall be
officers, respectively, or to whom any corporate trust matter is referred at the
Corporate Trust Office of the Indenture Trustee because of his knowledge of and
familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of the date hereof, among the Issuer, the Trust Depositor, the
Servicer, Heller Financial Leasing, Inc. and the Indenture Trustee,
substantially in the form of Exhibit A hereto.
"State" means any one of the 50 states of the United States, or the
District of Columbia or any of its territories.
"Targeted Holder" means any holder of a right to receive interest or
principal with respect to the Notes or other interests in the Trust (other than
a Note or other interest with respect to which an opinion is or has been
rendered that such interest will be treated as debt for federal income tax
purposes) and any holder of a right to receive any amount in respect of the
Certificates; provided, that any Person holding more than one interest each of
which would cause such Person to be a Targeted Holder shall be treated as a
single Targeted Holder.
"Termination Date" means the date on which the Indenture Trustee shall
have received payment and performance of all amounts and obligations which the
Issuer may owe to or on behalf of the Indenture Trustee for the benefit of the
Noteholders under this Indenture or the Notes.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of the date hereof, between the Trust Depositor and the Owner Trustee.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Sale and Servicing Agreement.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
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"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has
the meaning assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without
limitation;
(v) words in the singular include the plural and
words in the plural include the singular;
(vi) any agreement, instrument or statute defined
or referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as from
time to time amended, modified or supplemented and includes (in the
case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns; and
(vii) the words "hereof," "herein" and "hereunder"
and words of similar import when used in this Indenture shall refer to
this Indenture as a whole and not to any particular provision of this
Indenture; Section, subsection and Schedule references contained in
this Indenture are references to Sections, subsections and Schedules in
or to this Indenture unless otherwise specified.
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ARTICLE TWO
THE NOTES
Section 2.01. Form. The Notes, in each case together with the Indenture
Trustee's certificate of authentication, shall be in substantially the forms set
forth as Exhibits B, C, D, E, F, G and H to this Indenture with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits hereto are part of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of an Issuer Order,
authenticate and deliver for original issue (i) Class A-1 Notes in an aggregate
principal amount of $[___________], (ii) Class A-2 Notes in an aggregate
principal amount of $[___________], (iii) Class A-3 Notes in an aggregate
principal amount of $[___________], (iv) Class A-4 Notes in an aggregate
principal amount of $[___________], (iv) Class B Notes in an aggregate principal
amount of $[___________], (v) Class C Notes in an aggregate principal amount of
$[___________] and (vi) Class D Notes in an aggregate principal amount of
$[___________]. The aggregate principal amount of such Classes of Notes
Outstanding at any time may not exceed such respective amounts, except as
otherwise provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein by
the Indenture Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.03. Temporary Notes. Pending the preparation of Book-Entry
Notes or Definitive Notes, the Issuer may execute, and upon receipt of an Issuer
Order the Indenture Trustee shall authenticate and deliver, temporary Notes that
are printed, lithographed, typewritten, mimeographed or otherwise produced, of
the tenor of the definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer will cause Book-Entry Notes
or Definitive Notes to be prepared without unreasonable delay. After the
preparation of Book-Entry Notes or Definitive Notes, the temporary Notes shall
be exchangeable for Book-Entry Notes or Definitive Notes upon surrender of the
temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to the Holder. Upon surrender for
cancellation of any one or more Notes, the Issuer shall execute and the
Indenture Trustee shall authenticate and deliver in exchange therefor a like
tenor and principal amount of definitive Notes of authorized denominations.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as Book-Entry Notes or Definitive Notes.
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Section 2.04. Registration; Registration of Transfer and Exchange;
Transfer Restriction. (a) The Issuer shall cause to be kept a register (the
"Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. The Indenture Trustee shall be "Note
Registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. Upon any resignation of any Note Registrar, the Issuer shall promptly
appoint a successor or, if it elects not to make such an appointment, assume the
duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and the amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located in the city in which the Corporate Trust Office is
located, or by a member firm of a national securities exchange, and such other
documents as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 not involving
any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
Neither the Trustee nor the Registrar shall have any responsibility to
monitor or restrict the transfer of beneficial ownership in any Note an interest
in which is transferable through the facilities of the Clearing Agency.
(b) Notwithstanding any other provision of this Indenture, no transfer
of the Class C Notes or the Class D Notes shall be made or shall be valid or
effective hereunder unless such transfer is made in a transaction which does not
require registration or qualification under the Securities Act of 1933 or
qualification under any state securities or "Blue Sky" laws. In addition,
neither the Indenture Trustee nor the Note Registrar shall effect the
registration of any transfer of the Class C Notes or the Class D Notes if,
following such transfer, there would be more than 100 Targeted Holders.
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Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by them to hold the Issuer and the Indenture
Trustee, then, in the absence of notice to the Issuer, the Note Registrar or the
Indenture Trustee that such Note has been acquired by a bona fide purchaser, the
Issuer shall execute and upon its written request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same Class; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer, and the Indenture Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such Person to whom
such replacement Note was delivered or any assignee of such Person, except a
bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Indenture Trustee may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee or the Note Registrar) connected
therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost of stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, and any
of their respective agents may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Indenture Trustee nor any of their respective agents
shall be affected by notice to the contrary.
Section 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest at the related Interest
Rate, and such interest shall be payable on each Distribution Date as specified
therein, subject to Section 3.01. Any installment of interest or principal, if
any, payable on any Note which is punctually paid or duly provided for by the
Issuer on the applicable Distribution Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the Record
Date, by wire transfer in immediately available funds to the account designated
by such nominee and except for the final installment of principal payable with
respect to such Note on a Distribution Date or on the related Final Distribution
Date, as the case may be (and except for the Redemption Price for any Note
called for redemption pursuant to Section 10.01(a)), which shall be payable as
provided below. The funds represented by any such checks returned undelivered
shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable on each Distribution
Date to the extent provided in the form of the related Note set forth as an
Exhibit hereto. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable, if not previously paid, on the
date on which an Event of Default shall have occurred and be continuing, unless
the Required Holders have waived such Event of Default in the manner provided in
Section 5.02. All principal payments on each Class of Notes shall be made pro
rata to the Noteholders of
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such Class entitled thereto. The Indenture Trustee shall notify the Person in
whose name a Note is registered at the close of business on the Record Date
preceding the Distribution Date on which the Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such notice
shall be mailed within five Business Days of receipt of notice of termination of
the Trust pursuant to Section 9.01(c) of the Trust Agreement and shall specify
that such final installment will be payable only upon presentation and surrender
of such Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest at the applicable Interest Rate in any
lawful manner. The Issuer may pay such defaulted interest to the Persons who are
Noteholders on any Distribution Date in the manner and to the extent provided in
the Sale and Servicing Agreement.
(d) All payments to be made by the Issuer under this Indenture shall be
made only from the income and proceeds from the Trust Estate and only to the
extent that the Issuer shall have sufficient income or proceeds from the Trust
Estate to enable the Issuer to make payments in accordance with the terms
hereof. The Indenture Trustee is not personally liable for any amounts payable
under this Indenture, except as expressly provided herein.
Section 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is timely
and the Notes have not been previously disposed of by the Indenture Trustee.
Section 2.09. Book-Entry Notes. The Notes (except for the Class C Notes
or the Class D Notes as specified in Section 2.11 below), upon original
issuance, will be issued in the form of a typewritten Note or Notes representing
the Book-Entry Notes, to be delivered to DTC, the initial Depository, by, or on
behalf of, the Issuer. Such Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Noteholder of such Notes will receive a Definitive Note representing such
Noteholder's interest in such Note, except as provided in Section 2.11. Unless
and until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Noteholders pursuant to Section 2.11:
(i) the provisions of this Section shall be in full
force and effect;
(ii) the Note Registrar and the Indenture Trustee shall
be entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole holder of the Notes, and shall have no obligation to the
Noteholders;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Noteholders shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Noteholders and the Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the Note
Depository Agreement, unless and until Definitive Notes are issued
pursuant to Section 2.11, the Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants; and
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(v) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of Noteholders
evidencing a specified percentage of the Outstanding Amount, the
Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from Note
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
the Notes and has delivered such instructions to the Indenture Trustee.
Section 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Noteholders pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders of the Notes to the Clearing Agency,
and shall have no obligation to the Noteholders.
Section 2.11. Definitive Notes. The Class C Notes and the Class D Notes
shall be initially issued in the form of Definitive Notes. With respect to the
other Classes of Notes, if (i)(A) the Administrator advises the Indenture
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities as described in the Note Depository
Agreement, and (B) the Indenture Trustee or the Administrator is unable to
locate a qualified successor, (ii) the Administrator at its option advises the
Indenture Trustee in writing that it elects to terminate the book-entry system
through the Clearing Agency, or (iii) after the occurrence of an Event of
Default, Note Owners for such Notes representing not less than 66 2/3% of the
Outstanding Amount of such Class of Notes advise the Indenture Trustee and the
Clearing Agency through the Clearing Agency Participants in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the related Note Owners, then the Indenture Trustee shall
notify all Note Owners of the related Class or Classes of Notes, through the
Clearing Agency, of the occurrence of any such event and of the availability of
Definitive Notes of the related Class of Notes to Note Owners requesting the
same. Upon surrender to the Indenture Trustee of the Note or Notes representing
the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes of a Class, the Indenture Trustee shall
recognize the holders of the Definitive Notes as Noteholders hereunder.
The Indenture Trustee shall not be liable if the Indenture Trustee or
the Administrator is unable to locate a qualified successor Clearing Agency.
Definitive Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
Section 2.12. Release of Collateral. Subject to Section 11.01 and the
terms of the Transaction Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate.
Section 2.13. Tax Treatment. The Issuer and the purchasers of the Notes
intend, and will take all actions consistent with the intention, that the Notes
be treated as indebtedness which is solely secured by the assets of the Trust
for all federal, state, local, and foreign income and franchise tax purposes and
that, pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii) as in effect
for periods after January 1, 1997, the Trust be disregarded as a separate entity
from the Trust Depositor for federal income tax purposes. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
agree to treat the Notes for federal, state and local income, single business
and franchise tax purposes as indebtedness.
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ARTICLE THREE
COVENANTS; REPRESENTATIONS AND WARRANTIES
Section 3.01. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 8.02(c), the Issuer and the Indenture Trustee will
cause to be deposited into the Note Distribution Account amounts allocated
pursuant to Section 7.05 of the Sale and Servicing Agreement, and cause to be
distributed all such amounts on a Distribution Date as deposited therein (i) for
the benefit of the Class A-1 Notes, to the Class A-1 Noteholders, (ii) for the
benefit of the Class A-2 Notes, to the Class A-2 Noteholders, (iii) for the
benefit of the Class A-3 Notes, to the Class A-3 Noteholders, (iv) for the
benefit of the Class-A-4 Notes, to the Class A-4 Noteholders, (iii) for the
benefit of the Class B Notes, to the Class B Noteholders, (iv) for the benefit
of the Class C Notes, to the Class C Noteholders, and (iv) for the benefit of
the Class D Notes, to the Class D Noteholders, in each case as further specified
herein. Amounts properly withheld under the Code by any Person from a payment to
any Noteholder of interest and/or principal shall be considered as having been
paid by the Issuer to such Noteholder for all purposes of this Indenture.
Section 3.02. Maintenance of Office or Agency. The Issuer will maintain
in Wilmington, Delaware, an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to be Held in Trust. As provided in
Section 8.02, all payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Collection Account and the
Note Distribution Account pursuant to Section 8.02(b) shall be made on behalf of
the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
On or before the Business Day immediately preceding each Distribution
Date and Redemption Date, the Issuer shall deposit or cause to be deposited in
the Note Distribution Account an aggregate sum sufficient to pay the amounts
then becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless the Paying Agent is the Indenture Trustee) shall
promptly notify the Indenture Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by
the Issuer (or any other obligor upon the Notes) in the making of any
payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee, forthwith
pay to the Indenture Trustee all sums so held in trust by such Paying
Agent;
(iv) immediately resign as a Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the
payment of Notes if at any time it ceases to meet the standards
required to be met by a Paying Agent at the time of its appointment;
and
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(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on any Notes of
any applicable withholding taxes imposed thereon and with respect to
any applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and upon receipt of an Issuer Request shall be deposited by the Indenture
Trustee in the Collection Account; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Issuer for payment thereof,
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that if such money or
any portion thereof had been previously deposited by the Issuer with the
Indenture Trustee for the payment of principal or interest on the Notes, and
provided, further, that the Indenture Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuer cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to or for the
account of the Issuer. The Indenture Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but not have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or of any
Paying Agent, at the last address of record for each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Collateral.
Section 3.05. Protection of Collateral. The Issuer intends the security
interest Granted pursuant to this Indenture in favor of the Indenture Trustee on
behalf of the Noteholders to be prior to all other liens in respect of the
Collateral, and the Issuer shall take all actions necessary to obtain and
maintain, for the benefit of the Indenture Trustee on behalf of the Noteholders,
a first lien on and a first priority, perfected security interest in the
Collateral. In connection therewith, pursuant to Section 2.06 of the Sale and
Servicing Agreement, the Issuer shall cause to be delivered into the possession
of the Indenture Trustee as pledgee hereunder, indorsed in blank, any
"instruments" (within the meaning of the UCC), not constituting part of chattel
paper, evidencing any Contract which is part of the Collateral. The Indenture
Trustee agrees to maintain continuous possession of such delivered instruments
as pledgee hereunder until this Indenture shall have terminated in accordance
with its terms or until, pursuant to the terms hereof or of the Sale and
Servicing Agreement, the Indenture Trustee is otherwise authorized to release
such instrument from the Collateral. The Issuer will from time to time execute
and deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, all as prepared by the Servicer and delivered to the Issuer, and
will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the
Collateral;
(ii) maintain or preserve the lien and security interest
(and the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
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(iii) perfect, publish notice of or protect the validity
of any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Collateral and the
rights of the Indenture Trustee and the Noteholders in such Collateral
against the claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed
upon the Collateral when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute all financing statements, continuation statements or
other instruments required to be executed pursuant to this Section.
Section 3.06. [Reserved].
Section 3.07. Performance of Obligations; Servicing of Contracts.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any such Person's material covenants or obligations under any instrument or
agreement included in the Collateral or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in the Transaction Documents or such other instrument or
agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties and obligations under this Indenture, and any performance
of such duties by a Person identified to the Indenture Trustee in an Officer's
Certificate shall be deemed to be action taken by the Issuer. The Indenture
Trustee shall not be responsible for the action or inaction of the Servicer or
the Administrator. Initially, the Issuer has contracted with the Servicer and
the Administrator to assist the Issuer in performing its duties under this
Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Transaction
Documents and in the instruments and agreements included in the Collateral,
including but not limited to filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within the
time periods provided for herein and therein. Except as otherwise expressly
provided therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Transaction Document or any provision thereof without the consent
of the Indenture Trustee or the Required Holders.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default, the Issuer shall promptly notify the Indenture Trustee and each Rating
Agency thereof. Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee. As soon as a Successor Servicer is appointed, the Issuer
shall notify the Indenture Trustee and the Rating Agencies of such appointment
(to the extent such party has not already been notified pursuant to the Sale and
Servicing Agreement), specifying in such notice the name and address of such
Successor Servicer.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Originators of their respective duties under
the Transaction Documents if the effect thereof would adversely affect the
Holders of the Notes.
Section 3.08. Negative Covenants. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by the Transaction
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the
Collateral, unless directed to do so by the Indenture Trustee;
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(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or assessed
upon any part of the Collateral;
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien created by this Indenture
to be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenant; or obligations with
respect to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or
burden the Collateral or any part thereof or any interest therein or
the proceeds thereof (other than Permitted Liens), (C) permit the lien
created by this Indenture not to constitute a valid first priority
(other than with respect to any such tax, mechanics' or other lien)
security interest in the Collateral, or (D) amend, modify or fail to
comply with the provisions of the Transaction Documents without the
prior written consent of the Indenture Trustee, except where the
Transaction Documents allow for amendment or modification without the
consent or approval of the Indenture Trustee; or
(iv) dissolve or liquidate in whole or in part.
Section 3.09. Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form and substance satisfactory
to the Indenture Trustee, the due and punctual payment of the principal
of and interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture and each other Transaction
Document on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel which shall be delivered to and shall be satisfactory to the
Indenture Trustee to the effect that such transaction will not have any
material adverse tax consequence to the Trust, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel (which shall
describe the actions taken as required by clause (v) above or that no
such actions will be taken) each stating that such consolidation or
merger and such supplemental indenture comply with this Article Three
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and
(vii) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately
after such consolidation or merger, that is (A) greater than zero and
(B) not less than the net worth of the Issuer immediately prior to
giving effect to such consolidation or merger.
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(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Collateral, to any
Person (except as expressly permitted by the Transaction Documents), unless:
(i) the Person that acquires by conveyance or transfer
the properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the United
States or any State, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee, in form and
substance satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture and each other Transaction Document on the part of the Issuer
to be performed or observed, all as provided herein, (C) expressly
agree by means of such supplemental indenture that all right, title and
interest so conveyed or transferred shall be subject and subordinate to
the rights of Holders of the Notes and (D) unless otherwise provided in
such supplemental indenture, expressly agree to indemnify, defend and
hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel which shall be delivered to and shall be satisfactory to the
Indenture Trustee to the effect that such transaction will not have any
material adverse tax consequence to the Trust, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel (which shall
describe the actions taken as required by clause (v) above or that no
such actions will be taken) each stating that such conveyance or
transfer and such supplemental indenture comply with this Article Three
and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filings required by
Exchange Act); and
(vii) the Issuer has a net worth, immediately after such
conveyance or transfer, that is (A) greater than zero and (B) not less
than the net worth of the Issuer immediately prior to giving effect to
such conveyance or transfer.
Section 3.10. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.09(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with same
effect as if such Person has been named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the
assets or properties of the Issuer pursuant to Section 3.09(b), the Issuer will
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee stating that the
Issuer is to be so released.
Section 3.11. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the other Transaction
Documents and activities incidental thereto.
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Section 3.12. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the other Transaction Documents. The proceeds of the Notes
and the Certificates shall be used exclusively to fund the Issuer's purchase of
the Contracts and the other assets specified in the Sale and Servicing
Agreement, to fund the Reserve Fund and to pay the transactional expenses of the
Issuer.
Section 3.13. Notice of Events of Default. The Issuer agrees to give
the Indenture Trustee and each Rating Agency prompt written notice of each Event
of Default hereunder and of a Servicer Default under the Sale and Servicing
Agreement.
Section 3.14. Further Instruments and Acts. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
Section 3.15. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Transaction Document.
Section 3.16. Amendments of Trust Agreement. The Issuer shall not agree
to any amendment to Section 11.01 of the Trust Agreement to eliminate the
requirements thereunder that the Indenture Trustee or the Holders of the Notes
consent to amendments thereto as provided therein.
Section 3.17. Removal of Administrator. So long as any Notes are issued
and outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection with
such removal.
Section 3.18. Representations and Warranties of Issuer. The Issuer
represents and warrants as follows:
(a) Power and Authority. It has full power, authority and
legal right to execute, deliver and perform its obligations as Issuer
under this Indenture and the Notes (the foregoing documents, the
"Issuer Documents").
(b) Due Authorization. The execution and delivery of the
Issuer Documents and the consummation of the transactions provided for
therein have been duly authorized by all necessary action on its part.
(c) No Conflict. The execution and delivery of the Issuer
Documents, the performance of the transactions contemplated thereby and
the fulfillment of the terms thereof will not conflict with, result in
any breach of any of the materials terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default
under, any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which the Issuer is a party or by which it or any
of its property is bound.
(d) No Violation. The execution and delivery of the Issuer
Documents, the performance of the transactions contemplated thereby and
the fulfillment of the terms thereof will not conflict with or violate,
in any material respect, any Requirements of Law applicable to the
Issuer.
(e) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or any Governmental
Authority required in connection with the execution and delivery of the
Issuer Documents, the performance of the transactions contemplated
thereby and the fulfillment of the terms thereof have been obtained.
(f) Location. The Issuer has its chief executive office and
place of business (as such terms are used in Article 9 of the UCC) in
Wilmington, Delaware. The Issuer agrees that it will not change the
location
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of such office to a location outside of Wilmington, Delaware, without
at least 30 days prior written notice to the Originators, the Servicer,
the Indenture Trustee and the Rating Agencies.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.01, 3.03, 3.04, 3.05,
3.07, 3.08, 3.10, 3.12, 3.13, 3.15 and 3.16, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.02) and (vi) the rights of Noteholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them, and the Indenture Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section
2.05 and (ii) Notes for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 3.03) have been delivered
to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the
Indenture Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at the
applicable Maturity Date within one year, or
(iii) are to be called for redemption
within one year under arrangements satisfactory to
the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States (which will mature
prior to the date such amounts are payable), in trust in an
Eligible Deposit Account (which shall be the Collection
Account or Note Distribution Account) for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness
on such Note not theretofore delivered to the Indenture
Trustee for cancellation when due to the final scheduled
Distribution Date (if Notes shall have been called for
redemption pursuant to Section 10.01(a)), as the case may be;
(B) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or on
behalf of the Indenture Trustee for the benefit of the Noteholders
under this Indenture or the Notes; and
(C) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel and (if required by the
TIA or the Indenture Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable requirements
of Section 11.01(a) and, subject to Section 11.02, stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with and the Rating
Agency Condition has been satisfied.
Section 4.02. Application of Trust Money. All moneys deposited
with the Indenture Trustee pursuant to Section 4.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture,
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to the payment, either directly or through any Paying Agent, as the Indenture
Trustee may determine, to the Holders of the particular Notes for the payment or
redemption of which such moneys have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
moneys need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
Section 4.03. Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.03 and thereupon such Paying Agent shall be released from all
further liability with respect to such moneys.
Section 4.04. Release of Collateral. Subject to Section 11.01 and the
terms of the Transaction Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate and an Opinion of Counsel and
Independent Certificates in accordance with TIA ss.ss.314(c) and 314(d)(1) or an
Opinion of Counsel in lieu of such Independent Certificates to the effect that
the TIA does not require any such Independent Certificates.
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ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) failure to pay on each Distribution Date the full
amount of accrued interest on any Note;
(b) failure to pay the then outstanding principal amount
of any Note, if any, on its related Maturity Date;
(c) (i) failure on the part of any Originator to make any
payment or deposit required under the Sale and
Servicing Agreement within three Business Days after
the date the payment or deposit is required to be
made, or (ii) failure on the part of any Originator,
the Trust Depositor, the Issuer or the Owner Trustee
to observe or perform any other covenants or
agreements of such entity set forth in the Sale and
Servicing Agreement or the Indenture, which failure
has a material adverse effect on the Noteholders and
which continues unremedied for a period of 60 days
after written notice; provided, that no such 60-day
cure period shall apply in the case of a failure by
the Originators to perform their joint and several
agreement to repurchase or substitute for Ineligible
Contracts, and further provided, that only a five day
cure period shall apply in the case of a failure by
any Originator or the Owner Trustee to observe their
respective covenants not to grant a security interest
in or otherwise intentionally create a lien on the
Contracts;
(d) any representation or warranty made by any
Originator, the Trust Depositor, the Indenture
Trustee or the Owner Trustee in the Sale and
Servicing Agreement or the Indenture or any
information required to be given by any Originator or
the Trust Depositor to the Indenture Trustee to
identify the Contracts proves to have been incorrect
in any material respect when made and continues to be
incorrect in any material respect for a period of 60
days after written notice and as a result of which
the interests of the Noteholders are materially and
adversely affected; provided, however, that an Event
of Default shall not be deemed to occur thereunder if
the Originator has repurchased the related Contracts
through the Trust Depositor during such period in
accordance with the provisions of the Sale and
Servicing Agreement;
(e) the occurrence of an Insolvency Event relating to any
Originator, the Trust Depositor, the Issuer or the
Servicer; or
(f) the Issuer becomes an "investment company" within the
meaning of the Investment Company Act of 1940, as
amended.
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Section 5.02. Rights Upon Event of Default; Notice.
If an Event of Default referred to in subparagraph (e) of Section 5.01
has occurred, then and in every such case the unpaid principal of the Notes,
together with interest accrued but unpaid thereon, and all other amounts due to
the Noteholders under the Indenture, shall immediately and without further act
become due and payable.
In the case of any event described in clause (a), (b), (c), (d), or
(f) above, an Event of Default with respect to the Notes will be deemed to have
occurred provided such Event of Default may be waived if the Required Holders
provide written notice to the Trust Depositor, Indenture Trustee and the
Servicer of such waiver. In the event the Indenture Trustee has actual knowledge
of an Event of Default, it shall give written notice thereof to the Trust
Depositor, each Originator, the Servicer, the Owner Trustee and the Rating
Agencies.
If an Insolvency Event relating to the Trust Depositor occurs, pursuant
to the Trust Agreement and the Sale and Servicing Agreement, on the day of such
Insolvency Event, the Trust Depositor shall promptly give notice to the
Indenture Trustee of the Insolvency Event, and the Indenture Trustee shall,
unless notified to the contrary by the Required Holders, promptly act pursuant
to and in accordance with the terms thereof to sell, dispose of or otherwise
liquidate the Collateral in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from any such sale, disposition or liquidation of
Contracts shall be deposited in the Collection Account and allocated as
described in the Sale and Servicing Agreement and herein.
Promptly following its receipt of notice hereunder or under any other
Transaction Document of any Event of Default, the Indenture Trustee shall send a
copy thereof to the Issuer and each Rating Agency.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee; Authority of Indenture Trustee.
(a) The Issuer covenants that if the Notes are accelerated following
the occurrence of an Event of Default, the Issuer will, upon demand of the
Indenture Trustee, pay to it, for the benefit of the Holders of the Notes, the
whole amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the applicable Interest Rate and in addition thereto such further amount as
shall be sufficient to cover costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) The Indenture Trustee following the occurrence of an Event of
Default, shall have full right, power and authority to take, or defer from
taking, any and all acts with respect to the administration, maintenance or
disposition of the Collateral.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may in its discretion (except as provided in Section 5.03(d)), proceed
to protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Indenture Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture if an Event of Default shall have occurred and be continuing, and if
the Issuer fails to perform its obligations under Section 10.01(b) when and as
due, the Indenture Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Noteholders by such appropriate Proceedings as
the Indenture Trustee shall deem most effective to protect and enforce any such
rights, whether for specific performance of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law, provided that the Indenture Trustee shall
only be entitled to take any such actions to the extent such actions (i) are
taken only to enforce the Issuer's obligations to redeem the principal amount of
Notes, and (ii) are taken only against the Collateral, any investments therein
and any proceeds thereof.
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(e) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Collateral, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of Notes in any election
of a trustee, a standby trustee or Person performing similar functions
in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Holders of Notes allowed in any
judicial proceedings relative to the Issuer, its creditors and its
property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(f) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
compensation affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(g) All rights of action and of asserting claims under this Indenture
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(h) In any Proceedings brought by the Indenture Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Indenture Trustee shall be held to represent all of the Holders of the
Notes, and it shall not be necessary to make any Noteholder a party to any such
proceedings.
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Section 5.04. Remedies. If an Event of Default shall have occurred and
be continuing the Indenture Trustee (subject to Section 5.05) may, and shall if
so directed by the Required Holders in writing:
(i) institute Proceedings in its own name and as or on
behalf of a trustee of an express trust for the collection of all
amounts then payable on the Notes or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such
Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect to the
Collateral;
(iii) exercise any remedies of a secured party under the
UCC and any other remedy available to the Indenture Trustee and take
any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee on behalf of the Noteholders under
this Indenture or the Notes; and
(iv) direct the Owner Trustee to sell the Collateral or
any portion thereof or rights or interest therein, at one or more
public or private sales called and conducted in any manner permitted by
law; provided, however, that the Indenture Trustee may not sell or
otherwise liquidate the Collateral following an Event of Default, other
than an Event of Default described in Section 5.01(a) or (b), unless
(A) the Holders of 100% of the Principal Amount of the Notes consent
thereto, (B) the proceeds of such sale or liquidation distributable to
the Noteholders are sufficient to discharge in full all amounts then
due and unpaid upon such Notes for principal and interest or (C) the
Indenture Trustee determines that the Collateral will not continue to
provide sufficient funds for the payment of principal of and interest
on the Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee provides prior
written notice to each Rating Agency and obtains the consent of the
Required Holders. In determining such sufficiency or insufficiency with
respect to clauses (B) and (C), the Indenture Trustee may, but need
not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm or national reputation as to the feasibility
of such proposed action and as to the sufficiency of the Collateral for
such purpose; provided, however, upon the occurrence of an Event of
Default described in Section 5.01(e), caused solely from an event
described in such subparagraph occurring with respect to the Trust
Depositor, the Collateral will be liquidated by the Indenture Trustee
and the Trust will be terminated 90 days after the date of such
Insolvency Event, unless, before the end of such 90-day period, the
related Trustee shall have received written instructions from the
Required Holders, to the effect that such Required Holders disapprove
of the liquidation of such Collateral and termination of such Trust.
Section 5.05. Optional Preservation of the Contracts. Following an
Event of Default and if such Event of Default has not been rescinded and
annulled, and except as otherwise provided above, the Indenture Trustee may, but
need not, elect to maintain possession of the Collateral. It is the desire of
the parties hereto and the Noteholders that there be at all times sufficient
funds for the payment of principal and interest on the Notes, and the Indenture
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Collateral. In determining whether to maintain
possession of the Collateral, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Collateral for such purpose.
Section 5.06. Priorities.
(a) If the Indenture Trustee collects any money or property pursuant to
this Article Five, it shall pay out the money or property in the following order
and priority:
first, so much of such payment as shall be required
to reimburse the Indenture Trustee for any tax, fee, expense,
charge or other loss incurred by the Indenture Trustee (to the
extent not previously reimbursed), (including, without
limitation, the expense of sale, taking or other proceeding,
attorneys' fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made by the
Indenture Trustee in the
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protection, exercise or enforcement of any right, power or
remedy or any damages sustained by the Indenture Trustee,
liquidated or otherwise, upon the Event of Default giving rise
to such expenditures or advances) shall be applied by the
Indenture Trustee in reimbursement of such expenses;
second, so much of such payment remaining as shall be
required to reimburse the Noteholders in full for certain
indemnity payments, if any, made by such Noteholders to the
Indenture Trustee (to the extent not previously reimbursed)
shall be distributed to the Noteholders, and, if the aggregate
amount remaining shall be insufficient to reimburse all such
payments in full, it shall be distributed ratably, without
priority of any Noteholder over any other, in the proportion
that the aggregate amount of such unreimbursed indemnity
payments made by each such Noteholder bears to the aggregate
amount of such unreimbursed indemnity payments made by all
Noteholders;
third, so much of such payment remaining as shall be
required to pay in full the aggregate amount of all accrued
but unpaid interest to the date of distribution on the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes shall be distributed to the Class A-1
Noteholders, the Class A-2 Noteholders, the Class A-3
Noteholders and the Class A-4 Noteholders and, if the
aggregate amount remaining shall be insufficient to pay all
such amounts in full, it shall be distributed ratably, without
priority of any one Class A-1 Note, one Class A-2 Note, one
Class A-3 Note and one Class A-4 Note over any other Class A-1
Note, over any other Class A-2 Note over any other Class A-3
Note or over any other Class A-4 Note in the proportion that
the aggregate amount of all accrued but unpaid interest to the
date of distribution on each Class A-1 Note, Class A-2 Note,
Class A-3 Note or Class A-4 Note bears to the aggregate amount
of all accrued but unpaid interest to the date of distribution
on all Class A-1 Notes, Class A-2 Notes, Class A-3 Note and
Class A-4 Notes;
fourth, so much of such payment remaining as shall be
required to pay in full the aggregate amount of all accrued
but unpaid interest to the date of distribution on the Class B
Notes shall be distributed to the Class B Noteholders, and, if
the aggregate amount remaining shall be insufficient to pay
all such amounts in full, it shall be distributed ratably,
without priority of any one Class B Note over any other Class
B Note, in the proportion that the aggregate amount of all
accrued but unpaid interest to the date of distribution on
each Class B Note bears to the aggregate amount of all accrued
but unpaid interest to the date of distribution on all Class B
Notes;
fifth, so much of such payment remaining as shall be
required to pay in full the aggregate amount of all accrued
but unpaid interest to the date of distribution on the Class C
Notes shall be distributed to the Class C Noteholders, and, if
the aggregate amount remaining shall be insufficient to pay
all such amounts in full, it shall be distributed ratably,
without priority of any one Class C Note over any other Class
C Note, in the proportion that the aggregate amount of all
accrued but unpaid interest to the date of distribution on
each Class C Note bears to the aggregate amount of all accrued
but unpaid interest to the date of distribution on all Class C
Notes;
sixth, so much of such payment remaining as shall be
required to pay in full the aggregate amount of all accrued
but unpaid interest to the date of distribution on the Class D
Notes shall be distributed to the Class D Noteholders, and, if
the aggregate amount remaining shall be insufficient to pay
all such amounts in full, it shall be distributed ratably,
without priority of any one Class D Note over any other Class
D Note, in the proportion that the aggregate amount of all
accrued but unpaid interest to the date of distribution on
each Class D Note bears to the aggregate amount of all accrued
but unpaid interest to the date of distribution on all Class D
Notes;
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seventh, the balance, if any, of such payment
remaining thereafter shall be distributed to the Class A-1
Noteholders in order to pay in full the outstanding aggregate
amount of principal of the Class A-1 Notes and if the
aggregate amount remaining shall be insufficient to pay all
such amounts in full, it shall be distributed ratably, without
priority of any one Class A-1 Note over any other Class A-1
Note in the proportion that the aggregate unpaid principal
amount of each Class A-1 Note bears to the aggregate unpaid
principal amount of all Class A-1 Notes;
eighth, the balance, if any, of such payment
remaining thereafter shall be distributed ratably to the Class
A-2 Noteholders, the Class A-3 Noteholders and the Class A-4
Noteholders in order to pay in full the outstanding aggregate
amount of principal of the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes, and if the aggregate amount
remaining shall be insufficient to pay all such amounts in
full, it shall be distributed ratably, without priority of any
one Class A-2 Note, one Class A-3 Note or one Class A-4 Note
over any other Class A-2 Note, any other Class A-3 Note or any
other Class A-4 Note, in the proportion that the aggregate
unpaid principal amount of each Class A-2 Note, Class A-3 Note
and Class A-4 Note bears to the aggregate unpaid principal
amount of all Class A-2 Notes, Class A-3 Notes and Class A-4
Notes;
ninth, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class B
Noteholders to pay in full the aggregate amount of principal
of the Class B Notes, then due pursuant to or in respect of
the Class B Notes, and if the aggregate amount remaining shall
be insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class B Note
over any other Class B Note, in the proportion that the
aggregate unpaid principal amount of each Class B Note bears
to the aggregate unpaid principal amount of all Class B Notes;
tenth, the balance, if any, of such payment remaining
thereafter shall be distributed ratably to the Class C
Noteholders to pay in full the aggregate amount of principal
of the Class C Notes, then due pursuant to or in respect of
the Class C Notes, and if the aggregate amount remaining shall
be insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class C Note
over any other Class C Note, in the proportion that the
aggregate unpaid principal amount of each Class C Note bears
to the aggregate unpaid principal amount of all Class C Notes;
and
eleventh, the balance, if any, of such payment
remaining thereafter shall be distributed ratably to the Class
D Noteholders to pay in full the aggregate amount of principal
of the Class D Notes, then due pursuant to or in respect of
the Class D Notes, and if the aggregate amount remaining shall
be insufficient to pay all such amounts in full, it shall be
distributed ratably, without priority of any one Class D Note
over any other Class D Note, in the proportion that the
aggregate unpaid principal amount of each Class D Note bears
to the aggregate unpaid principal amount of all Class D Notes.
(b) The Indenture Trustee may fix a record date and payment date for
any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
Section 5.07. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless (and in all events subject to Section 11.16 hereof):
(i) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
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(ii) the Holders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Indenture Trustee
to institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the
Indenture Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt
of such notice, request and offer of indemnity has failed to institute
such Proceedings; and
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by
the Holders of a majority of the Outstanding Amount of the Notes,
voting together as a single class.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.08. Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in the Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
Section 5.09. Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholders has instituted any Proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Indenture Trustee
and the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default of Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
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Section 5.12. Control by Noteholders. The Required Holders shall have
the right to direct the time, method and place of conducting any Proceeding for
any remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee (in all events
subject to Section 6.02(f)); provided that:
(i) such direction shall not be in conflict with any
rule of law or with any other provision of this Indenture;
(ii) subject to the terms of Section 5.04, any direction
to the Indenture Trustee to sell or liquidate the Collateral shall be
by the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 have
been satisfied and the Indenture Trustee elects to retain the
Collateral pursuant to such Section, then any direction to the
Indenture Trustee by Holders of Notes representing less than 100% of
the Outstanding Amount of the Notes to sell or liquidate the Collateral
shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not inconsistent with
such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines
might involve it in liability or might materially and adversely affect the
rights of any Noteholders not consenting to such action.
Section 5.13. Waiver of Past Defaults. In the case of any waiver of an
Event of Default, the Issuer, the Indenture Trustee and the Holders of the notes
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Event of Default or
impair any right consequent thereto. Upon any such waiver, such Event of Default
shall cease to exist and be deemed to have been cured and not to have occurred,
for every purpose of this Indenture.
Section 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Indenture Trustee, (ii) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (iii) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
Section 5.15. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.16. Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy
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of any execution under such judgment upon any portion of the Collateral or upon
any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.06.
Section 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer shall take all such lawful action
as the Indenture Trustee may request to compel or secure the performance and
observance by the Trust Depositor and the Servicer as applicable, of each of
their obligations to the Issuer under or in connection with the Sale and
Servicing Agreement in accordance with the terms thereof, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale and Servicing Agreement to the extent and
in the manner directed by the Indenture Trustee, including the transmission of
notices of default on the part of the Trust Depositor or the Servicer thereunder
and the institution of legal of administrative actions or proceedings to compel
or secure performance by the Trust Depositor or the Servicer of each of their
obligations under the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in
writing, including facsimile) of the Required Holders shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the Trust
Depositor or the Servicer under or in connection with the Sale and Servicing
Agreement, including the right or power to take any action to compel or secure
performance or observance by the Trust Depositor or the Servicer of each of
their obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
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ARTICLE SIX
THE INDENTURE TRUSTEE
Section 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and in the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into
this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the factual
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture and the other Transaction Documents to which the Indenture
Trustee is a party.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(i) this paragraph does not limit the effect of Section
6.01(b);
(ii) the Indenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer unless it
is proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) The Indenture Trustee shall have no discretionary duties other than
those explicitly set forth in this Indenture.
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(i) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this section and to the provisions of the
TIA.
Section 6.02. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate (with respect to factual matters) or an Opinion
of Counsel, as applicable. The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officer's
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of Notes,
pursuant to the provisions of this Indenture, unless such Holders of Notes shall
have offered to the Indenture Trustee reasonable security or indemnity against
the costs, expenses and liabilities that may be incurred therein or thereby;
provided, however, that the Indenture Trustee shall, upon the occurrence of an
Event of Default (that has not been cured), exercise the rights and powers
vested in it by this Indenture in a manner consistent with Section 6.01.
(g) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless so requested by the Holders of Notes evidencing
not less than 25% of the Outstanding Amount of the Notes; provided, however,
that if the payment within a reasonable time to the Indenture Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Indenture Trustee, not reasonably
assured to the Indenture Trustee by the security afforded to it by the terms of
this Indenture or the Sale and Servicing Agreement, the Indenture Trustee may
require reasonable indemnity against such cost, expense or liability as a
condition to so proceeding; the reasonable expense of every such examination
shall be paid by the Person making such request, or, if paid by the Indenture
Trustee, shall be reimbursed by the Person making such request upon demand.
Section 6.03. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee is required to comply with Section 6.11.
Section 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Collateral or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
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Section 6.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to each Noteholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal of
or interest on any Note (including payments pursuant to the redemption of such
Notes), the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
Section 6.06. Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information, including without
limitation, IRS Form 1099, as may be required to enable such holder to prepare
its federal and state income tax returns.
Section 6.07. Compensation and Indemnity. The Issuer shall pay or shall
cause the Administrator or Servicer to pay to the Indenture Trustee from time to
time reasonable compensation for its services. The Indenture Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall or shall cause the Administrator or Servicer to
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts. The Issuer shall indemnify or shall
cause the Administrator or Servicer to indemnify the Indenture Trustee against
any and all loss, liability or expense (including attorneys' fees) incurred by
it in connection with the administration of this trust and the performance of
its duties hereunder. The Indenture Trustee shall notify the Issuer and the
Administrator promptly of any claim for which it may seek indemnity. Failure by
the Indenture Trustee to so notify the Issuer and the Administrator shall not
relieve the issuer or the Administrator of its obligations hereunder. The Issuer
shall defend or shall cause the Administrator or Servicer to defend any such
claim, and the Indenture Trustee may have separate counsel and the Issuer shall
pay or shall cause the Administrator or Servicer to pay the fees and expenses of
such counsel. Neither the Issuer nor the Administrator or Servicer need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. The Indenture Trustee
may resign at any time by so notifying the Issuer and the Servicer. The Issuer
may remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section
6.11;
(ii) a court having jurisdiction in the premises in
respect of the Indenture Trustee in an involuntary case or proceeding
under federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, trustee, conservator, sequestrator (or similar official) for
the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the
Indenture Trustee's affairs, provided any such decree or order shall
have continued unstayed and in effect for a period of 30 consecutive
days;
(iii) the Indenture Trustee commences a voluntary case
under any federal or state banking or bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or consents to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, conservator, sequestrator or other
similar official for the Indenture Trustee or for any substantial part
of the Indenture Trustee's property, or makes any assignment for the
benefit of creditors or fails generally to pay its debts as such debts
become due or takes any corporate action in furtherance of any of the
foregoing; or
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(iv) the Indenture Trustee otherwise becomes incapable
of acting.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The Issuer or the successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority in Outstanding Amount
of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of
a successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section and payment of all fees and expenses
owed to the outgoing Indenture Trustee. Notwithstanding the replacement of the
Indenture Trustee pursuant to this Section, the retiring Indenture Trustee shall
be entitled to payment or reimbursement of such amounts as such Person is
entitled pursuant to Section 6.07.
Section 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide each Rating
Agency prompt notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor Indenture Trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
Section 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Collateral may at the time be located, the Indenture Trustee and
the Administrator acting jointly shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as a co-Indenture
Trustee or co-Indenture Trustees, jointly with the Indenture Trustee, or
separate Indenture Trustee or separate Indenture Trustees, of all or any part of
the Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Collateral, or any part hereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee and the Administrator
may consider necessary or desirable. If the Administrator shall not have joined
in such appointment within 15 days after the receipt by it of a request so to
do, the Indenture Trustee alone shall have the power to make such appointment.
No co-Indenture Trustee or separate Indenture Trustee hereunder shall be
required to meet the terms of eligibility of a successor Indenture Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-Indenture
Trustee or separate Indenture Trustee shall be required under Section 6.08
(b) Every separate Indenture Trustee and co-Indenture Trustee shall, to
the extent permitted by law, be appointed and act subject to the following
provisions and conditions:
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(i) all rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be conferred or
imposed upon and exercised or performed by the Indenture Trustee and
such separate Indenture Trustee or co-Indenture Trustee jointly (it
being understood that such separate Indenture Trustee or co-Indenture
Trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed the Indenture Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Indenture Trustee or co-Indenture
Trustee, but solely at the direction of the Indenture Trustee;
(ii) no Indenture Trustee hereunder shall be personally
liable by reason of any act or omission of any other Indenture Trustee
hereunder; and
(iii) the Indenture Trustee and the Administrator may at
any time accept the resignation of or remove any separate Indenture
Trustee or co-Indenture Trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate Indenture
Trustees and co-Indenture Trustees, as effectively as if given to each of them.
Every instrument appointing any separate Indenture Trustee or co-Indenture
Trustee shall refer to this Agreement and the conditions of this Article. Each
separate Indenture Trustee and co-Indenture Trustee, upon its acceptance of the
trusts conferred, shall be vested with the estates or property specified in its
instrument of co-appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the provisions of this
Indenture, specifically including every provision of this Indenture relating to
the conduct of, affecting the liability of or affording protection to, the
Indenture Trustee. Every such instrument shall be filed with the Indenture
Trustee and a copy thereof given to the Administrator.
(d) Any separate Indenture Trustee or co-Indenture Trustee may at any
time constitute the Indenture Trustee, its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do any lawful act
under or in respect of this Agreement on its behalf and in its name. If any
separate Indenture Trustee or co-Indenture Trustee shall die, become incapable
of acting, resign or be removed, all of its estates, properties, rights,
remedies and trusts shall vest in and be exercised by the Indenture Trustee, to
the extent permitted by law, without the appointment of a new or successor
Indenture Trustee. Notwithstanding anything to the contrary in this Indenture,
the appointment of any separate Indenture Trustee or co-Indenture Trustee shall
not relieve the Indenture Trustee of its obligations and duties under this
Indenture.
Section 6.11. Eligibility. The Indenture Trustee shall at all times
satisfy the requirements of TIA ss.310(a). The Indenture Trustee hereunder shall
at all times be a financial institution organized and doing business under the
laws of the United States of America or any state, authorized under such laws to
exercise corporate trust powers, whose long term unsecured debt is rated at
least Baa3 by Moody's and shall have a combined capital and surplus of at least
$50,000,000 or shall be a member of a bank holding system the aggregate combined
capital and surplus of which is $50,000,000 and subject to supervision or
examination by federal or state authority, provided that the Trustee's separate
capital and surplus shall at all times be at least the amount required by
Section 310(a)(2) of the TIA. If such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of a supervising or
examining authority, then for the purposes of this Section 6.ll, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 6.ll, the Trustee shall resign immediately in the
manner and with the effect specified in Section 6.08. The Indenture Trustee
shall comply with TIA ss.310(b); provided, however, that there shall be excluded
from the operation of TIA ss.310(b)(1) any indenture or indentures under which
other securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA ss.310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss.311(a) to the extent indicated.
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Section 6.13. Representations and Warranties of Indenture Trustee. The
Indenture Trustee in its individual capacity and as Indenture Trustee represents
and warrants as follows:
(a) Organization and Corporate Power. It is a duly organized
and validly existing national banking association in good standing
under the laws of each jurisdiction where its business so requires. It
has full corporate power, authority and legal right to execute, deliver
and perform its obligations as Indenture Trustee under this Indenture
and the Sale and Servicing Agreement (the foregoing documents, the
"Indenture Trustee Documents") and to authenticate the Notes.
(b) Due Authorization. The execution and delivery of the
Indenture Trustee Documents, the consummation of the transactions
provided for therein and the authentication of the Notes have been duly
authorized by all necessary corporate action on its part, either in its
individual capacity or as Indenture Trustee, as the case may be.
(c) No Conflict. The execution and delivery of the Indenture
Trustee Documents, the performance of the transactions contemplated
thereby and the fulfillment of the terms thereof (including the
authentication of the Notes), will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Indenture Trustee is a party or by which it or
any of its property is bound.
(d) No Violation. The execution and delivery of the Indenture
Trustee Documents, the performance of the transactions contemplated
thereby and the fulfillment of the terms thereof (including the
authentication of the Notes), will not conflict with or violate, in any
material respect, any Requirements of Law applicable to the Indenture
Trustee.
(e) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or any Governmental
Authority applicable to the Indenture Trustee, required in connection
with the execution and delivery of the Indenture Trustee Documents, the
performance by the Indenture Trustee of the transactions contemplated
thereby and the fulfillment by the Indenture Trustee of the terms
thereof (including the authentication of the Notes), have been
obtained.
(f) Validity, Etc. Each Indenture Trustee Document constitutes
a legal, valid and binding obligation of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with its terms,
except as such enforceability may be limited by Insolvency Laws and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity) or by an
implied covenant of good faith and fair dealing.
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ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (i) not more than five days after the earlier of (a) each
Record Date and (b) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Noteholders as of such Record Date and (ii) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than ten days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
Section 7.02. Preservation of Information: Communication to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.01 and the names and addresses of Noteholders received by the Indenture
Trustee in its capacity as Note Registrar and shall otherwise comply with TIA
ss.312(a). The Indenture Trustee may destroy any list furnished to it as
provided in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).
Section 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required (if at all) to file the same with the Commission,
copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) that the Issuer may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations;
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
ss.313(c)) such summaries of any information, documents and reports
required to be filed by the issuer pursuant to clauses (i) and (ii) of
this Section 7.03(a) and by rules and regulations prescribed from time
to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by TIA
ss.313(a), within 60 days after January 31 beginning with January 31, 2000, the
Indenture Trustee shall mail to each Noteholder as required by TIA ss.313(c) a
brief report dated as of such date that complies with TIA ss.313(a). The
Indenture Trustee also shall comply with TIA ss.313(b).
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A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
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ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture and the Sale
and Servicing Agreement. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Collateral,
the Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article Five.
Section 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders and the Certificateholders, the Trust Accounts as
provided in Section 7.01 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, all amounts required to be
disbursed to the Indenture Trustee with respect to the preceding Collection
Period pursuant to Section 7.01 of the Sale and Servicing Agreement will be
transferred from the Collection Account and/or the Reserve Fund and deposited by
the Indenture Trustee upon receipt to the Note Distribution Account.
(c) On each Distribution Date, the Indenture Trustee shall distribute
all amounts on deposit in the Note Distribution Account to Noteholders in
respect of the Notes to the extent of amounts due and unpaid on the Notes for
principal and interest as follows and in the following order of priority:
first, so much of such installment or payment as
shall be required to pay in full the aggregate amount of
interest then due on or in respect of the Class A-1 Notes ,
the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes shall be distributed to the Class A-1 Noteholders, the
Class A-2 Noteholders, the Class A-3 Noteholders and the Class
A-4 Noteholders ratably, without priority of any one Class A-1
Note, one Class A-2 Note, one Class A-3 Note or one Class A-4
Note over any other Class A-1 Note, any other Class A-2 Note,
any other Class A-3 Note or any other Class A-4 Note, in the
proportion that the aggregate amount of all accrued but unpaid
interest to the date of distribution on each Class A-1 Note,
each Class A-2 Note, each Class A-3 Note and each Class A-4
Note bears to the aggregate amount of all accrued but unpaid
interest to the date of distribution on all Class A-1 Notes,
all Class A-2 Notes, all Class A-3 Notes and all Class A-4
Notes;
second, so much of such installment or payment as
shall be required to pay in full the aggregate amount of
interest then due on or in respect of the Class B Notes shall
be distributed to the Class B Noteholders ratably, without
priority of any one Class B Note over any other Class B Note,
in the proportion that the aggregate amount of all accrued but
unpaid interest to the date of distribution on each Class B
Note bears to the aggregate amount of all accrued but unpaid
interest to the date of distribution on all Class B Notes;
third, so much of such installment or payment as
shall be required to pay in full the aggregate amount of
interest then due on or in respect of the Class C Notes shall
be distributed to the Class C Noteholders ratably, without
priority of any one Class C Note over
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any other Class C Note, in the proportion that the aggregate
amount of all accrued but unpaid interest to the date of
distribution on each Class C Note bears to the aggregate
amount of all accrued but unpaid interest to the date of
distribution on all Class C Notes;
fourth, so much of such installment or payment as
shall be required to pay in full the aggregate amount of
interest then due on or in respect of the Class D Notes shall
be distributed to the Class D Noteholders ratably, without
priority of any one Class D Note over any other Class D Note,
in the proportion that the aggregate amount of all accrued but
unpaid interest to the date of distribution on each Class D
Note bears to the aggregate amount of all accrued but unpaid
interest to the date of distribution on all Class D Notes;
fifth, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to
the Class A-1 Noteholders to pay in full the aggregate amount
of the Class A Principal Payment Amount then due pursuant to
or in respect of the Class A-1 Notes, without priority of any
one Class A-1 Note over any other Class A-1 Note, in the
proportion that the aggregate unpaid principal amount of each
Class A-1 Note bears to the aggregate unpaid principal amount
of all Class A-1 Notes;
sixth, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to
the Class A-2 Noteholders to pay in full the aggregate amount
of the Class A-2 Principal Payment Amount then due pursuant to
or in respect of the Class A-2 Notes, without priority of any
one Class A-2 Note over any other Class A-2 Note, in the
proportion that the aggregate unpaid principal amount of each
Class A-2 Note bears to the aggregate unpaid principal amount
of all Class A-2 Notes; provided, that the Outstanding Amount
of the Class A-1 Notes is $0;
seventh, the balance, if the if any, of such
installment or payment remaining thereafter shall be
distributed ratably to the Class A-3 Noteholders to pay in
full the aggregate amount of the Class A-3 Principal Payment
Amount then due pursuant to or in respect of the Class A-3
Notes, without priority of any one Class A-3 Note over any
other Class A-3 Note, in the proportion that the aggregate
unpaid principal amount of each Class A-3 Note bears to the
aggregate unpaid principal amount of all Class A-3 Notes;
provided, that the Outstanding Amount of the Class A-1 Notes
and Class A-2 Notes is $0;
eighth, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to
the Class A-4 Noteholders to pay in full the aggregate amount
of the Class A-4 Principal Payment Amount then due pursuant to
or in respect of the Class A-4 Notes, without priority of any
one class A-4 Note over any other Class A-4 Note, in the
proportion that the aggregate unpaid principal amount of each
Class A-4 Note bears to the aggregate unpaid principal amount
of all Class A-4 Notes; provided, that the Outstanding Amount
of the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes is
$0;
ninth, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to
the Class B Noteholders to pay in full the aggregate amount of
the Class B Principal Payment Amount then due pursuant to or
in respect of the Class B Notes, without priority of any one
Class B Note over any other Class B Note, in the proportion
that the aggregate unpaid principal amount of each Class B
Note bears to the aggregate unpaid principal amount of all
Class B Notes; provided, that the Outstanding Amount of the
Class A-1 Notes is $0;
tenth, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to
the Class C Noteholders to pay in full the aggregate amount of
the Class C Principal Payment Amount then due pursuant to or
in respect of the Class C Notes, without priority of any one
Class C Note over any other Class C Note, in the proportion
that
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the aggregate unpaid principal amount of each Class C Note
bears to the aggregate unpaid principal amount of all Class C
Notes; provided, that the Outstanding Amount of the Class A-1
Notes is $0;
eleventh, the balance, if any, of such installment or
payment remaining thereafter shall be distributed ratably to
the Class D Noteholders to pay in full the aggregate amount of
the Class D Principal Payment Amount then due pursuant to or
in respect of the Class D Notes, without priority of any one
Class D Note over any other Class D Note, in the proportion
that the aggregate unpaid principal amount of each Class D
Note bears to the aggregate unpaid principal amount of all
Class D Notes; provided, that the Outstanding Amount of the
Class A-1 Notes is $0;
twelfth, while the Outstanding Amount of the Class
A-1 Notes (after giving effect to the Class A Principal
Payment Amount) is greater than $0, the balance, if any, of
such installment or payment remaining thereafter shall be
distributed ratably to the Class A-1 Noteholders to pay in
full the lesser of (i) the Additional Principal and (ii) the
Outstanding Amount of Class A-1 Notes (after giving effect to
the Class A Principal Payment Amount), without priority of any
one Class A-1 Note over any other Class A-1 Note, in the
proportion that the aggregate unpaid principal amount of each
Class A-1 Note bears to the aggregate unpaid principal amount
of all Class A-1 Notes;
thirteenth, the balance, if any, of such installment
or payment remaining thereafter shall be distributed ratably
to the Class A-2 Noteholders to pay in full the lesser of (i)
the Additional Principal and (ii) the Outstanding Amount of
Class A-2 Notes (after giving effect to the Class A Principal
Payment Amount), without priority of any one Class A-2 Note
over any other Class A-2 Note, in the proportion that the
aggregate unpaid principal amount of each Class A-2 Note bears
to the aggregate unpaid principal amount of all Class A-2
Notes; provided, that the Outstanding Amount of the Class A-1
Notes is $0;
fourteenth, the balance, if any, of such installment
or payment remaining thereafter shall be distributed ratably
to the Class A-3 Noteholders to pay in full the lesser of (i)
the Additional Principal and (ii) the Outstanding Amount of
Class A-3 Notes (after giving effect to the Class A Principal
Payment Amount), without priority of any one Class A-3 Note
over any other Class A-3 Note, in the proportion that the
aggregate unpaid principal amount of each Class A-3 Note bears
to the aggregate unpaid principal amount of all Class A-3
Notes; provided, that the Outstanding Amount of the Class A-1
Notes and Class A-2 Notes is $0;
fifteenth, the balance, if any, of such installment
or payment remaining thereafter shall be distributed ratably
to the Class A-4 Noteholders to pay in full the lesser of (i)
the Additional Principal and (ii) the Outstanding Amount of
Class A-4 Notes (after giving effect to the Class A Principal
Payment Amount), without priority of any one Class A-4 Note
over any other Class A-4 Note, in the proportion that the
aggregate unpaid principal amount of each Class A-4 Note bears
to the aggregate unpaid principal amount of all Class A-4
Notes; provided, that the Outstanding Amount of the Class A-1
Notes, Class A-2 Notes and Class A-3 Notes is $0;
sixteenth, the balance, if any, of such installment
or payment remaining thereafter shall be distributed ratably
to the Class B Noteholders to pay in full the lesser of (i)
the Additional Principal and (ii) the Outstanding Amount of
Class B Notes (after giving effect to the Class B Principal
Payment Amount), without priority of any one Class B Note over
any other Class B Note, in the proportion that the aggregate
unpaid principal amount of each Class B Note bears to the
aggregate unpaid principal amount of all Class B Notes;
provided, that the Outstanding Amount of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes is $0;
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seventeenth, the balance, if any, of such installment
or payment remaining thereafter shall be distributed ratably
to the Class C Noteholders to pay in full the lesser of (i)
the Additional Principal and (ii) the Outstanding Amount of
Class C Notes (after giving effect to the Class C Principal
Payment Amount), without priority of any one Class C Note over
any other Class C Note, in the proportion that the aggregate
unpaid principal amount of each Class C Note bears to the
aggregate unpaid principal amount of all Class C Notes;
provided, that the Outstanding Amount of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class B
Notes is $0; and
eighteenth, the balance, if any, of such installment
or payment remaining thereafter shall be distributed ratably
to the Class D Noteholders to pay in full the lesser of (i)
the Additional Principal and (ii) the Outstanding Amount of
Class D Notes (after giving effect to the Class D Principal
Payment Amount), without priority of any one Class D Note over
any other Class D Note, in the proportion that the aggregate
unpaid principal amount of each Class D Note bears to the
aggregate unpaid principal amount of all Class D Notes;
provided, that the Outstanding Amount of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B
Notes and Class C Notes is $0;
Section 8.03. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Trust Accounts shall be
invested in accordance with the provisions of Section 7.03 of the Sale and
Servicing Agreement. Except as otherwise provided in Section 7.03 of the Sale
and Servicing Agreement, all income or other gain from investments of moneys
deposited in such Trust Accounts shall be deposited by the Indenture Trustee in
the Collection Account, and any loss resulting from such investments shall be
charged to the related Trust Account. The Issuer will not direct the Indenture
Trustee to make any investment of any funds or to sell any investment held in
any of the Trust Accounts unless the security interest granted and perfected in
such account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in any
way be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as Indenture Trustee, in accordance with their
terms.
(c) If (i) the Issuer shall have failed to give written investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 11:00 a.m., New York City time (or such other time as may be agreed
by the Issuer and Indenture Trustee), on any Business Day or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.02 or (iii) if such Notes shall have been declared due and payable following
an Event of Default, but amounts collected or receivable from the Collateral are
being applied in accordance with Section 5.05 as if there had not been such a
declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in Eligible
Investments described in clause (vi) of the definition thereof in the Sale and
Servicing Agreement.
Section 8.04. Release of Collateral.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Indenture Trustee may, and when required by the provisions of this
Indenture or the Sale and Servicing Agreement shall, execute instruments to
release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
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instrument executed by the Indenture Trustee as provided in this Article shall
be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid, release any remaining portion of the Collateral that secured the
Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.04(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA as so stated in the Opinion of Counsel) Independent Certificates in
accordance with TIA ss.ss.314(c) and 314(d)(1) and in each case meeting the
applicable requirements of Section 11.01.
Section 8.05. Opinion of Counsel. The Indenture Trustee shall receive
at least seven days prior written notice when requested by the Issuer to take
any action pursuant to Section 8.04(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee, stating the legal effect of any such action, outlining the
steps required to complete the same, and concluding that all conditions
precedent to the taking of such action have been complied with and such action
will not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions for this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Collateral. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
Without the consent of the Holders of any Notes and with prior notice
to each Rating Agency, the Issuer and the Indenture Trustee, when authorized by
an Issuer Order, and the other parties hereto at any time from time to time, may
enter into one or more indentures supplemental hereto (which shall conform to
the provisions of the TIA as in force at the date of the execution thereof), in
form satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this Indenture, or better
to assure, convey and confirm unto the Indenture Trustee any property
subject or required to be subjected to the lien created by this
Indenture, or to subject to the lien created by this Indenture
additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or the Transaction Documents or to make any other provisions
with respect to matters or questions arising under this Indenture or in
any supplemental indenture; provided that such action shall not
adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Indenture Trustee with respect to
the Notes and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration of the
trusts hereunder by more than one Indenture Trustee, pursuant to the
requirements of Article Six;
(vii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA; and
(viii) to elect into the FASIT provisions of the Code,
provided an Opinion of Counsel to the effect that such election will
not adversely affect the Noteholders, is delivered to the Issuer and
Indenture Trustee.
The Indenture Trustee is hereby authorized to join in the exemption of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to each Rating Agency, and with the consent of a Majority in
Interest, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this
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Indenture; provided, however, that, no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount
thereof, the interest rate thereon or the Redemption Date Amount with
respect thereto, change the provisions of this Indenture relating to
the application of collections on, or the proceeds of the sale of, the
Collateral to payment of principal of or interest on the Notes, or
change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of the provisions of this Indenture
requiring the application of funds available therefor, as provided in
Article Five, to the payment of any such amount due on the Notes on or
after the respective due dates thereof (or, in the case of redemption,
on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of
the Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the second
proviso to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of
the Notes required to direct the Indenture Trustee to sell or liquidate
the Collateral pursuant to Section 5.04 or amend the provisions of this
Article which specify the percentage of the Outstanding Amount of the
Notes required to amend this Indenture or the other Transaction
Documents;
(v) modify any provision of this Section except to
increase any percentage specified herein or to provide that certain
additional provisions of this Indenture or the other Transaction
Documents cannot be modified or waived without the consent of the
Holder of each Outstanding Note affected thereby; or
(vi) permit the creation of any lien ranking prior to or
on a parity with the lien created by this Indenture with respect to any
part of the Collateral or, except as otherwise permitted or
contemplated herein, terminate the lien created by this Indenture on
any property at any time subject hereto or deprive the Holder of any
Note of the security provided by the lien created by this Indenture.
Neither the Issuer, the Indenture Trustee nor any of their respective
affiliates shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Note Owner
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture, the Sale and Servicing Agreement or the Notes
unless such consideration is offered to be paid to all Note Owners that so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of the Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Indenture Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture
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Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
Section 9.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture. If
the Issuer or the Indenture Trustee shall so determine, new notes so modified as
to conform, in the opinion of the Indenture Trustee and the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for Outstanding
Notes.
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<PAGE>
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) In the event that the Originators pursuant to Section 7.08 of the
Sale and Servicing Agreement purchase (through the Trust Depositor) the corpus
of the Trust, the Notes are subject to redemption in whole, but not in part, on
the Distribution Date on which such repurchase occurs, for a purchase price
equal to the outstanding principal, and accrued interest on the Notes; provided,
however, that the Issuer has available funds sufficient to pay such amounts.
Originator, the Servicer or the Issuer shall furnish each Rating Agency notice
of such redemption. If the Notes are to be redeemed pursuant to this Section
10.01(a), the Servicer or the Issuer shall furnish notice of such election to
the Indenture Trustee not later than 20 days prior to the Redemption Date and
the Issuer shall deposit with the Indenture Trustee in the Note Distribution
Account the Redemption Price of the Notes to be redeemed whereupon all such
Notes shall be due and payable on the Redemption Date upon the furnishing of a
notice complying with Section 10.02 to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.02 of the Trust Agreement or Section 5.02(b) of this Indenture, the
proceeds of such sale shall be distributed as provided in Section 5.06. If
amounts are to be paid to Noteholders pursuant to this Section 10.01(b), the
Servicer or the Issuer shall, to the extent practicable, furnish notice of such
event to the Indenture Trustee not later than 20 days prior to the Redemption
Date whereupon all such amounts shall be payable on the Redemption Date.
Section 10.02. Form of Redemption Notice. Notice of redemption under
Section 10.01(a) shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than five days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Date Amount; and
(iii) the place where such Notes are to be surrendered
for payment of the Redemption Date Amount (which shall be the office or
agency of the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
Section 10.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Date Amount and (unless the Issuer shall default in the payment of
the Redemption Date Amount) no interest shall accrue on the Redemption Date
Amount for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Date Amount.
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ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, and (iii) (if required by the TIA as so stated in the Opinion of
Counsel) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section and TIA ss.ss.314(c) and
314(d)(1), except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to enable
such signatory to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for
authentication and delivery of the Notes or the release of any property subject
to the lien created by this Indenture, the Issuer shall, in addition to any
obligation imposed in Section 11.01(a) or elsewhere in this Indenture, furnish
to the Indenture Trustee an Officer's Certificate certifying or stating the
opinion of the signer thereof as to the fair value (within 90 days of such
deposit) to the Issuer of the Collateral or other property or securities to be
so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Indenture Trustee an Independent Certificate as to the
named matters, if the fair value to the Issuer of the property to be so
deposited and of all other such property made the basis of any such withdrawal
or release since the commencement of the then-current fiscal year of the Issuer,
as set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any property so deposited, if
the fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Outstanding
Amount of the Notes.
(iii) Other than with respect to any release described in
clause (A) or (B) of Section 11.01(b)(v), whenever any property or securities
are to be released from the lien created by this Indenture, the Issuer shall
also furnish to the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed to be
released and stating that in the opinion of such person the proposed release
will not impair the security created by this Indenture in contravention of the
provisions hereof.
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<PAGE>
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the opinion of
any signer thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Indenture Trustee an Independent Certificate as to the
same matters if the fair value of the property or securities and of all other
property or securities (other than property described in clauses (A) or (B) of
Section 11.01(b)(v)) released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the certificates
required by clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be furnished in
the case of any release of property or securities if the fair value thereof as
set forth in the related Officer's Certificate is less than $25,000 or less than
one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the
Issuer may, without compliance with the other provisions of this Section, (A)
collect, liquidate, sell or otherwise dispose of the Contracts as and to the
extent permitted or required by the Transaction Documents, (B) make cash
payments out of the Trust Accounts as and to the extent permitted or required by
the Transaction Documents, so long as the Issuer shall deliver to the Indenture
Trustee every six months, commencing [December 15,] 1999, an Officer's
Certificate stating that all the dispositions of Collateral described in clauses
(A) or (B) that occurred during the preceding six calendar months were in the
ordinary course of the Issuer's business and that the proceeds thereof were
applied in accordance with the Transaction Documents.
Section 11.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Person as to other matters, and any such Person may certify or given an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Originator or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Originator or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article Six.
Section 11.03. Acts of Noteholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or
48
<PAGE>
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Noteholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01) conclusive in favor of the Indenture Trustee and
the Issuer, if made in the manner provided in this Section.
(c) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(d) The ownership of Notes shall be proved by the Note Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or (d)
on the date transmitted by legible telecopier transmission with a confirmation
of receipt, in all cases addressed to the recipient at the address specified in
the Sale and Servicing Agreement for such recipient.
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
Section 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provisions of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
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Section 11.07. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 11.08. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-Indenture Trustees and agents.
Section 11.09. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.10. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Collateral, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
Section 11.11. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.12. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.13. Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.14. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
Section 11.15. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficiary interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Article Six, Seven and Eight of the Trust
Agreement.
Section 11.16. No Petition. The parties hereto, by entering into this
Indenture, and each Noteholder, by accepting a Note or a beneficial interest in
a Note, hereby covenant and agree that they will not at any time institute
against the Originator, the Issuer or any General Partner, or join in any
institution against the Originators, the Issuer or any General Partner thereof,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the other Transaction Documents.
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Section 11.17. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested, the Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
Section 11.18. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
Section 11.19. Communication by Note Owners With Other Note Owners.
Note Owners may communicate with other Note Owners with respect to their rights
under this Indenture or the Notes pursuant to Section 312(b) of the TIA. Every
Note Owner, by receiving and holding the same, agrees with the Issuer and the
Indenture Trustee that none of the Issuer and the Indenture Trustee nor any
agent of the Issuer and the Indenture Trustee shall be deemed to be in violation
of any existing law, or any law hereafter enacted which does not specifically
refer to Section 312 of the TIA, by reason of the disclosure of any such
information as to the names and addresses of the Note Owners in accordance with
Section 312 of the TIA, regardless of the source from which such information was
derived, and that the Indenture Trustee shall not be held accountable by reason
of mailing any material pursuant to a request made under Section 312(b) of the
TIA..
Section 11.20. Listing Restrictions. Neither the Issuer nor the Owner
Trustee acting on behalf of the Issuer will (i) list or cause the Class D Notes
to be listed or traded on an established securities market (within the meaning
of Treasury Regulation Section 1.7704-1(b)), or (ii) cooperate in, or
facilitate, the establishment of such a market.
The provisions of TIA ss.ss.310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
HELLER EQUIPMENT ASSET RECEIVABLES
TRUST 1999-1
By: Wilmington Trust Company, not in its
individual capacity but solely on
behalf of the Issuer as Owner
Trustee under the Trust Agreement
By:
Printed Name: ___________________________
Title: __________________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Indenture Trustee
By:
Printed Name: ___________________________
Title: __________________________________
52
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF )
On before me,
------------- ----------------------------------------------
[insert date] [Here insert name and title of notary]
personally appeared
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
------------------------------
53
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF )
On before me,
------------- ----------------------------------------------
[insert date] [Here insert name and title of notary]
personally appeared
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
------------------------------
<PAGE>
EXHIBIT A
FORM OF SALE AND SERVICING AGREEMENT
A-1
<PAGE>
EXHIBIT B
FORM OF CLASS A-1 NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
[______]% CLASS A-1 RECEIVABLE-BACKED NOTES
REGISTERED $[__________]
No. R-1
Heller Equipment Asset Receivables Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Cede & Co.,
or its registered assigns, the principal sum of
[_______________________________________] Dollars ($[__________]) payable on the
earlier of [May __], 2000 (the "Class A-1 Maturity Date") and the Redemption
Date, if any, pursuant to Sections 10.01 of the Indenture referred to on the
reverse hereof.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.01 of the Indenture. Interest on this Note will accrue
for each Distribution Date from the most recent Distribution Date on which
interest has been paid to but excluding such Distribution Date or, if no
interest has yet been paid, from the Closing Date. Interest will be computed on
the basis of a 360-day year and actual days elapsed. Such principal of and
interest on this Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
B-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as of the date set forth
below.
Date: April __, 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
By: Wilmington Trust Company, not in its
individual capacity but solely on
behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By:
__________________________________
Printed Name:_____________________
Title:____________________________
B-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee
By:_________________________________
Authorized Signatory
B-3
<PAGE>
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [_____]% Class A-1 Receivable- Backed Notes (the "Class A-1
Notes"), all issued under an Indenture, dated as of April __, 1999 (the
"Indenture"), among the Issuer and Norwest Bank Minnesota, National Association,
as Indenture Trustee (the "Indenture Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-1 Notes are subject to all
terms of the Indenture. All terms used in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes and the other Notes described in the Indenture
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture subject to
the priorities of allocations as to interest and principal payments as described
therein and in the Sale and Servicing Agreement.
Principal of the Class A-1 Notes will be payable on the earlier of the
Class A-1 Maturity Date and the Redemption Date, if any, selected pursuant to
the Indenture. Notwithstanding the foregoing, the entire unpaid principal amount
of the Class A-1 Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing unless the Required Holders have
waived such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by wire transfer to the account of the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, except
that with respect to Notes registered on the Record Date in the name of nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed within five days of such Distribution Date
and the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Corporate Trust Office of the Indenture Trustee or
at the office of the Indenture Trustee's agent appointed for such purposes
located in the City of Chicago, Illinois.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Notes of authorized denominations and in the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection
B-4
<PAGE>
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note (and each
Noteholder by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer and the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer and the Required Holders. The Indenture also contains provisions
permitting the Noteholders representing specified percentages of the Outstanding
Amount of the Notes, on behalf of the Noteholders, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the
Noteholder (or any one of more Predecessor Notes) shall be conclusive and
binding upon such Holders and upon all future Noteholders and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Noteholders issued
thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
B-5
<PAGE>
EXHIBIT C
FORM OF CLASS A-2 NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
[_____]% CLASS A-2 RECEIVABLE-BACKED NOTES
REGISTERED $[__________]
No. R-1
Heller Equipment Asset Receivables Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Cede & Co.,
or its registered assigns, the principal sum of
[_____________________________________________] Dollars ($[__________]) payable
on the earlier of [___________] (the "Class A-2 Maturity Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof. No payments of principal of the Class A-2 Notes shall be
made until the principal on the Class A-1 Notes have been paid in full.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from the Closing Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
C-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [_____________] 1999 HELLER EQUIPMENT ASSET RECEIVABLES
TRUST 1999-1
By: Wilmington Trust Company, not
in its individual capacity but
solely on behalf of the Issuer as
Owner Trustee, under the Trust
Agreement
By:____________________________
Printed Name:_______________
Title:______________________
C-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee
By:__________________________________
Authorized Signatory
C-3
<PAGE>
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [______]% Class A-2 Receivable-Backed Notes (the "Class A-2
Notes"), all issued under an Indenture, dated as of [_____________] 1999 (the
"Indenture"), among the Issuer and Norwest Bank Minnesota, National Association,
as Indenture Trustee (the "Indenture Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A-2 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class A-2 Notes will be payable on the earlier of the
Class A-2 Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-2 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed within five days of such Distribution Date
and the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of Chicago, Illinois.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Originators, on any Distribution Date on or after the date on which the ADCB of
all Contracts then in the Contracts Pool is less than 10% of the initial ADCB of
Contracts in the Contracts Pool as of the Initial Cutoff Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class A-2 Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to
C-4
<PAGE>
cover any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-5
<PAGE>
EXHIBIT D
FORM OF CLASS A-3 NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
[_____]% CLASS A-3 RECEIVABLE-BACKED NOTES
REGISTERED $[__________]
No. R-1
Heller Equipment Asset Receivables Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Cede & Co.,
or its registered assigns, the principal sum of
[_____________________________________________] Dollars ($[__________]) payable
on the earlier of [___________] (the "Class A-3 Maturity Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof. No payments of principal of the Class A-3 Notes shall be
made until the principal on the Class A-3 Notes have been paid in full.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from the Closing Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
C-6
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [_____________] 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST
1999-1
By: Wilmington Trust Company, not in
its individual capacity but
solely on behalf of the Issuer as
Owner Trustee, under the Trust
Agreement
By:_____________________________
Printed Name:________________
Title:_______________________
C-7
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee
By:__________________________________
Authorized Signatory
C-8
<PAGE>
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [______]% Class A-3 Receivable-Backed Notes (the "Class A-3
Notes"), all issued under an Indenture, dated as of [_____________] 1999 (the
"Indenture"), among the Issuer and Norwest Bank Minnesota, National Association,
as Indenture Trustee (the "Indenture Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A-3 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class A-3 Notes will be payable on the earlier of the
Class A-3 Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-3 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed within five days of such Distribution Date
and the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of Chicago, Illinois.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Originators, on any Distribution Date on or after the date on which the ADCB of
all Contracts then in the Contracts Pool is less than 10% of the initial ADCB of
Contracts in the Contracts Pool as of the Initial Cutoff Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class A-3 Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to
C-9
<PAGE>
cover any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-10
<PAGE>
EXHIBIT E
FORM OF CLASS A-4 NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
[_____]% CLASS A-4 RECEIVABLE-BACKED NOTES
REGISTERED $[__________]
No. R-1
Heller Equipment Asset Receivables Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Cede & Co.,
or its registered assigns, the principal sum of
[_____________________________________________] Dollars ($[__________]) payable
on the earlier of [___________] (the "Class A-4 Maturity Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof. No payments of principal of the Class A-4 Notes shall be
made until the principal on the Class A-1 Notes have been paid in full.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from the Closing Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
C-11
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [_____________] 1999 HELLER EQUIPMENT ASSET RECEIVABLES
TRUST 1999-1
By: Wilmington Trust Company, not in its
individual capacity but solely on
behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By:_______________________________
Printed Name:__________________
Title:_________________________
C-12
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but
solely as Indenture Trustee
By:_______________________________
Authorized Signatory
C-13
<PAGE>
[REVERSE OF CLASS A-4 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [______]% Class A-4 Receivable-Backed Notes (the "Class A-4
Notes"), all issued under an Indenture, dated as of [_____________] 1999 (the
"Indenture"), among the Issuer and Norwest Bank Minnesota, National Association,
as Indenture Trustee (the "Indenture Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A-4 Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class A-4 Notes will be payable on the earlier of the
Class A-4 Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-4 Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed within five days of such Distribution Date
and the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of Chicago, Illinois.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Originators, on any Distribution Date on or after the date on which the ADCB of
all Contracts then in the Contracts Pool is less than 10% of the initial ADCB of
Contracts in the Contracts Pool as of the Initial Cutoff Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class A-4 Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to
C-14
<PAGE>
cover any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C-15
<PAGE>
EXHIBIT F
FORM OF CLASS B NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
[______]% CLASS B RECEIVABLE-BACKED NOTES
REGISTERED $[__________]
No. R-1
Heller Equipment Asset Receivables Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Cede & Co.,
or its registered assigns, the principal sum of
[__________________________________________________] Dollars ($[__________])
payable on the earlier of [_____________] (the "Class B Maturity Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof. No payments of principal of the Class B Notes shall be
made until the principal on all the Class A-1 Notes has been paid in full. After
the occurrence of an Event of Default or Restricting Event (as defined in the
Sale and Servicing Agreement), no payments of principal of the Class B Notes
shall be made until the principal on the Class A-1 Notes and Class A-2 Notes has
been paid in full.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from the Closing Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
F-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [_____________] 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST
1999-1
By: Wilmington Trust Company, not in
its individual capacity but
solely on behalf of the Issuer
as Owner Trustee, under the
Trust Agreement
By:____________________________
Printed Name:_______________
Title:______________________
F-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
[NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,] not in its
individual capacity
but solely as Indenture
Trustee
By:________________________________
Authorized Signatory
F-3
<PAGE>
[REVERSE OF CLASS B NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [_____]% Class B Receivable- Backed Notes (the "Class B
Notes"), all issued under an Indenture, dated as of [_____________] 1999 (the
"Indenture"), among the Issuer and Norwest Bank Minnesota, National Association,
as Indenture Trustee (the "Indenture Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class B Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class B Notes will be payable on the earlier of the
Class B Maturity Date and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class B Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed within five days of such Distribution Date
and the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of Chicago, Illinois.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Originators, on any Distribution Date on or after the date on which the ADCB of
all Contracts then in the Contracts Pool is less than 10% of the initial ADCB of
Contracts in the Contracts Pool as of the Initial Cutoff Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class B Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
F-4
<PAGE>
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer, of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
F-5
<PAGE>
EXHIBIT G
FORM OF CLASS C NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
[______]% CLASS C RECEIVABLE-BACKED NOTES
REGISTERED $[__________]
No. R-1
Heller Equipment Asset Receivables Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Cede & Co.,
or its registered assigns, the principal sum of
[_________________________________________________] Dollars ($[__________])
payable on the earlier of [_______________] (the "Class C Maturity Date") and
the Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred
to on the reverse hereof. No payments of principal of the Class C Notes shall be
made until the principal on all the Class A-1 Notes has been paid in full. After
the occurrence of an Event of Default or Restricting Event (as defined in the
Sale and Servicing Agreement), no payments of principal of the Class C Notes
shall be made until the principal on the Class A-1 Notes, Class A-2 Notes and
Class B Notes have been paid in full.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from the Closing Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
G-1
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [_____________] 1999 HELLER EQUIPMENT ASSET RECEIVABLES
TRUST 1999-1
By: Wilmington Trust Company, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By:
Printed Name:___________________
Title:__________________________
G-2
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee
By:______________________________
Authorized Signatory
G-3
<PAGE>
[REVERSE OF CLASS C NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [______]% Class C Receivable- Backed Notes (the "Class C
Notes"), all issued under an Indenture, dated as of [_____________] 1999 (the
"Indenture"), among the Issuer and Norwest Bank Minnesota, National Association,
as Indenture Trustee (the "Indenture Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class C Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class C Notes will be payable on the earlier of the
Class C Maturity Date and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class C Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed within five days of such Distribution Date
and the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of Chicago, Illinois.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Originators, on any Distribution Date on or after the date on which the ADCB of
all Contracts then in the Contracts Pool is less than 10% of the initial ADCB of
Contracts in the Contracts Pool as of the Initial Cutoff Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class C Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
G-4
<PAGE>
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
G-5
<PAGE>
EXHIBIT H
FORM OF CLASS D NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH HELLER FUNDING CORPORATION
II (THE "TRUST DEPOSITOR") OR ANY AFFILIATE OF THE TRUST DEPOSITOR WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY), ONLY (A) TO THE TRUST
DEPOSITOR, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE TRUST DEPOSITOR'S RIGHTS
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO THE TRUST DEPOSITOR. THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER, AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT
WILL NOT SELL, TRADE, ASSIGN OR OTHERWISE DISPOSE OF THIS SECURITY (OR ANY
INTEREST HEREIN) OR CAUSE THIS SECURITY (OR ANY INTEREST HEREIN) TO BE MARKETED
ON OR THROUGH (I) AN "ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF
SECTION 7704(B)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER MARKET OR AN
INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL
QUOTATIONS OR (II) A "SECONDARY MARKET" WITHIN THE MEANING OF SECTION 7704(B)(2)
OF THE CODE, INCLUDING A MARKET WHEREIN ANY PERSON REGULARLY MAKES AVAILABLE BID
OR OFFER QUOTES WITH RESPECT TO THE CLASS D NOTES AND STANDS READY TO EFFECT BUY
OR SELL TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTHERS.
H-1
<PAGE>
IN ADDITION THIS NOTE MAY NOT BE SOLD OR TRANSFERRED UNLESS THE
CONDITIONS SET FORTH IN SECTION 2.04(b) OF THE INDENTURE HAVE BEEN COMPLIED
WITH.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
[______]% CLASS D RECEIVABLE-BACKED NOTES
REGISTERED $[__________]
No. R-1
Heller Equipment Asset Receivables Trust 1999-1, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to Simark & Co.,
or its registered assigns, the principal sum of
[______________________________________________] Dollars ($[__________]) payable
on the earlier of [_______________] (the "Class D Maturity Date") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred to
on the reverse hereof. No payments of principal of the Class D Notes shall be
made until the principal on all the Class A-1 Notes has been paid in full. After
the occurrence of an Event of Default or Restricting Event (as defined in the
Sale and Servicing Agreement), no payments of principal of the Class D Notes
shall be made until the principal on the Class A-1 Notes, Class A-2 Notes, Class
B Notes and Class C Notes have been paid in full.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from the Closing Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
H-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [_____________] 1999 HELLER EQUIPMENT ASSET RECEIVABLES
TRUST 1999-1
By: Wilmington Trust Company, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By:______________________________
Printed Name:_________________
Title:________________________
H-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee
By:_____________________________
Authorized Signatory
H-4
<PAGE>
[REVERSE OF CLASS D NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [______]% Class D Receivable- Backed Notes (the "Class D
Notes"), all issued under an Indenture, dated as of [_____________] 1999 (the
"Indenture"), among the Issuer and [Norwest Bank Minnesota, National
Association,] as Indenture Trustee (the "Indenture Trustee"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class D Notes and the other Classes of Notes described in the
Indenture (collectively, the "Notes") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class D Notes will be payable on the earlier of the
Class D Maturity Date and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class D Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date shall be made by check mailed to the Person whose name appears as the
Registered Holder of this Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date, except that with
respect to Notes registered on the Record Date in the name of nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payments will be
made by wire transfer in immediately available funds to the account designated
by such nominee. Such checks shall be mailed to the Person entitled thereto at
the address of such Person as it appears on the Note Register as of the
applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Distribution
Date shall be binding upon all future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date preceding such
Distribution Date by notice mailed within five days of such Distribution Date
and the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of Chicago, Illinois.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Originators, on any Distribution Date on or after the date on which the ADCB of
all Contracts then in the Contracts Pool is less than 10% of the initial ADCB of
Contracts in the Contracts Pool as of the Initial Cutoff Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class D Notes of authorized denomination and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to
H-5
<PAGE>
cover any tax or other governmental charge that may be imposed in connection
with any such registration of transfer or exchange.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that no recourse may be taken, directly or indirectly,
with respect to the obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Indenture Trustee or the Owner
Trustee in their individual capacities, any holder of a beneficial interest in
the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in their individual
capacities, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Required Holders. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
H-6
<PAGE>
EXHIBIT I
FORM OF NOTE ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- -------------------------------------------------------------------------------
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
- -------------------------------------------------------------------------------
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:
-----------------
Signature Guaranteed:
Signature must be guaranteed by an eligible
guarantor institution which is a participant in the
Securities Transfer Agent's Medallion Program
(STAMP) or similar signature guarantee program.
- ---------------------------------------------------
(Authorized Officer)
- ---------------------------------------------------
Notice: The signature(s) on this assignment must
correspond with the name(s) as it appears on the
face of the within Note in every particular, without
alteration or enlargement or any change whatsoever.
I-1
<PAGE>
EXHIBIT J
FORM OF NOTE DEPOSITORY AGREEMENT
J-1
<PAGE>
Exhibit 5.1
April 9, 1999
Heller Funding Corporation II
c/o Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinios 60661
Re: Class A-1, Class A-2, Class A-3, Class A-4, Class B and Class C
---------------------------------------------------------------
Receivable-Backed Notes (the "Notes")
-------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to the Heller Equipment Asset
Receivables Trust 1999-1 (the "Trust") in connection with the filing by Heller
Funding Corporation II (the "Company"), as trust depositor of the Trust, of the
registration statement on Form S-1 (File No. 333-70507) (such registration
statement, together with the exhibits and any amendments thereto, the
"Registration Statement"), registering the Notes. The Registration Statement
has been filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Securities Act"). As described in the Registration
Statement, the Notes will be issued under and pursuant to the terms of a Sale
and Servicing Agreement, Trust Agreement and Indenture (collectively, the
"Agreements" and each, individually, an "Agreement"). Capitalized terms used but
not defined herein have the meanings given to them in the Registration
Statement.
This opinion letter is being delivered to you pursuant to the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.
We are familiar with the proceedings to date with respect to the
proposed issuance and delivery of the Notes and have examined copies of the
Certificate of Incorporation and By-Laws of the Company, the Registration
Statement and the Prospectus included therein, the form of each Agreement and
such other documents, records and questions of law, and satisfied ourselves as
to such matters of fact, as we have considered relevant and necessary as a basis
for this opinion letter.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of
<PAGE>
March , 1999
Page 2
documents that will be executed in connection with the issuance of the Notes, we
have assumed that the parties to such documents will have at the time of
execution of such documents, the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect of such documents.
As to any facts material to the opinions expressed herein which we did not
independently establish or verify, we have relied upon oral and written
statements and representations of officers and other representatives of the
Company and others. In addition, we have also relied upon the accuracy and
completeness of all certificates and other statements, representations,
documents, records, financial statements and papers reviewed by us, and the
accuracy and completeness of all representations, warranties, schedules and
exhibits contained in such documents, with respect to the factual matters set
forth therein.
Based on the foregoing, we are of the opinion that when (i) the
Registration Statement, as finally amended, has become effective under the
Securities Act, (ii) the price and interest rate of the Notes have been duly
approved by Board of Directors of the Company, (iii) the applicable Agreements
relating to such Notes have been duly executed and delivered by the parties
thereto in substantially the form filed as exhibits to the Registration
Statement, (iv) with respect to the Trust, the Certificate of Trust has been
duly executed and filed by the Owner Trustee with the Secretary of State of the
State of Delaware, (v) the Indenture has been qualified under the Trust
Indenture Act of 1939, as amended, and (vi) the Notes have been duly executed
and authenticated in accordance with the applicable Agreements, the Notes will
be legally issued, fully paid and non-assessable and will be legally valid and
binding obligations of the Trust as issuer thereof enforceable in accordance
with their terms, and entitled to the benefits of the applicable Agreements
(subject to the effect of bankruptcy, fraudulent conveyance or transfer,
insolvency, reorganization, arrangement, liquidation, conservatorship and
moratorium laws and subject to the limitations imposed by other laws and
judicial decisions relating to or affecting the rights of creditors generally,
to general principles of equity, regardless of whether enforcement is considered
in proceedings in equity or at law, and to an implied covenant of good faith and
fair dealing).
We do not find it necessary for the purposes of this opinion letter to
cover, and accordingly we express no opinion as to, the application of the
securities or blue sky laws of the various states to the offering of the Notes.
This opinion letter is limited to the laws of the United States of
America, the State of Illinois, New York and Delaware, and we express no opinion
with respect to the laws of any other state or jurisdiction.
<PAGE>
March , 1999
Page 3
Our opinions set forth in this letter are based on the facts in
existence and the laws in effect on the date hereof and we expressly disclaim
any obligation to update our opinions herein, regardless of whether changes in
such facts or laws come to our attention after the delivery hereof.
We hereby consent to the filing of this opinion letter as an Exhibit
to the Registration Statement and to all references to our firm included in or
made a part of the Registration Statement. In giving such consent, we do not
concede that we are experts within the meaning of the Securities Act or the
rules and regulations thereunder or that this consent is required by Section 7
of the Securities Act.
Very truly yours,
<PAGE>
Exhibit 8.1
Form of Opinion of Winston & Strawn
with respect to Tax Matters
__________, 1999
Re: Heller Funding Corporation
Registration Statement on Form S-1(Reg. No. 333-70507)
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special federal tax counsel to Heller Funding
Corporation, a Delaware corporation (the "Registrant"), in connection with the
proposed issuance and sale of its Class A-1 Receivable-Backed Notes, Series
1999-1, Class A-2 Receivable-Backed Notes, Series 1999-1, Class A-3 Receivable-
Backed Notes, Series 1999-1, Class A-4 Receivable-Backed Notes, Series 1999-1,
Class B Receivable-Backed Notes, Series 1999-1, Class C Receivable-Backed Notes,
Series 1999-1 and Class C Receivable-Backed Notes Series 1999-1 (collectively
the "Notes") to be issued from the Heller Equipment Asset Receivables Trust,
1999-1, a limited purpose Delaware business trust (the "Trust"). The property of
the Trust will include certain conditional sale agreements, finance leases,
installment payment agreements with respect to business equipment and computer
software and other property. The Notes will be issued pursuant to an indenture
(the "Indenture") between the Trust and an indenture trustee.
As special tax counsel to the Registrant, we have expressed our
opinion regarding the material United States federal income tax consequences of
the proposed issuance of the Notes to the holders thereof. Our opinion is
contained in the section of the prospectus relating to the Notes (the
"Prospectus") titled "Federal Income Tax Consequences", which is a part of the
Registration Statement on Form S-1 (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") initially on January 12,
1999, under the Securities Act of 1933, as amended (the "Act"), for the
registration of the Notes under the Act.
Based on current United States federal income tax laws and regulations
and on current authoritative interpretations, we are of the opinion that the
statements contained in the section of the Prospectus under the headings
"Summary of Terms--Federal Income tax Considerations" and
<PAGE>
"Federal Tax Consequences", to the extent that they concern matters of United
States federal income tax law, are correct in all material respects.
Our opinion is based upon the current provisions of the Code, Treasury
Regulations promulgated thereunder, current administrative rulings, judicial
decisions, and other applicable authorities, all as in effect on the date of
such opinions. All of the foregoing authorities are subject to change or new
interpretation, both prospectively and retroactively, and such changes or
interpretation, as well as the changes in the facts as they have been
represented to us or assumed by us, could affect our opinions. Our opinion does
not foreclose the possibility of a contrary determination by the Internal
Revenue Service (the "IRS") or by a court of competent jurisdiction, or of a
contrary position by the IRS or Treasury Department in regulations or rulings
issued in the future. Furthermore, our opinion assumes that all the transactions
contemplated by the Prospectus will be consummated in accordance with the terms
of the Prospectus, including without limitation, that holders of Notes will
treat such Notes as indebtedness.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as counsel to the
Registrant) under the headings "Summary of Terms--Federal Income Tax
Considerations," "Federal Income Tax Consequences," and "Legal Matters" in the
Prospectus forming a part of the Registration Statement, without implying or
admitting that we are "experts" within the meaning of the Act or the rules and
regulations of the Commission issued thereunder, with respect to any part of the
Registration Statement, including this exhibit.
Very truly yours,
/s/ Winston & Strawn
<PAGE>
Exhibit 10.1
SALE AND SERVICING AGREEMENT
among
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1,
as Issuer,
HELLER FUNDING CORPORATION II,
as Trust Depositor,
HELLER FINANCIAL, INC.,
as Servicer and as an Originator,
HELLER FINANCIAL LEASING, INC.,
as an Originator
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
Dated as of [ __________ ], 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS........................................................1
Section 1.01. Definitions......................................1
Section 1.02. Usage of Terms..................................23
Section 1.03. Section References..............................23
Section 1.04. Calculations....................................23
Section 1.05. Accounting Terms................................23
ARTICLE TWO
ESTABLISHMENT OF TRUST............................................24
Section 2.02. Conditions to Transfer of Trust Assets
to Trust......................................25
Section 2.03. Acceptance by Owner Trustee.....................27
Section 2.04. Conveyance of Substitute Contracts..............27
Section 2.05. Release of Released Amounts.....................28
Section 2.06. Delivery of Instruments.........................29
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES....................................30
Section 3.02. Representations and Warranties Regarding
Each Contract and as to Certain Contracts
in the Aggregate................................32
Section 3.03. Representations and Warranties Regarding
the Initial Contracts in the Aggregate..........32
Section 3.04. Representations and Warranties Regarding
the Contract Files..............................32
Section 3.05. Representations and Warranties Regarding
Concentrations of Initial Contracts.............33
Section 3.06. Representations and Warranties Regarding
the Trust Depositor.............................33
Section 3.07. Representations and Warranties Regarding
the Servicer....................................35
ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS.......36
Section 4.01. Custody of Contracts............................36
Section 4.02. Filing..........................................37
Section 4.03. Name Change or Relocation.......................37
Section 4.04. Chief Executive Office..........................37
Section 4.05. Costs and Expenses..............................37
Section 4.06 Sale Treatment..................................37
ARTICLE FIVE
SERVICING OF CONTRACTS............................................39
Section 5.01. Appointment and Acceptance; Responsibility for
Contract Administration.........................39
Section 5.02. General Duties..................................39
Section 5.03. Consent to Assignment or Replacement............39
Section 5.04. Disposition Upon Termination of Contract........39
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Section 5.05. Subservicers....................................40
Section 5.06. Further Assurance...............................40
Section 5.07. Notice to Obligors..............................40
Section 5.08. Collection Efforts; Modification of Contracts...40
Section 5.09. Prepaid Contract................................41
Section 5.10. Acceleration....................................41
Section 5.11. Taxes and Other Amounts.........................41
Section 5.12. [Reserved]......................................41
Section 5.13. Remittances.....................................41
Section 5.14. Servicer Advances...............................41
Section 5.15. Realization Upon Defaulted Contract.............41
Section 5.16. Maintenance of Insurance Policies...............42
Section 5.17. Other Servicer Covenants........................42
Section 5.18. Servicing Compensation..........................43
Section 5.19. Payment of Certain Expenses by Servicer.........43
Section 5.20. Records.........................................43
Section 5.21. Inspection......................................43
Section 5.22. Trustees to Cooperate in Releases...............43
ARTICLE SIX
COVENANTS OF THE TRUST DEPOSITOR..................................44
Section 6.01. Corporate Existence.............................44
Section 6.02. Contracts Not to be Evidenced by Promissory
Notes. ........................................44
Section 6.03. Security Interests. ...........................44
Section 6.04. Delivery of Collections. ......................44
Section 6.05. Regulatory Filings. ...........................44
Section 6.06. Compliance With Law. ..........................44
Section 6.07. Activities. ...................................44
Section 6.08. Indebtedness. .................................44
Section 6.09. Guarantees. ...................................45
Section 6.10. Investments. ..................................45
Section 6.11. Merger; Sales. ................................45
Section 6.12. Distributions. ................................45
Section 6.13. Other Agreements. .............................45
Section 6.14. Separate Corporate Existence. .................45
Section 6.15. Location; Records. ............................46
Section 6.16. Liability of Trust Depositor; Indemnities.......46
Section 6.17. Bankruptcy Limitations..........................47
Section 6.18 Limitation on Liability of Trust Depositor
and Others......................................47
Section 6.19. Chief Executive Office..........................47
ARTICLE SEVEN
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND............48
Section 7.01. Trust Accounts; Collections.....................48
Section 7.02. Reserve Fund Deposit. .........................48
Section 7.03. Trust Account Procedures. ......................48
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Section 7.04. Securityholder Distributions....................49
Section 7.05. Allocations and Distributions...................49
ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER................................55
Section 8.01. Servicer Default................................55
Section 8.02. Servicer Transfer...............................55
Section 8.03. Appointment of Successor Servicer;
Reconveyance; Successor Servicer to Act ........56
Section 8.04. Notification to Securityholders.................57
Section 8.05. Effect of Transfer..............................57
Section 8.06. Database File...................................57
Section 8.07. Successor Servicer Indemnification..............57
Section 8.08. Responsibilities of the Successor Servicer......57
Section 8.09. Rating Agency Condition For Servicer Transfer...58
ARTICLE NINE
REPORTS...........................................................59
Section 9.01. Monthly Reports.................................59
Section 9.02. Officer's Certificate...........................59
Section 9.03. Other Data......................................59
Section 9.04. Annual Report of Accountants....................59
Section 9.05. Annual Statement of Compliance from Servicer....59
Section 9.06. Annual Summary Statement........................60
ARTICLE TEN
TERMINATION.......................................................61
Section 10.01. Sale of Trust Assets..............................61
ARTICLE ELEVEN
REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION................62
Section 11.01. Repurchases of, or Substitution For, Contracts
for Breach of Representations and Warranties....62
Section 11.02. Reassignment of Repurchased or Substituted
Contracts.......................................62
Section 11.03. Originators' and Trust Depositor's Repurchase
Option..........................................62
ARTICLE TWELVE
ORIGINATOR INDEMNITIES............................................63
Section 12.01. Originators' Indemnification....................63
Section 12.02. Liabilities to Obligors.........................63
Section 12.03. Tax Indemnification.............................63
Section 12.04. Adjustments.....................................64
Section 12.05. Operation of Indemnities........................64
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ARTICLE THIRTEEN
MISCELLANEOUS.....................................................65
Section 13.01. Amendment.........................................65
Section 13.02. Protection of Title to Trust......................65
Section 13.03. Governing Law.....................................66
Section 13.04. Notices...........................................66
Section 13.05. Severability of Provisions........................68
Section 13.06. Third Party Beneficiaries.........................68
Section 13.07. Counterparts......................................68
Section 13.08. Headings..........................................68
Section 13.09. No Bankruptcy Petition; Disclaimer. ..............68
Section 13.10. Jurisdiction. ....................................69
Section 13.11. Tax Characterization. ............................69
Section 13.12. Prohibited Transactions with Respect to the Trust.69
Section 13.13. Merger or Consolidation of Originators............69
Section 13.14. Assignment or Delegation by the Originators.......69
iv
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EXHIBITS
Exhibits A Form of Assignment ...........................................A-1
Exhibit B Form of Closing Certificate of Trust Depositor ...............B-1
Exhibits C-1,
C-2 Form of Closing Certificate of Servicer/Originators...........C-1
Exhibit D Form of Opinion of Counsel for Trust Depositor regarding
general corporate matters (including perfection opinion) .....D-1
Exhibit E Form of Opinion of Counsel for Trust Depositor regarding
the "true sale" nature of the transaction ....................E-1
Exhibit F Form of Opinion of Counsel for Trust Depositor regarding
non-consolidation ............................................F-1
Exhibit G Form of Certificate Regarding Repurchased Contracts...........G-1
Exhibit H List of Contracts.............................................H-1
Exhibit I Form of Monthly Report to Noteholders and Certificateholders..I-1
Exhibit J [Reserved]....................................................J-1
Exhibit K [Form of Contract Stamp.......................................K-1
Exhibit L Form of Subsequent Transfer Agreement.........................L-1
Exhibit M Form of Subsequent Purchase Agreement.........................M-1
v
<PAGE>
This SALE AND SERVICING AGREEMENT, dated as of [_________], 1999, is
among Heller Equipment Asset Receivables Trust 1999-1 (together with its
successors and assigns, the "Trust"), Heller Funding Corporation II, (together
with its successor and assigns, the "Trust Depositor"), Norwest Bank Minnesota,
National Association (solely in its capacity as Indenture Trustee, together with
its successors and assigns, the "Indenture Trustee"), Heller Financial, Inc.
(together with its successors and assigns, "HFI", in its capacity as Servicer,
together with its successor and assigns, the "Servicer" and in its capacity as
an originator) and Heller Financial Leasing, Inc. (together with its successor
and assigns "Heller Leasing", and together with HFI, the "Originators", and
each, an "Originator").
WHEREAS, in the regular course of their business, the Originators
originate and purchase Contracts (as defined herein);
WHEREAS, the Trust Depositor acquired the Initial Contracts from the
Trust Depositor and may acquire from time to time thereafter certain Substitute
Contracts (such Initial Contracts and Substitute Contracts, together with
certain related property as more fully described herein, being the Contract
Assets as defined herein);
WHEREAS, it was a condition to the Trust Depositor's acquisition of the
Initial Contracts from the Originators that the Originators make certain
representations and warranties regarding the Contract Assets for the benefit of
the Trust Depositor as well as the Trust;
WHEREAS, on the Closing Date the Trust Depositor will fund the Trust by
selling, conveying and assigning all its right, title and interest in such
Contract Assets and certain other assets to the Trust;
WHEREAS, the Trust is willing to purchase and accept assignment of the
Trust Assets from the Trust Depositor pursuant to the terms hereof; and
WHEREAS, the Servicer is willing to service the Contracts for the
benefit and account of the Trust pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accountant's Report" has the meaning assigned such term in Section
9.04.
"Accrual Period" means the period from and including the most recent
Distribution Date to but excluding the following Distribution Date, provided,
that the initial Accrual Period following the Closing Date shall be the period
from and including the Closing Date to but excluding the first Distribution Date
following the Closing Date.
"ADCB" means, lease with respect to any date of determination thereof,
the sum of the Discounted Contract Balances of each Contract included in the
group of Contracts for which an ADCB determination is being made, as of the date
of such determination. For purposes of calculating such sum on any date other
than the last day of a Collection Period, the Discounted Contract Balance of a
Contract shall be as of the last day of the preceding Collection Period or, with
respect to any Substitute Contract transferred to the Trust after such last day,
the Discounted Contract Balance on the applicable Subsequent Cutoff Date for
such Contract.
"Addition Notice" means, with respect to any transfer of Substitute
Contracts to the Trust pursuant to Section 2.04 (and the Trust Depositor's
corresponding prior purchase of such Contracts from the applicable Originator),
a notice,
<PAGE>
which shall be given at least 5 days prior to the related Subsequent Transfer
Date, identifying the Substitute Contracts to be transferred, the ADCB of such
Substitute Contracts and the related Substitution Event (with respect to an
identified Contract or Contracts then in the Contracts Pool) to which such
Substitute Contract relates, with such notice to be signed both by the Trust
Depositor, and the Originators jointly and severally (including the Originator
which owns such Substitute Contract which is to be transferred by such
Originator to the Trust Depositor and by the Trust Depositor to the Trust on the
related Subsequent Transfer Date).
"Additional Principal" means, with respect to a Distribution Date
(i) if the Class B Target Investor Principal Amount, Class C Target
Investor Principal Amount and Class D Target Investor Principal Amount
exceed the Class B Floor, Class C Floor and Class D Floor,
respectively, an amount of $0; or
(ii) if all of the conditions in clause Ii) are not satisfied, an amount
equal to the excess, if any, of
(A) the Monthly Principal Amount
(B) the sum of the Class A Principal Payment Amount, Class B
Principal Payment Amount, Class C
Principal Payment Amount and Class D Principal Payment Amount
for such Distribution Date.
"Affiliate" of any specified Person means any other Person controlling
or controlled by, or under common control with, such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Aggregate Principal Amount" means, with respect to any group of Notes
or the Certificate, at any date of determination, the sum of the Principal
Amounts of such Notes or the Certificate on such date of determination.
"Applicable Security" means, with respect to a Vendor Loan, any (i)
Secondary Contract securing such Vendor Loan and (ii) Equipment securing such
Vendor Loan or a related Secondary Contract.
"Assignment" means each Assignment, substantially in the form of
Exhibit A relating to an assignment, transfer and conveyance of Contracts and
related property by the Trust Depositor to the Trust.
"Available Amounts" means, as of any Distribution Date, the sum of (i)
all amounts on deposit in the Collection Account as of the immediately preceding
Determination Date on account of Scheduled Payments due on or before, and
Prepayments received on or before, the last day of the Collection Period
immediately preceding such Distribution Date (other than Excluded Amounts), (ii)
Recoveries on account of previously Defaulted Contracts received as of the
immediately preceding Determination Date; (iii) Investment Earnings credited to
the Collection Account or the Reserve Fund, (iv) Late Charges received on or
before the last day of such Collection Period (provided such late charges were
included in the Contract's terms as of the applicable Cutoff Date), and (v)
proceeds of any of the foregoing.
"Business Day" means any day which is neither a Saturday or a Sunday,
nor another day on which banking institutions in the city of Chicago, Illinois,
Wilmington, Delaware or New York, New York are authorized or obligated by law,
executive order, or governmental decree to be closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del Code 3801 et seq., as the same may be amended from time to time.
"Calculation Date" means the first day of each calendar month.
2
<PAGE>
"Casualty Loss" means, with respect to any item of Equipment, the loss,
theft, damage beyond repair or governmental condemnation or seizure of such item
of Equipment.
"Certificate Register" has the meaning specified in the Trust
Agreement.
"Certificateholder" means the holder of the Certificate.
"Certificate" means the $[_____________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class E Certificate, Series
1999-1 representing a beneficial equity interest in the Trust and issued
pursuant to the Trust Agreement.
"Class" means any of the group of Notes or the Certificate identified
herein as, as applicable, the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class
D Notes, or the Certificate.
"Class A Notes" means the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes.
"Class A Principal Payment Amount" means, with respect to a
Distribution Date, (i) while the Principal Amount of the Class A-1 Notes is
greater than zero, the lesser of (a) the amount necessary to reduce the
Principal Amount of the Class A-1 Notes to zero and (b) the Monthly Principal
Amount; (ii) if such Distribution Date is the Class A-1 Maturity Date, the
Principal Amount of the Class A-1 Notes; (iii) if the Principal Amount of the
Class A-1 Notes is zero, the amount necessary to reduce the aggregate Principal
Amount of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes to the Class
A Target Investor Principal Amount; (iv) if the Principal Amount of the
Class A-1 Notes and Class A-2 Notes is zero, the amount necessary to reduce the
aggregate Principal Amount of the Class A-3 Notes and Class A-4 Notes to the
Class A Target Investor Principal Amount; and (v) if the Principal Amount
of the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes is zero, the amount
necessary to reduce the Principal Amount of the Class A-4 Notes to the Class A
Target Investor Principal Amount.
"Class A-1 Interest Rate" means [______]% per annum (calculated on the
basis of a year of 360 days and actual days elapsed).
"Class A-1 Maturity Date" means the [_____________], 2000 Distribution
Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"Class A-1 Notes" means the $[___________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust, Class A-1 Receivable-Backed
Notes, Series 1999-1, issued pursuant to the Indenture.
"Class A-2 Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class A-2 Maturity Date" means the [____________] Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
3
<PAGE>
"Class A-2 Notes" means the $[___________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class A-2 Receivable-Backed
Notes, Series 1999-1, issued pursuant to the Indenture.
"Class A-3 Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class A-3 Maturity Date" means the [____________] Distribution Date.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-3 Notes" means the $[___________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class A-3 Receivable-Backed
Notes, Series 1999-1, issued pursuant to the Indenture.
"Class A-4 Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class A-4 Maturity Date" means the [____________] Distribution Date.
"Class A-4 Noteholder" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"Class A-4 Notes" means the $[___________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class A-4 Receivable-Backed
Notes, Series 1999-1, issued pursuant to the Indenture.
"Class B Floor" means, with respect to a Distribution Date,
(i) [ ]% of the initial ADCB plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the sum of (a) the aggregate Principal Amount of the Class C Notes and
Class D Notes as of the immediately preceding Distribution Date after
giving effect to all principal payments made on such date and (b) the
Overcollateralization Balance as of the immediately preceding
Distribution Date.
"Class B Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class B Maturity Date" means the [___________] Distribution Date.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
"Class B Notes" means the $[____________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class B Receivable-Backed Notes,
Series 1999-1, issued pursuant to the Indenture.
"Class B Percentage" means [ ]%.
"Class B Principal Payment Amount" means, with respect to a
Distribution Date,
(i) if the Principal Amount of the Class A-1 Notes is greater than zero,
zero; and
(ii) if the Principal Amount of the Class A-1 Notes is zero, the amount
necessary to reduce the Principal Amount of the Class B Notes to the
greater of (a) the Class B Target Investor Principal Amount or (b) the
Class B Floor.
"Class B Target Investor Principal Amount" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class B Percentage
and (ii) the ADCB as of the last day of the related Collection Period.
"Class C Floor" means, with respect to a Distribution Date,
4
<PAGE>
(i) [ ]% of the initial ADCB plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the sum of (a) the Principal Amount of the Class D Notes as of
the immediately preceding Distribution Date after giving
effect to all principal payments made on such date and (b) the
Overcollateralization Balance as of the immediately preceding
Distribution Date;
provided, however, that if the Principal Amount of the Class B Notes as of such
Distribution Date is less than or equal to the Class B Floor on such date, the
Class C Floor will be an amount equal to the Principal Amount of the Class C
Notes as of the immediately preceding Distribution Date after giving effect to
all principal payments on such date.
"Class C Interest Rate" means [_______]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class C Maturity Date" means the [_________] Distribution Date.
"Class C Noteholder" means the Person in whose name a Class C Note is
registered in the Note Register.
"Class C Notes" means the $[_____________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class C Receivable-Backed Notes,
Series 1999-1, issued pursuant to the Indenture.
"Class C Percentage" means [ ]%.
"Class C Principal Payment Amount" means, with respect to a
Distribution Date,
(i) if the Principal Amount of the Class A-1 Notes is greater than zero,
zero; and
(ii) if the Principal Amount of the Class A-1 Notes is zero, the amount
necessary to reduce the Principal Amount of the Class C Notes to the
greater of (a) the Class C Target Investor Principal Amount or (b) the
Class C Floor.
"Class C Target Investor Principal Amount" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class C Percentage
and (ii) the ADCB as of the last day of the related Collection Period.
"Class D Floor" means, with respect to a Distribution Date,
(i) [ ]% of the initial ADCB plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the Overcollateralization Balance as of the immediately preceding
Distribution Date;
provided, however, that if the Principal Amount of the Class C Notes as of such
Distribution Date is less than or equal to the Class C Floor on such date, the
Class D Floor will be an amount equal to the Principal Amount of the Class D
Notes as of the immediately preceding Distribution Date after giving effect to
all principal payments made on such date.
"Class D Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class D Maturity Date" means the [___________] Distribution Date.
"Class D Noteholder" means the Person in whose name a Class D Note is
registered in the Note Register.
"Class D Notes" means the $[__________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class D Receivable-Backed Notes,
Series 1999-1, issued pursuant to the Indenture.
"Class D Percentage" means [ ]%.
"Class D Principal Payment Amount" means, with respect to a
Distribution Date,
(i) if the Principal Amount of the Class A-1 Notes is greater than zero,
zero; and
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(ii) if the Principal Amount of the Class A-1 Notes is zero, the amount
necessary to reduce the Principal Amount of the Class D Notes to the
greater of (a) the Class D Target Investor Principal Amount or (b) the
Class D Floor.
"Class D Target Investor Principal Amount" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class D Percentage
and (ii) the ADCB as of the last day of the related Collection Period.
"Closing Date" means April 15, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning given such term in the "granting clause"
of the Indenture.
"Collection Account" means the Trust Account so designated established
pursuant to Section 7.01.
"Collection Period" means a period beginning on the second day of a
calendar month and ending on and including, the first day of the next calendar
month, provided that the first Collection Period shall be the period beginning
on the Initial Cutoff Date and ending on and including the first day of the
calendar month immediately following the calendar month in which the Closing
Date occurs.
"Collections" means all payments received on or with respect to the
Contracts in the Contracts Pool or the related Equipment, including, without
limitation, Scheduled Payments, Prepayments, Recoveries, Late Charges and
Expired Lease Proceeds, all as related to amounts attributable to the Contracts
in the Contracts Pool or the related Equipment (including any such amounts
derived from Vendor recourse provisions), but excluding any Excluded Amounts.
"Commission" means the United States Securities and Exchange
Commission.
"Computer Disk" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the
Originators in selecting the Contracts conveyed to the Trust Depositor pursuant
to Section 2.01 (and any Subsequent Purchase Agreement conveyed to the Trust
Depositor pursuant to Section 2.04), and includes the master file and the
history file as well as servicing information with respect to the Contracts.
"Contract" means each End-User Contract and each Vendor Loan but,
unless otherwise specified herein, shall not refer to any Secondary Contract.
"Contract Assets" has the meaning assigned in Section 2.01 (and 2.04,
as applicable in the case of Substitute Contracts).
"Contract File" means, with respect to each Contract, the fully
executed original counterpart (for UCC purposes) of the contract, the original
certificate of title or other title document with respect to the related
Equipment (if applicable), and otherwise such documents, if any, that the
Servicer keeps on file in accordance with its customary procedures, evidencing
ownership of such Equipment (if applicable) and all other documents originally
delivered to the applicable Originator or held by the Servicer with respect to
any Contract.
"Contracts Pool" as of any date means the Initial Contracts and the
Substitute Contracts (if any), other than any such Contracts which (i) have been
reconveyed by the Trust to the Trust Depositor, and concurrently by the Trust
Depositor to the applicable Originator, pursuant to Section 11.02 hereof, or
(ii) have been paid (or prepaid) in full.
"Corporate Trust Office" means, with respect to the Indenture Trustee
or Owner Trustee, as applicable, the office of the Indenture Trustee or Owner
Trustee at which at any particular time its corporate trust business shall be
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principally administered, which offices at the date of the execution of this
Agreement are located at the addresses set forth in Section 13.04.
"Cumulative Loss Amount" means, with respect to a Distribution Date, an
amount equal to the excess, if any,
(i) the total of
(A) the Principal Amount of the Notes as of the immediately
preceding Distribution Date after giving effect to all
principal payments made on such date plus
(B) the Overcollateralization Balance as of the immediately
preceding Distribution Date minus
(C) the lesser of: (1) the Monthly Principal Amount and (2)
Available Amounts remaining after payment of amounts owing to
the Servicer, including Servicer Advances and Servicer Fees if
HFI is not the Servicer (excluding the Servicing Fee) and
after payment of interest on the Notes on such date; over
(ii) the ADCB as of the last day of the related Collection Period.
"CSA" means each conditional sales agreement, including, as applicable,
schedules, subschedules, supplements and amendments to a master conditional
sales agreement, pursuant to which specified assets were conditionally sold to
an Obligor at specified monthly, quarterly, semi-annual or annual payments.
"Cutoff Date" means either or both (as the context may require) the
Initial Cutoff Date and any Subsequent Cutoff Date, as applicable to the
Contract or Contracts in question.
"Date of Processing" means, with respect to any transaction or
Collection, the date on which such transaction or Collection is first recorded
(and, in the case of a transaction or Collection related to a particular
Contract, identified as to such particular Contract) on the related Originator's
or Servicer's computer master file of Contracts (without regard to the effective
date of such recordation).
"DCR" means Duff & Phelps Credit Rating Co.
"Defaulted Contract" means a Contract in the Contracts Pool with
respect to which there has occurred one or more of the following: (i) all or
some portion of any Scheduled Payment under the Contract is more than 120 days
delinquent (or, with respect to a Contract for which there exists available
payment recourse to a Vendor to satisfy the amount in default, and which
recourse was not yet available (pursuant to the contractual terms thereof) or
had not yet been paid by the Vendor prior to the end of such 120 day period,
then at such time thereafter as the Vendor shall have failed to pay such
defaulted amount in accordance with the provisions of the Program Agreement,
Vendor Assignment or other agreement with the Vendor providing such recourse) or
such shorter period as the Originators may determine consistent with their
respective collection policy or (ii) the Servicer has determined in its sole
discretion, in accordance with its usual and customary practices (and taking
into account any available Vendor recourse), that such Contract is not
collectible.
"Determination Date" means, with respect to any Distribution Date, the
third Business Day prior to such Distribution Date.
"Discount Rate" means, at any date of determination, [_______]%, which
is equal to the sum of (1) the weighted average of the coupon rate of the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class B Notes, the Class C Notes, and the Class D Notes each weighed by (a) the
initial principal balance of each Class of Notes, as applicable, and (b) the
weighted average life of each Class of Notes under a 15% CPR and no loss
scenario, as applicable, and (2) the Servicing Fee Percentage.
"Discounted Contract Balance" means with respect to any Contract, (i)
as of the related Cutoff Date, the present value of all of the remaining
Scheduled Payments becoming due and not yet received under such Contract after
the applicable Cutoff Date discounted monthly at the Discount Rate, and (ii) as
of any other date of determination, the sum of (x) the present value of all of
the remaining Scheduled Payments becoming due under such Contract after such
date
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of determination discounted monthly at the Discount Rate and (y) the aggregate
amount of all Scheduled Payments due and payable under such Contract after the
applicable Cutoff Date and prior to such date of determination (other than
Scheduled Payments related to Contracts that have become Defaulted Contracts or
Prepaid Contracts, and have not been replaced with a Substitute Contract as
provided in Section 2.04) that have not then been received by the Servicer.
The "Discounted Contract Balance" for each Contract shall be calculated
assuming:
(i) all payments due in any Collection period are due on the
last day of the Collection Period;
(ii) payments are discounted on a monthly basis using a 30
day month and a 360 day year; and
(iii) all security deposits and drawings under letters of
credit, if any, issued in support of a Contract are applied to
reduce Scheduled Payments in inverse order of the due date
thereof.
"Distribution Date" shall mean the thirteenth day of each calendar
month or, if such thirteenth day is not a Business Day, the next succeeding
Business Day, with the first such Distribution Date hereunder being May 13,
1999.
"Dollar" and "$" means lawful currency of the United States of America.
"Eligible Contract" means at any date of determination, each Contract
with respect to which each of the following is true (to the extent applicable to
such type of Contract):
(a) the information with respect to the Contract, any
Secondary Contract securing the obligations under such Contract, and
the Equipment, if any, subject to the Contract delivered under this
Agreement is true and correct in all material respects;
(b) immediately prior to the transfer of such Contract and any
related Equipment (or security interest therein) or Applicable Security
(or security interest therein) to the Trust Depositor, and immediately
prior to the Trust Depositor's concurrent transfer thereof to the
Trust, such Contract was owned by the applicable Originator (and by the
Trust Depositor following the transfer by the Originator) free and
clear of any adverse claim, other than with respect to any Residual
Investment;
(c) the Contract did not have a Scheduled Payment that was a
delinquent payment for more than 60 days, and the Contract is not a
Defaulted Contract;
(d) no provision of the Contract has been waived, altered or
modified in any respect, except by instruments or documents contained
in the Contract File (other than payment delinquencies permitted under
clause (c) above);
(e) the Contract is a valid and binding payment obligation of
the Obligor and is enforceable in accordance with its terms (except as
may be limited by applicable Insolvency Laws and the availability of
equitable remedies);
(f) the Contract is not and will not be subject to the rights
of rescission, setoff, counterclaim or defense and, to the Originator's
knowledge, no such rights have been asserted or threatened with respect
to the Contract;
(g) the Contract, at the time it was made, did not violate the
laws of the United States or any state, except for any such violations
which would not materially and adversely affect the collectibility of
the Contracts in the Contracts Pool taken as a whole;
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(h) (i) the Contract and any related Equipment or interest
therein have not been sold, transferred, assigned or pledged by the
applicable Originator to any other Person (other than the financed sale
of the Equipment to the End-User effected through the End-User
Contract) and any Equipment related to such Contract is free and clear
of any liens and encumbrances of any third parties other than the
applicable Originator and Permitted Liens, and (ii) either (A) such
Contract is secured by a fully perfected lien of the first priority in
favor of the applicable Originator on the related Equipment, or, in the
case of any Vendor Loan, related Applicable Security or (B) in the case
of such a Contract secured by Title Registry Equipment, within 30
calendar days of the origination or acquisition of such Contract by the
applicable Originator all applicable federal registration or recording
procedures were initiated, and such Originator's interest will be so
noted or recorded within 180 days of such acquisition or origination;
(i) if the Contract constitutes an "instrument" or "chattel
paper" for purposes of the UCC, there is not more than one "secured
party's original" counterpart of the Contract;
(j) all filings necessary to evidence the conveyance or
transfer of the applicable Originator's ownership interest in the
Contract, and such Originator's corresponding interest in the related
Equipment or Applicable Security, as applicable, to the Trust Depositor
(as well as the concurrent conveyance of such property hereunder from
the Trust Depositor to the Trust), have been made in all appropriate
jurisdictions; provided, that (i) UCC financing statement filings with
respect to Equipment or Applicable Security which name such Originator
as secured party have not been amended to indicate either the Trust
Depositor or the Trust as an assignee (although separate UCC filings
were made against the Originator's interest in Applicable Security in
each jurisdiction where a related Vendor is located); and (ii) filings
or registrations with respect to Title Registry Equipment which name
such Originator as either owner or a lienholder have not been amended
to indicate either the Trust Depositor or the Trust as an assignee;
(k) the Obligor is not, to the Originator's knowledge, subject
to bankruptcy or other insolvency proceedings;
(l) the Contract is a U.S. dollar-denominated obligation and
the associated Equipment is located in the United States;
(m) the Contract does not require the prior written consent of
an Obligor or contain any other restriction on the transfer or
assignment of the Contract (other than a consent or waiver of such
restriction that has been obtained prior to the Closing Date, with
respect to an Initial Contract, or the Subsequent Transfer Date, with
respect to a Substitute Contract);
(n) either (x) the obligations of the related Obligor under
such Contract are irrevocable and unconditional and non-cancelable (or,
if prepayable by its terms, such Contract meets the criteria described
in clause (x) below) or (y) with respect to certain Leases with Lessees
that are governmental entities or municipalities, if such Lease is
canceled in accordance with its terms, either (1) the Vendor that
assigned such Lease to the applicable Originator is unconditionally
obligated to a repurchase such lease from such Originator for a
purchase price not less than the Discounted Contract Balance of such
Lease (as of the date of purchase) plus interest thereon at the
Discount Rate through the Distribution Date following such date of
repurchase, or (2) pursuant to this Agreement, the Originator that sold
such Lease to the Trust Depositor has indemnified the Trust Depositor
against such cancellation in an amount at least equal to the Discounted
Contract Balance of such Lease (as of the date or purchase) plus
interest thereon at the Discount Rate through the Distribution Date
following such cancellation, less any amounts paid by the Vendor
pursuant to clause (1);
(o) the Contract has an original maturity of not greater than
the term specified in this Agreement;
(p) no adverse selection procedure was used in selecting the
Contract for the Contracts Pool;
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(q) the Obligor under the Contract is required to maintain
casualty insurance or to self-insure with respect to the related
Equipment in accordance with the Servicer's normal requirements;
(r) the Contract constitutes chattel paper, an account, an
instrument or a general intangible, in each case as defined under the
UCC;
(s) the Contract is not a "consumer lease" as defined in
Section 2A-103(1)(e) of the UCC, and if such Contract is a Lease, it is
a Lease intended for security within the meaning of Section 1-201(39)
of the UCC;
(t) if such Contract is a Lease, the Lessee thereunder has
represented to the related Vendor or applicable Originator that such
Lessee has accepted the related Equipment and has had a reasonable
opportunity to inspect and test such Equipment and the Vendor or
Originator has not been notified of any defects therein;
(u) the Contract is not subject to any guarantee by the
applicable Originator, nor has the Originator established any specific
credit reserve with respect to the related Obligor;
(v) if such Contract is a Lease, such Lease is a "triple net
lease" under which the Obligor is responsible for the maintenance of
the related Equipment in accordance with general industry standards
applicable to such item of Equipment;
(w) if such Contract is a Vendor Loan, such Vendor Loan is
secured by an Eligible Secondary Contract having an aggregate
Discounted Contract Balance for such Eligible Secondary Contract equal
to the outstanding principal amount of such Vendor Loan (assuming the
interest rate specified in such Vendor Loan is the "Discount Rate" for
purposes of calculating such Discounted Contract Balance); and
(x) no provision of such Contract provides for a Prepayment
Amount less than the amount calculated in accordance with the
definition of Prepayment Amount (unless otherwise indemnified by the
Vendor or the applicable Originator in an amount equal to the excess of
the "Prepayment Amount" as calculated in accordance with the definition
thereof over the amount otherwise payable upon a prepayment under such
Contract);
provided, that Contracts with respect to which any of the statements in clauses
(c), (o) or (x) above are not true shall also be "Eligible Contracts" if the
Trust Depositor shall have received confirmation from each Rating Agency that
such fact will not result in a Ratings Effect.
"Eligible Deposit Account" means either (a) a segregated account with a
Qualified Institution, or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
Untied States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating Agency in one
of its short-term credit rating categories which signifies investment grade.
"Eligible Investments" with respect to any Distribution Date means
negotiable instruments or securities or other investments maturing on or before
such Distribution Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) which,
as of any date of determination, mature by their terms on or prior to the
Distribution Date immediately following such date of determination, and (c)
which evidence:
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(i) direct obligations of, and obligations fully guaranteed as
to full and timely payment by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full
faith and credit of the United States of America);
(ii) demand deposits, time deposits or certificates of deposit
of depository institutions or trust companies incorporated under the
laws of the United States of America or any state thereof and subject
to supervision and examination by federal or state banking or
depository institution authorities; provided, however, that at the time
of the Trust's investment or contractual commitment to invest therein,
the commercial paper, if any, and short-term unsecured debt obligations
(other than such obligation whose rating is based on the credit of a
Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from each
Rating Agency in the Highest Required Investment Category granted by
such Rating Agency;
(iii) commercial paper, or other short term obligations, having,
at the time of the Trust's investment or contractual commitment to
invest therein, a rating in Highest Required Investment Category
granted by each Rating Agency;
(iv) demand deposits, time deposits or certificates of deposit
that are fully insured by the FDIC;
(v) notes that are payable on demand or bankers' acceptances
issued by any depository institution or trust company referred to in
(ii) above;
(vi) investments in money market funds having, at the time of
the Trust's investment or contractual commitment to invest therein, a
rating of the Highest Required Investment Category from each Rating
Agency or whose portfolio is limited to the investments described in
clause (i) of this definition;
(vii) time deposits (having maturities of not more than 90 days)
by an entity the commercial paper of which has, at the time of the
Trust's investment or contractual commitment to invest therein, a
rating of the Highest Required Investment Category granted by each
Rating Agency;
(viii) Eligible Repurchase Obligations; and
(ix) any negotiable instruments or securities or other
investments in which the investment by the Trust therein has been
approved in writing by the Rating Agency.
The Indenture Trustee may purchase or sell to itself or an Affiliate, as
principal or agent, the Eligible Investments described above.
"Eligible Repurchase Obligations" means repurchase obligations with
respect to any security that is a direct obligation of, or fully guaranteed by,
the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (c)(ii) of the
definition of Eligible Investments.
"Eligible Secondary Contract" shall mean each Secondary Contract
(i) that satisfies all the criteria set forth in the
definition of "Eligible Contract" except clauses (b), (h) (with respect
to ownership by the applicable Originator of the Contract) and (w)
thereof, and except that the term "Obligor" shall mean "End-User" in
all such criteria;
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(ii) with respect to which Secondary Contract and the proceeds
thereof the applicable Originator has a duly perfected first priority
lien; and
(iii) the transfer of the Originator's security interest with
respect to which has created a valid first priority Lien in such
Secondary Contract and the proceeds thereof in favor of the Originator
which has been duly perfected.
"End-User" shall mean any party that uses the Financed Item pursuant to
an End-User Contract.
"End-User Contract" shall mean any CSA, Secured Note, Lease, IPA, or
other Financing Agreement covering Financed Items originated or purchased by
either or the Financing Originators.
"Equipment" means the tangible assets (including but not limited to
printing, pre-press, machine tool, plastics, computer hardware, restaurant,
transportation, energy related, medical and industrial equipment) financed or
leased by an Obligor pursuant to a Contract and/or, unless the context otherwise
requires, a security interest in such assets.
"Event of Default" shall have the meaning specified in Section 5.01 of
the Indenture.
"Excess Contract", as of any date of determination, means each Contract
selected by the Servicer in accordance with Section 11.01 at such time as there
shall have been discovered a breach of any of the representations and warranties
set forth in Section 3.01, the removal of which pursuant to Section 11.01 hereof
and the applicable Originator's repurchase thereof or substitution of a
Substitute Contract therefor pursuant to Section 11.01, shall remedy such
breach.
"Exchange Act" means the Securities Exchange Act of 1934, as amended or
supplemented from time to time.
"Excluded Amounts" means (i) any collections on deposit in the
Collection Account or otherwise received by the Servicer on or with respect to
the Contracts Pool or related Equipment, which collections are attributable to
any taxes, fees or other charges imposed by any Governmental Authority, (ii) any
collections representing reimbursements of insurance premiums or payments for
services that were not financed by the applicable Originator, and (iii) any
proceeds from the sale or other disposition of Equipment in excess of the
difference between (x) the Discounted Contract Balance of the related Contract
as of the applicable Cutoff Date, over (y) the present value as of the
applicable Cutoff Date of all amounts actually received by the Trust in respect
of such Contract, discounted monthly at the Discount Rate.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"Financed Items" means Equipment, Software, Services and other property
and services that are permitted to be financed under Contracts in accordance
with the standard policies and procedures of the Originators.
"Financing Agreement" means each financing agreement covering Financed
Items other than a CSA, a Secured Note, a Lease or an IPA.
"Fitch" means Fitch IBCA, Inc. or any successor thereto.
"Governmental Authority" means the United States of America, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, government.
"Heller Leasing" has the meaning assigned such term in the preamble
hereto.
"HFI" has the meaning assigned such term in the preamble hereto.
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"Highest Required Investment Category" means (i) with respect to
ratings assigned by Fitch, F-1+ for short-term instruments and AAA for long-term
instruments, (ii) with respect to ratings assigned by Moody's, A2 or P-1 for one
month instruments, A1 or P-1 for three month instruments, Aa3 or P-1 for six
month instruments and Aaa or P-1 for instruments with a term in excess of six
months and (iii) with respect to ratings assigned by DCR, D-1+ for short-term
instruments and AAA for long-term instruments.
"Holder" means (i) with respect to a Certificate, the Person in whose
name such Certificate is registered in the Certificate Register, and (ii) with
respect to a Note, the Person in whose name such Note is registered in the Note
Register.
"Indebtedness" means, with respect to any Person at any date, (a) all
indebtedness of such person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (d) all liabilities secured by any Lien on any
property owned by such Person even though such person has not assumed or
otherwise become liable for the payment thereof.
"Indenture" means the Indenture, dated as of the date hereof, between
the Trust and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Trust, the Trust Depositor
or the Servicer, (ii) is not a director, officer or employee of any Affiliate of
the Trust, the Trust Depositor or the Servicer, (iii) is not a person related to
any officer or director of the Trust, the Trust Depositor or the Servicer or any
of their respective Affiliates, (iv) is not a holder (directly or indirectly) of
more than 10% of any voting securities of the Trust, the Trust Depositor or the
Servicer or any of their respective Affiliates, and (v) is not connected with
the Trust, the Trust Depositor or the Servicer as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
"Ineligible Contract" has the meaning specified in Section 11.01.
"Initial Class A-1 Principal Amount" means $[______________].
"Initial Class A-2 Principal Amount" means $[______________].
"Initial Class A-3 Principal Amount" means $[______________].
"Initial Class A-4 Principal Amount" means $[______________].
"Initial Class B Principal Amount" means $[______________].
"Initial Class C Principal Amount" means $[______________].
"Initial Class D Principal Amount" means $[______________].
"Initial Principal Amount" means, when used in the context of a
reference to an individual Class of Notes, the Initial Class Principal Amount
applicable to such Class as defined above, and otherwise means, collectively,
the sum of the Initial Class A-1 Principal Amount, the Initial Class A-2
Principal Amount, the Initial Class A-3 Principal
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Amount, the Initial Class A-4 Principal Amount, the Initial Class B Principal
Amount, the Initial Class C Principal Amount and the Initial Class D Principal
Amount, i.e., $[______________].
"Initial Contracts" means those Contracts conveyed to the Trust on the
Closing Date.
"Initial Cutoff Date" means April 1, 1999.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such person to the entry of an order for relief in an involuntary case under
such law, taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of this property, or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.
"Insolvency Laws" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
"Insurance Policy" means, with respect to any Contract, an insurance
policy covering physical damage to or loss of the related Equipment.
"Insurance Proceeds" means. depending on the context, any amounts
payable or any payments made, to the Servicer under any Insurance Policy.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Investment Earnings" means the investment earnings (net of losses and
investment expenses) on amounts on deposit in the Collection Account and the
Reserve Fund, to be credited to the Collection Account on such Distribution Date
pursuant to Section 7.03.
"IPA" means each installment payment agreement, including as
applicable, schedules, subschedules, supplements and amendments to a software
license agreement, pursuant to which the Originator financed the purchase or
acquisition of specified assets by an Obligor for specified monthly, quarterly
or semiannual payments.
"Late Charges" means any late payment fees paid by Obligors on
Contracts after all sums received have been allocated first to regular
installments due or overdue and all such installments are then paid in full.
"Lease" means each agreement, including both operating and financing
agreements, and, as applicable, schedules, subschedules, supplements and
amendments to a master lease, pursuant to which the Originator, as lessor,
leased specified assets to a Lessee at a specified monthly, quarterly,
semiannual or annual rental.
"Lessee" means, with respect to any Lease, the Obligor with respect to
such Lease.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), equity
interest, participation interest, preference, priority or other security
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agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing.
"Liquidation Expenses" means, with respect to any Contract, the
aggregate amount of all out-of-pocket expenses reasonably incurred by the
Servicer (including amounts paid to any subservicer) and any reasonably
allocated costs of internal counsel, in each case in accordance with the
Servicer's customary procedures in connection with the repossession,
refurbishing and disposition of any related Equipment upon or after the
expiration or earlier termination of such Contract and other out-of-pocket costs
related to the liquidation of any such Equipment, including the attempted
collection of any amount owing pursuant to such Contract if it is a Defaulted
Contract.
"Liquidation Proceeds" means, with respect to a Defaulted Contract,
proceeds from the sale, lease or re-lease of the Equipment, proceeds of the
related Insurance Policy and any other recoveries with respect to such Defaulted
Contract and the related Equipment, net of Liquidation Expenses and amounts, if
any, so received that are required to be refunded to the Obligor on such
Contract.
"List of Contracts" means the list identifying each Contract
constituting part of the Trust Assets, which list shall consist of the initial
List of Contracts reflecting the Initial Contracts transferred to the Trust on
the Closing Date, together with any Subsequent List of Contracts amending the
most current List of Contracts reflecting the Substitute Contracts transferred
to the Trust on the related Subsequent Transfer Date (together with a deletion
from such list of the related Contract or Contracts identified on the
corresponding Addition Notice with respect to which an Addition Event or a
Substitution Event has occurred), and which list in each case (a) identifies
each Contract included in the Contracts Pool, and (b) sets forth as to each such
Contract (i) the Discounted Principal Balance as of the applicable Cutoff Date,
and (ii) the maturity date, and which list (as in effect on the Closing Date) is
attached to this Agreement as Exhibit H.
"Material Modification" means a termination or release (including
pursuant to prepayment), or an amendment, modification or waiver, or equivalent
similar undertaking or agreement, by the Servicer with respect to a Contract
which would not otherwise be permitted under the standards and criteria set
forth in Sections 5.08 and/or 5.09 hereof, as applicable.
"Maturity Date" means, as applicable, the Class A-1 Maturity Date,
Class A-2 Maturity Date, Class A-3 Maturity Date, Class A-4 Maturity Date, Class
B Maturity Date, Class C Maturity Date or Class D Maturity Date.
"Monthly Principal Amount" means, with respect to a Distribution Date,
the difference between (i) the sum of the aggregate Principal Amount of the
Notes and the Overcollaterization Balance as of the immediately preceding
Distribution Date (after making any principal payments on such date) and (ii)
the ADCB as of the last day of the related Collection Period.
"Monthly Report" has the meaning specified in Section 9.01.
"Moody's" means Moody's Investors Service, Inc. or any successor
thereto.
"Note" means any one of the notes of the Trust of any Class executed
and authenticated in accordance with the Indenture.
"Note Distribution Account" means the account established and
maintained as such pursuant to Section 7.01.
"Note Register" has the meaning given such term in Section 2.04 of the
Indenture.
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"Obligor" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
"Officer's Certificate" shall mean a certificate signed by any officer
of the Trust Depositor or the Servicer and delivered to the Owner Trustee or the
Indenture Trustee, as the case may be.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel (including internal counsel) for the Trust Depositor or the Servicer and
who shall be reasonably acceptable to the Owner Trustee or the Indenture
Trustee, as the case may be.
"Originator" means either of HFI or Heller Leasing, each in the
capacity as an Originator of a Contract under this Agreement (including in
respect of a Substitute Contract pursuant to a Subsequent Purchase Agreement).
"Outstanding" has the meaning given such term in the Indenture.
"Overcollateralization Balance" means, with respect to a Distribution
Date, an amount equal to the excess, if any, of (i) the ADCB as of the last day
of the related Collection Period over (ii) the aggregate Principal Amount of the
Notes as of such date after giving effect to all principal payments made to the
Noteholders on such date.
"Owner Trustee" means the Person acting, not in its individual
capacity, but solely as Owner Trustee, under the Trust Agreement, its successors
in interest and any successor owner trustee under the Trust Agreement.
"Paying Agent" means as described in Section 6.11 of the Indenture and
Section 3.10 of the Trust Agreement.
"Permitted Liens" means (a) with respect to Contracts in the Contracts
Pool:
(i) Liens for state, municipal or other local taxes if such taxes
shall not at the time be due and payable or if the Trust Depositor
shall currently be contesting the validity thereof in good faith by
appropriate proceedings and shall have set aside on its books adequate
reserves with respect thereto, (ii) Liens in favor of the Trust
Depositor created by an Originator and transferred to the Trust
pursuant hereto, (iii) Liens in favor of the Trust created pursuant to
this Agreement, and (iv) Liens in favor of the Indenture Trustee
created pursuant to the Indenture and/or this Agreement;
and (b) with respect to the related Equipment:
(i) materialmen's, warehousemen's, mechanics' and other liens
arising by operation of law in the ordinary course of business for sums
not due, (ii) Liens for state, municipal or other local taxes if such
taxes shall not at the time be due and payable or if the Trust
Depositor shall currently be contesting the validity thereof in good
faith by appropriate proceedings and shall have set aside on its books
adequate reserves with respect thereto, (iii) Liens in favor of the
Trust Depositor created by the Originators and transferred by the Trust
Depositor to the Trust pursuant to this Agreement, (iv) Liens in favor
of the Trust created pursuant to this Agreement, (v) Liens in favor of
the Indenture Trustee created pursuant to the Indenture and/or this
Agreement, (vi) subordinated liens which are subordinated to the prior
payment of the Notes and the Certificate on terms described herein, and
(vii) Liens granted by the End-Users which are subordinated to the
interest of the Trust in such Equipment.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
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"Placement Agency Agreement" means the Placement Agency Agreement,
dated [__________], 1999, between [ ] as Agent thereunder, the Trust Depositor,
and HFI, with respect to the private placement of the Class D Notes.
"Placement Agent" means [ ,] as Agent under the Placement
Agency Agreement.
"Prepaid Contract" means any Contract that has terminated or been
prepaid in full prior to its scheduled expiration date (including because of a
Casualty Loss), other than a Defaulted Contract.
"Prepayment Amount" has the meaning specified in Section 5.09.
"Prepayments" means any and all partial and full prepayments on a
Contract (including, with respect to any Contract and any Collection Period, any
Scheduled Payment (or portion thereof) which is due in a subsequent Collection
Period which the Servicer has received, and (if such Contract is not otherwise
prepayable by its terms) expressly permitted the related Obligor to make, in
advance of its scheduled due date and which will be applied to such Scheduled
Payment on such due date, and any and all cash proceeds or rents realized from
the sale, lease, re-lease or re-financing of Equipment under a Prepaid Contract,
net of Liquidation Expenses), Liquidation Proceeds, amounts received in respect
of Transfer Deposit Amounts and payments upon an optional termination of the
Trust pursuant to Section 7.08.
"Principal Amount" means, with respect to a Class of Notes, the
aggregate Initial Principal Amount thereof reduced by (i) the aggregate amount
of any distributions applied in reduction of such principal amount and (ii) the
aggregate amount of any distributions then on deposit in the Note Distribution
Account, if any, for such Class of Notes established in accordance with the
Indenture and to be applied in reduction of such principal amount in accordance
with such Indenture.
"Program Agreement" means each Vendor finance program agreement
pursuant to which End-User Contracts originated by a Vendor are assigned to an
Originator.
"Prospectus" has the meaning given such term in the Underwriting
Agreement.
"Qualified Eligible Investments" means Eligible Investments acquired by
the Indenture Trustee in its name and in its capacity as Indenture Trustee,
which are held by the Indenture Trustee in the Collection Account or the Reserve
Fund and with respect to which (a) the Indenture Trustee has noted its interest
therein on its books and records, and (b) the Indenture Trustee has purchased
such investments for value without notice of any adverse claim thereto (and, if
such investments are securities or other financial assets or interests therein,
within the meaning of Section 8-102 of the UCC as enacted in Illinois, without
acting in collusion with a securities intermediary in violating such securities
intermediary's obligations to entitlement holders in such assets, under Section
8-504 of such UCC, to maintain a sufficient quantity of such assets in favor of
such entitlement holders), and (c) either (i) such investments are in the
possession of the Indenture Trustee, or (ii) such investments, (A) if
certificated securities and in bearer form, have been delivered to the Indenture
Trustee, or in registered form, have been delivered to the Indenture Trustee and
either registered by the issuer in the name of the Indenture Trustee or endorsed
by effective endorsement to the Indenture Trustee or in blank; (B) if
uncertificated securities, the ownership of which has been registered to the
Indenture Trustee on the books of the issuer thereof (or another person, other
than a securities intermediary, either becomes the registered owner of the
uncertified security on behalf of the Indenture Trustee or, having previously
become the registered owner, acknowledges that it holds for the Indenture
Trustee); or (C) if securities entitlements (within the meaning of Section 8-102
of the UCC as enacted in Illinois) representing interests in securities or other
financial assets (or interests therein) held by a securities intermediary
(within the meaning of said Section 8-102), a securities intermediary indicates
by book entry that a security or other financial asset has been credited to the
Indenture Trustee's securities account with such securities intermediary. Any
such Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its Affiliates.
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"Qualified Institution" means (a) the corporate trust department of the
Indenture Trustee, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), (i) (A) which has either
(1) a long-term unsecured debt rating acceptable to the Rating Agencies, or (2)
a short-term unsecured debt rating or certificate of deposit rating acceptable
to the Rating Agencies, (B) the parent corporation of which has either (1) a
long-term unsecured debt rating acceptable to the Rating Agencies, or (2) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies, or (C) is otherwise acceptable to the Rating Agencies, and
(ii) whose deposits are insured by the FDIC.
"Rating Agency" means each of Moody's, DCR and Fitch, so long as such
Persons maintain a rating on the Notes and the Certificate; and if either
Moody's, DCR or Fitch no longer maintains a rating on the Notes and the
Certificate, such other nationally recognized statistical rating organization
selected by the Trust Depositor.
"Rating Agency Condition" means, with respect to any action or series
of related actions or proposed transaction or series of related proposed
transactions, that each Rating Agency shall have notified the Trust Depositor
and the Owner Trustee and the Indenture Trustee in writing that such action or
series of related actions or the consummation of such proposed transaction or
series of related transactions will not result in a Ratings Effect.
"Ratings Effect" means, with respect to any action or series of related
actions or proposed transaction or series of related proposed transactions, a
reduction or withdrawal of the rating of any outstanding Class with respect to
which a Rating Agency has previously issued a rating as a result of such action
or series of related actions or the consummation of such proposed transaction or
series of related transactions.
"Record Date" means, with respect to a Distribution Date, the last
Business Day of the preceding calendar month.
"Recoveries" means any and all recoveries on account of a Defaulted
Contract, including, without limitation, any and all cash proceeds or rents
realized from the sale, lease, re-lease or re-financing of repossessed Equipment
or other property, Insurance Proceeds, amounts representing late fees and
penalties and amounts received pursuant to a Program Agreement (including,
without limitation, amounts received from any "ultimate net loss pool" that may
have been created under such Program Agreement), but in each case net of
Liquidation Expenses.
"Released Amounts" means, with respect to any payment or collection
received with respect to any Contract on any Business Day (whether such payment
or collection is received by the Servicer, the Owner Trustee or the Trust
Depositor), an amount equal to that portion of such payment or collection
constituting Excluded Amounts.
"Required Holders" means (i) prior to the payment in full of the Class
A Notes Outstanding, Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders and/or Class A-4 Noteholders evidencing more than 66 2/3% of the
Aggregate Principal Amount of all Class A Notes Outstanding, (ii) from and after
the payment in full of the Class A Notes Outstanding, Class B Noteholders
evidencing more than 66 2/3% of the Aggregate Principal Amount of all Class B
Notes Outstanding, (iii) from and after the payment in full of the Class B Notes
Outstanding, Class C Noteholders evidencing more than 66 2/3% of the Aggregate
Principal Amount of all Class C Notes Outstanding, and (iv) from and after the
payment in full of the Class C Notes Outstanding, Class D Noteholders evidencing
more than 66 2/3% of the Aggregate Principal Amount of all Class D Notes
Outstanding.
"Required Reserve Amount" means, with respect to a Distribution Date,
an amount equal to 0.70% of the aggregate Principal Amount of the Notes as of
the last day of the related Collection Period.
"Requirements of Law" for any Person means the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
order or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person
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or to which such Person is subject, whether Federal, state or local (including,
without limitation, usury laws, the Federal Truth in Lending Act and Regulation
Z and Regulation B of the Board of Governors of the Federal Reserve System).
"Reserve Fund" means the Reserve Fund established and maintained
pursuant to Section 7.01 hereof.
"Reserve Fund Initial Deposit" means $400,000.
"Residual Investment" means, with respect to certain Leases, any funds
that an Originator shall have advanced against all or any portion of the
anticipated residual value of the leased Equipment upon the expiration of such
Lease in accordance with its terms, and in excess of the discounted present
value of the rental payments due under such Lease.
"Responsible Officer" means, with respect to the Owner Trustee, any
officer in its Corporate Trust Administration Department (or any similar group
of a successor Owner Trustee) and with respect to the Indenture Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Indenture Trustee
customarily performing functions similar to those performed by persons who at
the time shall be such officers, respectively, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
"Scheduled Payment" means, with respect to any Contract, the monthly or
quarterly or semi-annual or annual rent or financing (whether principal or
principal and interest) payment scheduled to be made by the related Obligor
under the terms of such Contract after the related Cutoff Date; it being
understood that Scheduled Payments do not include any Excluded Amounts.
"Secondary Contract" shall mean, with respect to a Vendor Loan, each
End-User Contract securing such Vendor Loan.
"Secured Note" means each promissory note with a related security
interest evidenced by written agreement, pursuant to which the purchase of
specified assets by a Obligor is financed for specified monthly, quarterly,
semiannual or annual payments.
"Securities" means the Notes and the Certificate, or any of them.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Securityholders" means the Holders of the Notes or the Certificate.
"Servicer" means initially HFI, or its successor, until any Servicer
Transfer hereunder and thereafter means the Successor Servicer appointed
pursuant to Article VIII below with respect to the duties and obligations
required of the Servicer under this Agreement.
"Servicer Advance" means, with respect to any Distribution Date, the
amounts, if any, deposited by the Servicer in the Collection Account for such
Distribution Date in respect of Scheduled Payments pursuant to Section 5.14.
"Servicer Default" shall have the meaning specified in Section 8.01.
"Services" means, in connection with the financing of Software by an
Originator, the support and consulting services related to such Software, the
procurement of which was also financed by such Originator pursuant to a
Contract.
"Servicing Fee" has the meaning specified in Section 5.18.
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"Servicing Fee Percentage" means 0.40%.
"Servicer Transfer" has the meaning assigned in Section 8.02(a).
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Indenture Trustee by the Servicer, as the same may be amended
from time to time.
"Software" means the computer software programs financed or leased by
an Obligor pursuant to a Contract.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
Property of such Person in an orderly liquidation of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its Property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"Substitute Contract Qualification Conditions" means, with respect to
any Substitute Contract being transferred to the Trust pursuant to Section 2.04,
the accuracy of each of the following statements as of the related Cutoff Date
for such Contract:
(a) the Discounted Contract Balance of such Substitute Contract
is not less than that of the Contract or Contracts identified on the
related Addition Notice as the Contract or Contracts to be released by
the Trust to the Trust Depositor and reconveyed to the Originators in
exchange for such Substitute Contract; and
(b) for each separate Collection Period which corresponds to a
Collection Period in which a payment would have been owing on the
Contract or Contracts identified on the related Addition Notice as the
Contract or Contracts to be released by the Trust to the Trust
Depositor and reconveyed to the Originators in exchange for such
Substitute Contract, the amount in respect of Scheduled Payments
receivable (assuming Scheduled Payments are paid and received when due)
on the Substitute Contract in such Collection Period is not less than
that of such related Contract or Contracts; and
(c) if, instead of such Substitute Contract being added to the
Contracts Pool on the related Subsequent Transfer Date, such Substitute
Contract had instead been included in the Contracts Pool as of the
Initial Cutoff Date, and the related Contract or Contracts identified
on the related Addition Notice were not so included (and assuming such
hypothetical inclusion satisfied the criteria set forth in clause (a)
and (b) above that would have been applicable at such time), the
representations of the Originators set forth in Section 3.05 concerning
concentrations would not, as a result of such inclusion, have become
inaccurate or incorrect in any material respect; and
(d) no adverse selection procedure shall have been employed in
the selection of such Substitute Contract from the Originators'
portfolio; and
(e) all actions or additional actions (if any) necessary to
perfect the security interest and assignment of such Substitute
Contract to the Trust Depositor, Trust, and Indenture Trustee shall
have been taken as of or prior to the Subsequent Transfer Date; and
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(f) the maturity date for the last Scheduled Payment due under
such Substitute Contract is not later than the Class B Maturity Date.
"Subsequent Cutoff Date" means the date specified as such for
Substitute Contracts in the related Subsequent Transfer Agreement.
"Subsequent List of Contracts" means a list, in the form of the initial
List of Contracts delivered on the Closing Date, but listing each Substitute
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.
"Subsequent Purchase Agreement" means, with respect to any Substitute
Contracts, the agreement between the Originators and the Trust Depositor
pursuant to which the applicable Originator will transfer the Substitute
Contracts to the Trust Depositor, the form of which is attached to hereto as
Exhibit M.
"Subsequent Transfer Agreement" means the agreement described in
Section 2.04 hereof.
"Subsequent Transfer Date" means any date on which Substitute Contracts
are transferred to the Trust.
"Substitute Contract" means a Contract transferred to the Trust under
Section 2.04 with respect to which a related Substitution Event has occurred
with respect to a Contract or Contracts then held in the Contracts Pool and
identified in the related Addition Notice.
"Substitution Event" shall have occurred if one or more Contracts then
held in the Trust and identified in the related Addition Notice is either (a) a
Prepaid Contract or (b) the subject of a breach of a representation or warranty
under this Agreement or other provision which breach or other provision, in the
absence of a substitution of a Substitute Contract for such Contract or
Contracts pursuant to Section 2.04, would require the payment of a Transfer
Deposit Amount to the Trust in respect of such Contract pursuant to Section
11.01.
"Successor Servicer" has the meaning given such term in Section
8.02(b).
"Tax Opinion" means, with respect to any action, an opinion of Counsel
to the effect that, for federal income tax purposes, (i) following such action
the Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a corporation, (ii) following such action the Trust will
be disregarded as a separate entity from the Trust Depositor, and (iii) such
action will not affect the tax characterization as debt of Notes of any
outstanding Class issued by the Trust for which an Opinion of Counsel has been
provided that such Notes are debt.
"Title Registry Equipment" means Equipment in the form of aircraft,
where the transfer of interests in such Equipment is subject to certain federal
title registration statutes, regulations and procedures.
"Transaction Documents" means this Agreement, the Indenture, the Trust
Agreement, the Administration Agreement, any Subsequent Transfer Agreement, any
Subsequent Purchase Agreement, the Underwriting Agreements, the Placement Agency
Agreement, and the Note Purchase Agreement (as defined in the Placement Agency
Agreement).
"Transfer Date" means the Business Day immediately preceding each
Distribution Date.
"Transfer Deposit Amount" means, with respect to each Ineligible
Contract or Excess Contract, on any date of determination, the sum of the
Discounted Contract Balances of such Contracts, together with accrued interest
thereon through such date of determination at the Discount Rate, and any
outstanding Servicer Advances thereon.
"Trust" means the trust created by the Trust Agreement and funded
pursuant to this Agreement, consisting of the Trust Assets.
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"Trust Accounts" means, collectively, the Collection Account, the
Reserve Fund and the Note Distribution Account, or any of them.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including without limitation the Reserve Fund Initial
Deposit, and all proceeds of the foregoing.
"Trust Agreement" means the Trust Agreement, dated as of the date
hereof, between the Trust Depositor and the Owner Trustee.
"Trust Assets" has the meaning given to such term in Section 2.01(b)
hereof (and in Section 2.04(a) hereof in respect of Substitute Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements).
"Trust Depositor" has the meaning assigned such term in the preamble
hereunder, or any successor entity thereto.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"Trustees" means the Owner Trustee and the Indenture Trustee, or any of
them individually as the context may require.
"UCC" means the Uniform Commercial Code as enacted in Illinois;
provided, however, in the event that, by reason of mandatory provisions of law,
any and all of the attachment, perfection or priority of the Lien of the Trust
in and to the Trust Assets or the Lien of the Indenture Trustee in and to the
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Illinois, the term UCC shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"UCC Filing Locations" means the States of Illinois, Delaware, each
other State in which the Originator/Servicer maintains the Contract Files
related to Contracts in the Contracts Pool (as of the Closing Date, Georgia and
California), and each State in which a Vendor which is an Obligor on a Vendor
Loan is located (as defined in the UCC in such State) (as of the Closing Date,
Wisconsin only).
"Uncollectible Advance" means with respect to any Determination Date
and any Contract, the amount, if any, advanced by the Servicer pursuant to
Section 5.14 which the Servicer has as of such Determination Date determined in
good faith will not be ultimately recoverable by the Servicer.
"Underwriting Agreement" means the Underwriting Agreement, dated
[___________], 1999, among [First Union Capital Markets Corp.] (as an
underwriter thereunder and as Representative of the underwriters), [Bear,
Stearns & Co., Inc. and Lehman Brothers] (each as underwriters thereunder), the
Trust Depositor, and HFI.
"United States" means the United States of America.
"Unreimbursed Servicer Advances" means, at any time, the amount of all
previous Servicer Advances (or portions thereof) as to which the Servicer has
not been reimbursed as of such time pursuant to Sections 7.01 or 7.05 and which
the Servicer has determined in its sole discretion are Uncollectible Advances,
and with respect to which the Servicer has given a written certification to such
effect to each Trustee.
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"Vendor" means, with respect to a Contract, the equipment manufacturer,
dealer or distributor, or software licensor or distributor, or other Person that
provided financing under such Contract in connection with the acquisition or use
by an End-User of such party's Equipment, Software, Services or other products.
"Vendor Agreements" means the collective reference to Vendor
Assignments and Program Agreements.
"Vendor Assignment" means each assignment agreement pursuant to which
an individual End-User Contract originated by a Vendor is assigned to an
Originator.
"Vendor Loan" means a limited recourse loan agreement payable by a
Vendor and secured by the Vendor's interest in Secondary Contracts and by the
Equipment, if any, related thereto.
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
Section 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation."
Section 1.03. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.04. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months and will be carried out to at least
three decimal places.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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ARTICLE TWO
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACT ASSETS
Section 2.01. Creation and Funding of Trust; Transfer of Contract
Assets. (a) The Trust shall be created pursuant to the terms and conditions of
the Trust Agreement, upon the execution and delivery of the Trust Agreement and
the filing by the Owner Trustee of an appropriately completed Certificate of
Trust under the Business Trust Statute. The Trust Depositor, as settlor of the
Trust, shall fund and convey assets to the Trust pursuant to the terms and
provisions hereof. The Trust shall be administered pursuant to the provisions of
this Agreement and the Trust Agreement for the benefit of the Noteholders and
Certificateholder. The Owner Trustee is hereby specifically recognized by the
parties hereto as empowered to conduct business dealings on behalf of the Trust
in accordance with the terms hereof and of the Trust Agreement.
(b) Transfer of Contract Assets to the Trust Depositor. Subject to and
upon the terms and conditions set forth herein, the Trust Depositor hereby
sells, transfers, assigns, sets over and otherwise conveys to the Trust, for a
purchase price of $[____________] in cash (less underwriting expenses and
certain other expenses associated with the initial offer and sale of the Notes
the proceeds of which represent the consideration paid by the Trust herein), all
the right, title and interest of the Originators in and to (items (i) - (vi)
below, being collectively referred to herein as the "Contract Assets"):
(i) the Initial Contracts, and all monies due or to become due
in payment of such Contracts on and after the Initial Cutoff Date, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the Initial Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements and under any guarantee or similar
credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
provided, that Contract Assets shall not include any Residual Investment. In
addition to the Contract Assets, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust the remittances, deposits
and payments made into the Trust Accounts from time to time, amounts in the
Trust Accounts from time to time (and any investments of such amounts) and all
proceeds and products of the foregoing, which together with the Contract Assets
constitute the corpus of the Trust and are referred to as the "Trust Assets")
(c) The Originators and the Trust Depositor acknowledge that the
representations and warranties of the Originators in Section 3.02, 3.03, 3.04
and 3.05 will run to and be for the benefit of the Trust and the Trustees and
the Trust and the Trustees may enforce directly without joinder of Trust
Depositor, the repurchase obligations of the Originators with respect to
breaches of such representations and warranties as set forth herein and in
Section 11.01.
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(d) The sale, transfer, assignment, set-over and conveyance of the
Trust Assets by the Trust Depositor to the Trust pursuant to this Agreement does
not constitute and is not intended to result in a creation or an assumption by
the Trust Depositor or the Trust of any obligation of the Originators in
connection with the Contract Assets, or any agreement or instrument relating
thereto, including, without limitation, any obligation to any Obligor or
End-User, or any other Person in respect of services not financed by the
Originators, or (1) any taxes, fees, or other charges imposed by any
Governmental Authority and (2) any insurance premiums which remain owing with
respect to any Contract at the time such Contract is sold hereunder.
(e) The Originators, Trust Depositor and Trust intend and agree that
(i) the transfer of the Contract Assets to the Trust Depositor and the transfer
of the Trust Assets to the Trust are intended to be a sale, conveyance and
transfer of ownership of the Contract Assets and Trust Assets, as the case may
be, rather than the mere granting of a security interest to secure a borrowing
and (ii) such Contract Assets shall not be part of the applicable Originator's
estate in the event of a filing of a bankruptcy petition or other action by or
against such Person under any Insolvency Law. In the event, however, that
notwithstanding such intent and agreement, such transfers are deemed to be of a
mere security interest to secure indebtedness, the Originators shall be deemed
to have granted the Trust Depositor and the Trust Depositor shall be deemed to
have granted the Trust, as the case may be, a perfected first priority security
interest in such Contract Assets or Trust Assets respectively and this Agreement
shall constitute a security agreement under applicable law, securing the
repayment of the purchase price paid hereunder and the obligations and/or
interests represented by the Securities, in the order and priorities, and
subject to the other terms and conditions of, this Agreement, the Indenture and
the Trust Agreement, together with such other obligations or interests as may
arise hereunder and thereunder in favor of the parties hereto and thereto.
If any such transfer of the Contract Assets is deemed to be
the mere granting of a security interest to secure a borrowing, the Trust
Depositor may, to secure the Trust Depositor's own borrowing under this
Agreement (to the extent that the transfer of the Contract Assets thereunder is
deemed to be a mere granting of a security interest to secure a borrowing)
repledge and reassign (1) all or a portion of the Contract Assets pledged to
Trust Depositor by the Originators and with respect to which the Trust Depositor
has not released its security interest at the time of such pledge and
assignment, and (2) all proceeds thereof. Such repledge and reassignment may be
made by Trust Depositor with or without a repledge and reassignment by Trust
Depositor of its rights under any agreement with the Originators, and without
further notice to or acknowledgment from the Originators. The Originators waive,
to the extent permitted by applicable law, all claims, causes of action and
remedies, whether legal or equitable (including any right of setoff), against
Trust Depositor or any assignee of Trust Depositor relating to such action by
Trust Depositor in connection with the transactions contemplated by this
Agreement.
Section 2.02. Conditions to Transfer of Trust Assets to Trust. On or
before the Closing Date, the Originators or the Trust Depositor, as applicable,
shall deliver or cause to be delivered to the Owner Trustee and Indenture
Trustee each of the documents, certificates and other items as follows:
(i) A certificate of an officer of each respective Originator
substantially in the form of Exhibits C-1 and C-2 hereto;
(ii) Opinions of counsel for the Originators and the Trust
Depositor substantially in the form of Exhibits D hereto (and including
as an addressee thereof each Rating Agency);
(iii) Copies of resolutions of the Board of Directors of the
respective Originator or of the Executive Committee of the Board of
Directors of the respective Originator approving the execution,
delivery and performance of this Agreement and the transactions
contemplated hereunder, certified in each case by the Secretary or an
Assistant Secretary of the respective Originator;
(iv) Officially certified recent evidence of due incorporation
and good standing of the Originators under the laws of Delaware;
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(v) The initial List of Contracts, certified by the Chairman
of the Board, President or any Vice President of the Trust Depositor,
together with an Assignment substantially in the form of Exhibit A
(along with the delivery of any instruments as required under Section
2.06 below);
(vi) A certificate of an officer of the Trust Depositor
substantially in the form of Exhibit B hereto;
(vii) A letter from Arthur Andersen LLP, or another nationally
recognized accounting firm, addressed to the Originators and the Trust
Depositor, stating that such firm has reviewed a sample of the Initial
Contracts and performed specific procedures for such sample with
respect to certain contract terms and which identifies those Initial
Contracts which do not conform;
(viii) Copies of resolutions of the Board of Directors of the
Servicer and the Trust Depositor or of the Executive Committee of the
Board of Directors of the Servicer and the Trust Depositor approving
the execution, delivery and performance of this Agreement and the other
Transaction Documents to which any of them is a party, as applicable,
and the transactions contemplated hereunder and thereunder, certified
in each case by the Secretary or an Assistant Secretary of the Servicer
and the Trust Depositor;
(ix) Officially certified, recent evidence of due
incorporation and good standing of the Trust Depositor under the laws
of Delaware;
(x) Evidence of proper filing with appropriate officers in the
UCC Filing Locations of UCC financing statements executed by each
Originator, as debtor, naming the Trust Depositor as secured party (and
the Owner Trustee as assignee) and identifying the Contract Assets as
collateral; and evidence of proper filing with appropriate officer in
the UCC Filing Locations of UCC financing statements executed by the
Trust Depositor, as debtor, naming the Owner Trustee as secured party
(and the Indenture Trustee as assignee) and identifying the Trust
Assets as collateral; and evidence of proper filing with appropriate
officers in the UCC Filing Locations of UCC financing statements
executed by the Trust and naming the Indenture Trustee as secured party
and identifying the Collateral, as collateral;
(xi) An Officer's Certificate listing the Servicer's Servicing
Officers;
(xii) Evidence of deposit in the Collection Account of all
funds received with respect to the Initial Contracts after the Initial
Cutoff Date to the date two days preceeding the Closing Date, together
with an Officer's Certificate from the Servicer to the effect that such
amount is correct;
(xiii) Evidence of deposit in the Reserve Fund of the Reserve
Fund Initial Deposit by the Trust Depositor;
(xiv) A fully executed Trust Agreement;
(xv) A fully executed Administration Agreement;
(xvi) A fully executed Indenture; and
(xvii) An opinion of Winston & Strawn to the effect that (i)
for federal income tax purposes, the Class A Notes and Class B Notes
will be characterized as debt and the Trust will not be characterized
as an association (or publicly traded partnership) taxable as a
corporation, and (ii) for State of Illinois income tax purposes, the
characterization of the Trust will correspond to its characterization
for federal income tax purposes.
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Section 2.03. Acceptance by Owner Trustee. On the Closing Date, if the
conditions set forth in Section 2.02 have been satisfied, the Trust shall issue
to, or upon the order of, the Trust Depositor the Certificate representing
ownership of a beneficial interest in 100% of the Trust and the Trust shall
issue, and the Indenture Trustee shall authenticate, to, or upon the order of,
the Trust Depositor the Notes secured by the Collateral. The Owner Trustee
hereby acknowledges its acceptance, on behalf of the Trust, of the Trust Assets,
and declares that it shall maintain such right, title and interest in accordance
with the terms of this Agreement and the Trust Agreement upon the trust herein
and therein set forth.
Section 2.04. Conveyance of Substitute Contracts.
(a) Conveyance of Substitute Contracts to the Trust Depositor. Subject
to Section 2.01(d) above and the satisfaction of the conditions set forth in
paragraph (c) below, the Originators may at their option (but shall not be
obligated to) sell, transfer, assign, set over and otherwise convey to the Trust
Depositor (by delivery of an executed Subsequent Purchase Agreement
substantially in the form attached as Exhibit M hereto), without recourse other
than as expressly provided herein and therein (and the Trust Depositor shall be
required to purchase through payment by exchange of one or more related
Contracts released by the Trust to the Trust Depositor on the Subsequent
Transfer Date all the right, title and interest of the Originators in and to
(the property in clauses (i) - (vi) below, upon such transfer, becoming part of
the "Contract Assets"):
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Substitute Contracts on and after the related Subsequent Cutoff Dates,
any Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Subsequent
Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
provided, that such Contract Assets shall in no case include any Residual
Investment.
(b) Conveyance of Substitute Contracts to the Trust. Subject to Section
2.01(d) above and the conditions set forth in paragraph (c) below, the Trust
Depositor shall sell, transfer, assign, set over and otherwise convey to the
Trust, without recourse other than as expressly provided herein and therein, (i)
all the right, title and interest of the Trust Depositor in and to the
Substitute Contracts purchased pursuant to Section 2.04(a) above, and (ii) all
other rights and property interests consisting of Contract Assets related to
such Substitute Contracts (the property in clauses (i)-(ii) above, upon such
transfer, becoming part of the "Trust Assets").
(c) The Originators and Trust Depositor shall transfer to the Trust the
Substitute Contracts and the other property and rights related thereto described
in paragraphs (a), in the case of the Originators, or (b), in the case of the
Trust Depositor, above only upon the satisfaction of each of the following
conditions on or prior to the related
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Subsequent Transfer Date (and the delivery of a related Addition Notice by the
Trust Depositor shall be deemed a representation and warranty by the Trust
Depositor and of the Originators jointly and severally, that such conditions
have been or will be, as of the related Subsequent Transfer Date, satisfied):
(i) The Trust Depositor shall have provided the Owner Trustee
and the Indenture Trustee with a timely Addition Notice complying with
the definition thereof contained herein;
(ii) there shall have occurred, with respect to each such
Substitute Contract, a corresponding Substitution Event with respect to
one or more Contracts then in the Contracts Pool;
(iii) the Substitute Contract(s) being conveyed to the Trust,
satisfy the Substitute Contract Transfer Conditions;
(iv) the applicable Originator shall have delivered to the
Trust Depositor a duly executed written assignment in substantially the
form of Exhibit M hereto (the "Subsequent Purchase Agreement"), which
shall include a Subsequent List of Contracts listing the Substitute
Contracts;
(v) the Trust Depositor shall have delivered to the Owner
Trustee a duly executed written assignment (including an acceptance by
the Owner Trustee) in substantially the form of Exhibit L hereto (the
"Subsequent Transfer Agreement"), which shall include a Subsequent List
of Contracts listing the Substitute Contracts;
(vi) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all Collections received with
respect to the Substitute Contracts on or after the related Subsequent
Cutoff Date;
(vii) as of each Subsequent Transfer Date, neither the
Originators nor the Trust Depositor were insolvent nor will any of them
have been made insolvent by such transfer nor are any of them aware of
any pending insolvency;
(viii) no selection procedures believed by the Originators or
the Trust Depositor to be adverse to the interests of the Noteholders
or Certificateholder shall have been utilized in selecting the
Substitute Contracts;
(ix) each of the representations and warranties made by the
Originators pursuant to Sections 3.02, 3.03, 3.04, and 3.05 applicable
to the Substitute Contracts shall be true and correct as of the related
Subsequent Transfer Date, and the Originators shall have performed all
obligations to be performed by them hereunder on or prior to such
Subsequent Transfer Date; and
(x) the applicable Originator shall, at its own expense, on or
prior to the Subsequent Transfer Date, indicate in its Computer Disk
that ownership of the Substitute Contracts identified on the Subsequent
List of Contracts in the Subsequent Transfer Agreement have been sold
to the Trust through the Trust Depositor pursuant to this Agreement.
Section 2.05. Release of Released Amounts. (a) The Indenture Trustee
hereby agrees to release to the Trust from the Trust Assets, and the Trust
hereby agrees to release to the Trust Depositor, an amount equal to the Released
Amounts immediately upon identification thereof, which release shall be
automatic and shall require no further act by the Indenture Trustee or the
Trust, provided that the Indenture Trustee or Owner Trustee shall execute and
deliver such instruments of release and assignment, or otherwise confirm the
foregoing release, as may reasonably be requested by the Trust Depositor. Upon
such release, such Released Amounts shall not constitute and shall not be
included in the Trust Assets.
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(b) Immediately upon the release to the Trust Depositor by the Trustee
of the Released Amounts, the Trust Depositor hereby irrevocably agrees to
release to the Originators such Released Amounts, which release shall be
automatic and shall require no further act by the Trust Depositor, provided,
that the Trust Depositor shall execute and deliver such instruments of release
and assignment, or otherwise confirming the foregoing release of any Excluded
Amounts, as may be reasonably requested by the Originators.
Section 2.06. Delivery of Instruments. (a) The Originators and the
Trust Depositor shall deliver possession of all "instruments" (within the
meaning of Article 9 of the UCC) not constituting part of chattel paper (within
the meaning of such Article 9), which evidence any Contract to the Owner Trust
on behalf of the Trust on the Closing Date (or, if applicable, on the relevant
Subsequent Transfer Date), in each case indorsed in blank without recourse.
Pursuant to Section 3.05 of the Indenture, the Trust is required to deliver such
instruments to the Indenture Trustee as pledgee under the Indenture.
Accordingly, the Trust hereby authorizes and directs the Originators and the
Trust Depositor to deliver possession of any such instruments to the Indenture
Trustee on behalf of and for the account of the Trust, and agrees that such
delivery shall satisfy the condition set forth in the first sentence of this
Section 2.06. The Originators and the Trust Depositor shall also identify on the
List of Contracts (including any deemed amendment thereof associated
with any Substitute Contracts), whether by attached schedule or marking or other
effective identifying designation, all Contracts which are or are evidenced by
such instruments.
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ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Originators jointly and severally make, and upon execution of each
Subsequent Purchase Agreement are jointly and severally deemed to make, the
following representations and warranties, on which Trust Depositor will rely in
conveying the Contract Assets on the Closing Date (and on any Subsequent
Transfer Date) to the Trust, and on which the Trust, the Noteholders and
Certificateholder will rely. The Trust Depositor acknowledges that such
representations and warranties are being made by the Originators for the benefit
of the Trust.
Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), but shall survive the sale, transfer and assignment of the
Contracts to the Trust. The repurchase obligation or substitution obligation of
the Originators set forth in Section 11.01 constitutes the sole remedy available
for a breach of a representation or warranty of the Originators set forth in
Sections 3.02, 3.03, 3.04 or 3.05 of this Agreement. Notwithstanding the
foregoing, the Originators shall not be deemed to be remaking any of the
representations set forth in Section 3.03 or 3.05 on a Subsequent Transfer Date
with respect to the Substitute Contracts, as such representations relate solely
to the composition of the Initial Contracts conveyed on the Closing Date,
provided, that any inaccurate representation as to concentrations contained in
any Addition Notice shall be subject to the same remedies hereunder as if such
representation were made under Section 3.05 on the Closing Date with respect to
an Initial Contract.
Section 3.01. Representations and Warranties Regarding the Originators.
By its execution of this Agreement and each Subsequent Purchase Agreement, each
Originator jointly and severally represents and warrants that:
(a) Organization and Good Standing. Each Originator is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. Each Originator is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or otherwise) of
each Originator or Trust Depositor. Each Originator is properly
licensed in each jurisdiction to the extent required by the laws of
such jurisdiction in order to originate, and (if such Originator is to
be the Servicer) service the Contracts in accordance with the terms of
this Agreement.
(b) Authorization; Binding Obligation. Each Originator has the
power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which the respective
Originator is a party and all of the transactions contemplated under
this Agreement and the other Transaction Documents to which the
respective Originator is a party, and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the respective
Originator is a party. This Agreement and the other Transaction
Documents to which the respective Originator is a party constitute the
legal, valid and binding obligation of each Originator is enforceable
in accordance with their terms, except as enforcement of such terms may
be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies.
(c) No Consent Required. Each Originator is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement and the other Transaction Documents to which the respective
Originator is a party.
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(d) No Violations. Each Originator's execution, delivery and
performance of this Agreement and the other Transaction Documents to
which the respective Originator is a party will not violate any
provision of any existing law or regulation or any order or decree of
any court or the Certificate of Incorporation or Bylaws of the
respective Originator, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the respective
Originator is a party or by which the respective Originator or any of
the Originator's properties may be bound.
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of a Originator threatened, against a
Originator or any of its respective properties or with respect to this
Agreement or any other Transaction Document to which the respective
Originator is a party which, if adversely determined, would in the
opinion of the respective Originator have a material adverse effect on
the business, properties, assets or condition (financial or other) of
such Originator or the transactions contemplated by this Agreement or
any other Transaction Document to which the respective Originator is a
party.
(f) Place of Business; No Changes; No Trade Names. Each
Originator's sole place of business or chief executive office (within
the meaning of Article 9 of the UCC) is as set forth in Section 11.01
below, and each location where a Originator maintains custody of
Contract Files is reflected in the definition of UCC Filing Location or
has otherwise been disclosed with all necessary actions taken in
accordance with Section 4.03 hereof. Each Originator has not changed
its name as set forth herein, whether by amendment of its Certificate
of Incorporation, by reorganization or otherwise, and has not changed
the location of its place of business, within the four months preceding
the Closing Date (or Subsequent Transfer Date, as applicable, except in
accordance with the requirements of Section 4.03). The legal name of
each of the Originators is as set forth in this Agreement and within
the five years preceding the Closing Date neither of the Originators
has used, and neither of the Originators currently does use, any trade
names, fictitious names, assumed names, or "doing business as" names.
(g) No Bulk Sales. The execution, delivery and performance of
this Agreement by the Originators does not require compliance with any
"bulk sales" laws by the Originators.
(h) Solvency. Each Originator on the date of and after giving
effect to the transfer of the Contracts to the Trust Depositor pursuant
to [ ] is Solvent.
(i) Use of Proceeds. No proceeds of the sale of any Initial
Contract or Substitute Contract hereunder received by any Originator
will be used by such Originator to purchase or carry any "margin stock"
as such term is defined in Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(j) Not an Investment Company. Neither Originator is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (or such Originator is exempt from all provisions
of such Act).
(k) Taxes. To the best of each Originator's knowledge, (i)
each Originator has filed all tax returns required to be filed in the
normal course of its business and has paid or made adequate provisions
for the payment of all taxes, assessments and other governmental
charges due from such Originator or is contesting any such tax,
assessment or other governmental charge in good faith through
appropriate proceedings, (ii) no tax lien has been filed with respect
thereto, and (iii) no claim is being asserted with respect to any such
tax, fee or other charge.
(l) Sale Treatment. Each Originator has treated the transfer
of Contract Assets to the Trust Depositor for all purposes (including
financial accounting purposes) as a sale and purchase on all of its
relevant books, records, financial statements and other applicable
documents.
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(m) Marking of Files. Each Originator has, at its own expense,
prior to the Closing Date, indicated in its Computer Disk that
ownership of the Contracts transferred by it to the Trust Depositor and
identified on the List of Contracts have been sold to the Trust
Depositor.
Section 3.02. Representations and Warranties Regarding Each Contract
and as to Certain Contracts in the Aggregate. Each Originator jointly and
severally represents and warrants (x) with respect to subsections (a)-(c) below,
as to each Contract as of the execution and delivery of this Agreement and as of
the Closing Date, and as of each Subsequent Transfer Date with respect to each
Substitute Contract, and (y) with respect to subsections (d)-(f) below, as to
the Contracts Pool in the aggregate as of the Closing Date, and as of each
Subsequent Transfer Date with respect to Substitute Contracts (after giving
effect to the addition of such Substitute Contracts to the Contracts Pool),
that:
(a) List of Contracts. The information set forth in the List
of Contracts (as the same may be amended or deemed amended in respect
of a conveyance of Substitute Contracts on a Subsequent Transfer Date)
is true, complete and correct as of the applicable Cutoff Date.
(b) Eligible Contract. Such Contract satisfies the criteria
for the definition of Eligible Contract set forth in this Agreement as
of the date of its conveyance hereunder.
(c) No "True Leases". In the Originators' reasonable judgment,
no Contract constituting a Lease is a "true lease" as distinguished
from a financing lease.
(d) Contracts Secured by Fixtures. In the Originators'
reasonable judgment, not more than [ ]% of the ADCB of the Contracts
Pool consists of Contracts secured by Equipment constituting fixtures.
(e) Contracts Secured by Other Real Property. Not more than [
]% of the ADCB of the Contracts Pool consists of Contracts additionally
secured by other real property (exclusive of or in addition to
Equipment constituting fixtures).
(f) Contracts Secured by Title Registry Equipment. Not more
than [ ]% of the ADCB of the Contracts Pool consists of Contracts
secured by Equipment constituting Title Registry Equipment.
Section 3.03. Representations and Warranties Regarding the Initial
Contracts in the Aggregate. Each Originator jointly and severally represents
and warrants, as of the Closing Date, that:
(a) Amounts. The ADCB of the Contracts as of the Initial
Cutoff Date equals the sum of the principal balance of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes,
the Class B Notes, the Class C Notes, the Class D Notes and the
Certificates on the Closing Date.
(b) Characteristics. The Initial Contracts have the following
additional characteristics: (i) no Contract has a remaining maturity of
more than [ ] months; (ii) the final scheduled Distribution Date on the
Contract with the latest maturity is not later than [ ]; (iii) no
Contract was originated after the Initial Cutoff Date; and (iv) not
more than [ ]% of the Initial Contracts (as measured by ADCB) provide
for Scheduled Payments due on a basis other than monthly.
Section 3.04. Representations and Warranties Regarding the Contract
Files. Each Originator jointly and severally represents and warrants as of the
Closing Date with respect to the Initial Contracts (or as of the Subsequent
Transfer Date, with respect to Substitute Contracts), that (i) immediately prior
to such date (as applicable), the applicable Originator had possession of each
original Contract and the related complete Contract File, and there were no
other custodial agreements relating to the same in effect; (ii) each of such
documents which is required to be signed by the Obligor has been signed by the
Obligor in the appropriate spaces; (iii) all blanks on any form have been
properly filled
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in and each form has otherwise been correctly prepared; and (iv) the complete
Contract File for each Contract is in the possession of the Servicer.
Section 3.05. Representations and Warranties Regarding Concentrations
of Initial Contracts. Each Originator represents and warrants as of the Closing
Date, as to the composition of the Initial Contracts in the Contracts Pool as of
the Initial Cutoff Date, that:
(i) the ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities does not exceed [ ]%
of the ADCB of the Contracts Pool;
(ii) the ADCB of all End-User Contracts which finance, lease or are
related to Software will not exceed [ ]% of the ADCB of the
Contracts Pool;
(iii) the ADCB of all End-User Contracts with Obligors who comprise
the three (3) largest Obligors (measured by ADCB as of the
date of determination) does not exceed [ ]% of the ADCB of the
Contracts Pool;
(iv) the ADCB of all End-User Contracts with Obligors who comprise
the twenty (20) largest Obligors (measured by ADCB as of the
date of determination) does not exceed [ ]% of the ADCB of the
Contracts Pool;
(v) the ADCB of all End-User Contracts related to a single Vendor,
or representing a Vendor Loan to such Vendor, does not exceed
[ ]% of the ADCB of the Contracts Pool; and
(vi) the ADCB of all End-User Contracts with Obligors located in a
single State of the United States does not exceed [ ]% of the
ADCB of the Contracts Pool.
Section 3.06. Representations and Warranties Regarding the Trust
Depositor. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Trust, the
Indenture Trustee, the Noteholders and the Certificateholder that:
(a) Originators' Representations and Warranties. The
representations and warranties set forth in Section 3.02, Section 3.03,
Section 3.04 and Section 3.05 are true and correct.
(b) Organization and Good Standing. The Trust Depositor is a
corporation duly organized, validly existing and in good standing under
the laws of Delaware and has the corporate power to own its assets and
to transact the business in which it is currently engaged. The Trust
Depositor is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Trust Depositor or the Trust.
(c) Authorization; Valid Sale; Binding Obligations. The Trust
Depositor has the power and authority to make, execute, deliver and
perform this Agreement and the other Transaction Documents to which it
is a party and all of the transactions contemplated under this
Agreement and the other Transaction Documents to which it is a party,
and to create the Trust and cause it to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party
and to cause the Trust to be created. This Agreement and the related
Subsequent Transfer Agreement, if any, shall effect a valid sale,
transfer and assignment of the Trust Assets, enforceable against the
Trust Depositor and creditors of and purchasers from the Trust
Depositor. This
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Agreement and the other Transaction Documents to which the Trust
Depositor is a party constitute the legal, valid and binding obligation
of the Trust Depositor enforceable in accordance with their terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
(d) No Consent Required. The Trust Depositor is not required
to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with,
any Governmental Authority in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or the other
Transaction Documents to which it is a party.
(e) No Violations. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a
party by the Trust Depositor, and the consummation of the transactions
contemplated hereby and thereby, will not violate any Requirement of
Law applicable to the Trust Depositor, or constitute a material breach
of any mortgage, indenture, contract or other agreement to which the
Trust Depositor is a party or by which the Trust Depositor or any of
the Trust Depositor's properties may be bound, or result in the
creation or imposition of any security interest, lien, charge, pledge,
preference, equity or encumbrance of any kind upon any of its
properties pursuant to the terms of any such mortgage, indenture,
contract or other agreement, other than as contemplated by the
Transaction Documents.
(f) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Trust Depositor threatened, against
the Trust Depositor or any of its properties or with respect to this
Agreement, the other Transaction Documents to which it is a party or
the Securities (1) which, if adversely determined, would in the
reasonable judgment of the Trust Depositor have a material adverse
effect on the business, properties, assets or condition (financial or
otherwise) of the Trust Depositor or the Trust or the transactions
contemplated by this Agreement or the other Transaction Documents to
which the Trust Depositor is a party or (2) seeking to adversely affect
the federal income tax or other federal, state or local tax attributes
of the Certificate or Notes.
(g) Bulk Sales. The execution, delivery and performance of
this Agreement do not require compliance with any "bulk sales" laws by
the Trust Depositor.
(h) Solvency. The Trust Depositor, at the time of and after
giving effect to each conveyance of Trust Assets hereunder, is Solvent
on and as of the date thereof.
(i) Taxes. The Trust Depositor has filed or caused to be filed
all tax returns which, to its knowledge, are required to be filed and
has put all taxes shown to be due and payable on such returns or on any
assessments made against it or any of its property and all other taxes,
fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any amount of tax due, the validity
of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with
generally accepted accounting principles have been provided on the
books of the Trust Depositor); no tax lien has been filed and, to the
Trust Depositor's knowledge, no claim is being asserted, with respect
to any such tax, fee or other charge.
(j) Place of Business; No Changes. The Trust Depositor's sole
place of business (within the meaning of Article 9 of the UCC) is as
set forth in Section 13.04 below. The Trust Depositor has not changed
its name, whether by amendment of its Certificate of Incorporation, by
reorganization or otherwise, and has not changed the location of its
place of business, within the four months preceding the Closing Date.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Substitute Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
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Section 3.07. Representations and Warranties Regarding the Servicer.
The Servicer represents and warrants to the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholder that:
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Servicer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or otherwise) of
the Servicer or the Trust. The Servicer is properly licensed in each
jurisdiction to the extent required by the laws of such jurisdiction to
service the Contracts in accordance with the terms hereof.
(b) Authorization; Binding Obligations. The Servicer has the
power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which the Servicer is
a party and all of the transactions contemplated under this Agreement
and the other Transaction Documents to which the Servicer is a party,
and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the other
Transaction Documents to which the Servicer is a party. This Agreement
and the other Transaction Documents to which the Servicer is a party
constitute the legal, valid and binding obligation of the Servicer
enforceable in accordance with their terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(c) No Consent Required. The Servicer is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
Governmental Authority in connection with the execution, delivery,
performance, validity or enforceability of this Agreement and the other
Transaction Documents to which the Servicer is a party.
(d) No Violations. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which the
Servicer is a party by the Servicer will not violate any Requirements
of Law applicable to the Servicer, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the
Servicer is a party or by which the Servicer or any of the Servicer's
properties may be bound, or result in the creation of or imposition of
any security interest, lien, pledge, preference, equity or encumbrance
of any kind upon any of its properties pursuant to the terms of any
such mortgage, indenture, contract or other agreement, other than as
contemplated by the Transaction Documents.
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Servicer threatened, against the
Servicer or any of its properties or with respect to this Agreement, or
any other Transaction Document to which the Servicer is a party which,
if adversely determined, would in the reasonable judgment of the
Servicer have a material adverse effect on the business, properties,
assets or condition (financial or otherwise) of the Servicer or the
Trust or the transactions contemplated by this Agreement or any other
Transaction Document to which the Servicer is a party.
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ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;
Section 4.01. Custody of Contracts. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Noteholders, the Certificateholder, the Indenture Trustee, and the Owner Trustee
as the owner thereof.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the UCC Filing Locations as shall from time to time be identified to
the Trustees by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures; provided, however, that the Servicer will take all
action necessary to maintain the perfection of the Trust's interest in the
Contracts and the proceeds thereof. It is intended that by the Servicer's
agreement pursuant to Section 4.01(a) above and this Section 4.01(b) the
Trustees shall be deemed to have possession of the Contract Files for purposes
of Section 9-305 of the Uniform Commercial Code of the State in which the
Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Noteholders and
the Certificateholder and the Owner Trustee and the Indenture Trustee,
maintain accurate records pertaining to each Contract to enable it to
comply with the terms and conditions of this Agreement, maintain a
current inventory thereof, conduct annual physical inspections of
Contract Files held by it under this Agreement and certify to the Owner
Trustee and the Indenture Trustee annually that it continues to
maintain possession of such Contract Files;
(ii) implement or maintain policies and procedures in writing
and signed by a Servicing Officer with respect to persons authorized to
have access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes;
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Noteholders and the
Certificateholder, the Owner Trustee and the Indenture Trustee;
(iv) at all times maintain the original of each fully executed
Contract and store such original Contract in a fireproof vault;
(v) stamp each Contract or Contract File containing the
executed original of such Contract, as of the Closing Date (or
Subsequent Transfer Date, as the case may be), with a legend in the
form attached hereto as Exhibit K; and
(vi) within 30 days of the Closing Date (or Subsequent
Transfer Date, as the case may be) deliver an Officer's Certificate to
the Owner Trustee and the Indenture Trustee certifying that as of a
date no earlier than the Closing Date (or Subsequent Transfer Date, as
the case may be) it has conducted an inventory of the Contract Files
(which in the case of Substitute Contracts, need be only of the
Contract Files related to such Substitute Contracts) and that there
exists a Contract File for each Contract and stating all exceptions to
such statement, if any.
(d) In performing its duties under this Section 4.01, the Servicer
agrees to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts for the financing of Financed Items
owned and/or serviced by it, and in any event with no less degree of skill and
care than would be exercised by a prudent servicer of such Financed Items. The
Servicer shall promptly report to the Owner Trustee and the Indenture Trustee
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any failure by it to hold the Contract Files as herein provided and shall
promptly take appropriate action to remedy any such failure. In acting as
custodian of the Contract Files, the Servicer further agrees not to assert any
legal or beneficial ownership interest in the Contracts or the Contract Files,
except as provided in Section 5.06. The Servicer agrees to indemnify the
Noteholders, the Certificateholder, the Owner Trustee and the Indenture Trustee
for any and all liabilities, obligations, losses, damages, payments, costs, or
expenses of any kind whatsoever which may be imposed on, incurred by or asserted
against the Noteholders, the Certificateholder, the Owner Trustee and the
Indenture Trustee as the result of any act or omission by the Servicer relating
to the maintenance and custody of the Contract Files or any other action or
omission of the Servicer in the performance of its duties and obligations as
Servicer hereunder; provided, however, that the Servicer will not be liable for
any portion of any such amount resulting from the gross negligence or willful
misconduct of any Noteholder, Certificateholder, the Owner Trustee or the
Indenture Trustee. The Trustees shall have no duty to monitor or otherwise
oversee the Servicer's performance as custodian hereunder.
Section 4.02. Filing. On or prior to the Closing Date, the Originators,
Trust Depositor and Servicer shall cause the UCC financing statement(s) referred
to in Section 2.02(x) hereof to be filed, and from time to time the Servicer
shall take and cause to be taken such actions and execute such documents as are
necessary or desirable or as the Owner Trustee or Indenture Trustee may
reasonably request to perfect and protect the Trust's first priority perfected
interest in the Trust Assets against all other persons, including, without
limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.
Section 4.03. Name Change or Relocation. (a) During the term of this
Agreement, none of the Originators, the Servicer and the Trust Depositor shall
change its name, identity or structure or relocate its chief executive office,
or relocate or establish a new location where Contract Files are maintained,
without first giving at least 30 days' prior written notice to the Owner Trustee
and the Indenture Trustee.
(b) If any change in either the Servicer's, an Originator's or the
Trust Depositor's name, identity or structure or other action would make any
financing or continuation statement or notice of ownership interest or lien
relating to any Contract Asset seriously misleading within the meaning of
applicable provisions of the UCC or any title statute, the Servicer and/or the
applicable Originator, no later than five days after the effective date of such
change, shall file such amendments as may be required to preserve and protect
the Trust's interests in the Trust Assets and the proceeds thereof. In addition,
neither any Originator, the Servicer nor the Trust Depositor shall change its
place of business (within the meaning of Article 9 of the UCC), or the locations
in which Contract Files are maintained, from the locations specified in Section
13.04 below or the UCC Filing Locations unless it has first taken such action as
is advisable or necessary to preserve and protect the Trust's interest in the
Trust Assets. Promptly after taking any of the foregoing actions, the Servicer
shall deliver to the Owner Trustee and the Indenture Trustee an opinion of
counsel reasonably acceptable to the Owner Trustee stating that, in the opinion
of such counsel, all financing statements or amendments necessary to preserve
and protect the interests of the Owner Trustee in the Trust Corpus have been
filed, and reciting the details of such filing.
Section 4.04. Chief Executive Office. During the term of this
Agreement, and subject to the other terms and provisions herein relating to
changes in location, each Originator will maintain its chief executive office in
one of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
Section 4.05. Costs and Expenses. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trustees' and
Trust's right, title and interest in and to the Contract Assets (including,
without limitation, the security interest in the Equipment related thereto and
the security interests provided for in the Indenture).
Section 4.06 Sale Treatment. The Trust Depositor shall treat the
transfer of Trust Assets made hereunder for all purposes (including financial
accounting purposes) as a sale and purchase on all of its relevant books,
records,
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financial statements and other applicable documents. Notwithstanding the
preceding sentence, for federal income tax purposes the transfer of Trust Assets
by the Trust Depositor hereunder shall not be treated as a sale and purchase for
federal income tax purposes so long as the Trust is disregarded as a separate
entity pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii).
Section 4.07 Separateness from Trust Depositor. Each Originator agrees
to take or refrain from taking or engaging in with respect to the Trust
Depositor, as applicable, each of the actions or activities specified in the
"substantive consolidation" opinion of Winston & Strawn (including any
certificates of such Originator attached thereto) delivered on the Closing Date,
upon which the conclusions therein are based.
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ARTICLE FIVE
SERVICING OF CONTRACTS
Section 5.01. Appointment and Acceptance; Responsibility for Contract
Administration. HFI is hereby appointed as Servicer and custodian (as
contemplated in Article IV hereof) pursuant to this Agreement. HFI accepts the
appointment and agrees to act as the Servicer and custodian pursuant to this
Agreement.
The Servicer will have the sole obligation to manage, administer, service and
make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents necessary or
appropriate in the opinion of the Owner Trustee to enable the Servicer to carry
out its servicing and administrative duties hereunder. The Servicer is hereby
appointed the servicer hereunder until such time as any Servicer Transfer may be
effected under Article VIII.
Section 5.02. General Duties. The Servicer will service, administer and
enforce the Contracts in the Contracts Pool on behalf of the Trust and will have
full power and authority to do any and all things in connection with such
servicing and administration which it deems necessary or desirable and as shall
not contravene the provisions of this Agreement. The Servicer will manage,
service, administer, and make collections on the Contracts in the Contracts Pool
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable contracts that it services for itself
or others. The Servicer's duties will include collection and posting of all
payments, responding to inquiries of Obligors regarding the Contracts in the
Contracts Pool, investigating delinquencies, accounting for collections,
furnishing monthly and annual statements with respect to collections and
payments in accordance with Article Nine hereof, making Servicer Advances, and
using its best efforts to maintain the perfected first priority security
interest of the Indenture Trustee in the Trust Assets. The Servicer will follow
its customary standards, policies, and procedures and will have full power and
authority, acting alone, to do any and all things in connection with such
managing, servicing, administration, and collection that it deems necessary or
desirable. If the Servicer commences a legal proceeding to enforce a Defaulted
Contract pursuant to Section 5.15 or commences or participates in a legal
proceeding (including a bankruptcy proceeding) relating to or involving a
Contract in the Contracts Pool, the Trust will be deemed to have automatically
assigned such Contract to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Trust, pursuant to this Section 5.02, to execute
and deliver, on behalf of itself and the Trust, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceedings. If in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce a Contract on the ground that it is not a real party in interest or a
holder entitled to enforce the Contract, then the Owner Trustee will, at the
Servicer's expense and direction, take steps on behalf of the Trust to enforce
the Contract, including bringing suit in the Trust's name.
Section 5.03. Consent to Assignment or Replacement. At the request of
an Obligor, the Servicer may in its sole discretion consent to the assignment of
the related Contract or the sublease of a unit of the Equipment relating to a
Contract, so long as such Obligor remains liable for all of its obligations
under such Contract. Upon the request of any Obligor, the Servicer may, in its
sole discretion, provide for the substitution or replacement of any unit of
Equipment for a substantially similar unit of Equipment, so long as such Obligor
remains liable for all of its obligations under such Contract.
Section 5.04. Disposition Upon Termination of Contract. Upon the
termination of a Contract included in the Contracts Pool as a result of a
default by the Obligor thereunder, and upon any such Contract becoming a
Defaulted Contract, the Servicer will use commercially reasonable efforts to
dispose of any related Equipment. Without limiting the generality of the
foregoing, the Servicer may dispose of any such Equipment by purchasing such
Equipment or by selling such Equipment to any of its Affiliates for a purchase
price equal to the fair market value thereof. The Servicer will deposit any
Prepayments of any such disposition in accordance with Section 7.01.
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Section 5.05. Subservicers. The Servicer may enter into servicing
agreements with one or more subservicers (including any Affiliate of the
Servicer) to perform all or a portion of the servicing functions on behalf of
the Servicer; provided that the Servicer shall remain obligated and be liable to
the Trust for servicing and administering the Contracts in the Contracts Pool in
accordance with the provisions of this Agreement without diminution of such
obligation and liability by virtue of the appointment of such subservicer, to
the same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering such Contracts. The fees and expenses of the
subservicer (if any) will be as agreed between the Servicer and its subservicer
and neither the Owner Trustee, the Trust, the Indenture Trustee nor the Holders
will have any responsibility therefor. All actions of a subservicer taken
pursuant to such a subservicer agreement will be taken as an agent of the
Servicer with the same force and effect as though performed by the Servicer.
Section 5.06. Further Assurance. The Owner Trustee and the Indenture
Trustee will furnish the Servicer, and the Servicer will furnish any
subservicer, with any powers of attorney and other documents necessary or
appropriate to enable the Servicer or a subservicer, as applicable, to carry out
its servicing and administrative duties under this Agreement.
Section 5.07. Notice to Obligors. The Servicer will not be required to
notify any Obligor that such Obligor's Contract or related Equipment, or any
security interest in such Contract or such Equipment, has been sold,
transferred, assigned, or conveyed pursuant to this Agreement; provided that, in
the event that the Servicer resigns or is replaced, then if the place for
payment pursuant to any Contract is changed, the Successor Servicer must give
each related Obligor prompt written notice of the appointment of the Successor
Servicer and the place to which such Obligor should make payments pursuant to
each such Contract.
Section 5.08. Collection Efforts; Modification of Contracts. (a) The
Servicer will make reasonable efforts to collect all payments called for under
the terms and provisions of the Contracts in the Contracts Pool as and when the
same become due, and will follow those collection procedures which it follows
with respect to all comparable contracts that it services for itself or others.
(b) The Servicer may, subject to Sections 5.09 and 5.10, at the request
of an Obligor and at the Servicer's option, waive, modify or otherwise vary any
other provision of a Contract in accordance with its customary and usual
practices; provided, that no such waiver, modification or variance shall (except
as provided in Sections 5.09, 5.10 and 5.15), without the consent of each Rating
Agency,
(i) have the effect of accelerating, delaying or extending the
date for or the amount of any payment of Scheduled Payments with
respect to such Contract;
(ii) be inconsistent with the servicing standards set forth
in Section 5.02; or
(iii) have a material adverse effect on the interests of any
of the Trust, the Trustees or the Securityholders.
Notwithstanding the foregoing, to the extent consistent with the Servicer's past
practices, the Servicer may on only one occasion with respect to any Contract,
permit a deferment of not more than three consecutive Scheduled Payments
(collectively, a "Skipped Payment") under such Contract to the end of the term
of such Contract so long as, as of the Date of Processing for such Skipped
Payment (i) the sum of the Discounted Contract Balances of all Contracts with
respect to which there have been effected Skipped Payment modifications since
the Initial Cutoff Date does not exceed 5% of the ADCB for the Contracts Pool as
of the Initial Cutoff Date, and (ii) such Skipped Payment is deferred to no
later than the last day of the Collection Period related to the Distribution
Date that is twelve months prior to the Class B Maturity Date. Additionally,
notwithstanding the foregoing, the Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the ordinary course of
servicing any Contract in the Contracts Pool.
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Section 5.09. Prepaid Contract. The Servicer may, at its option and in
accordance with its customary and usual practices, agree to permit a Contract in
the Contracts Pool that is not otherwise contractually prepayable by its terms
to become a Prepaid Contract (which shall not include a Contract that becomes an
Prepaid Contract due to a Casualty Loss); provided, that the Servicer will not
permit the early termination or full prepayment of such a Contract unless (i)
such early termination or full prepayment would not result in the Trust
receiving an amount (the "Prepayment Amount") less than the sum of (A) the
Discounted Contract Balance on the date of such prepayment plus any accrued and
unpaid interest payments thereon (at the Discount Rate) and (B) any outstanding
Servicer Advances thereon, or (ii) if such early termination or full prepayment
would result in the Trust receiving a Prepayment Amount less than the amount set
forth in clause (i), either the Vendor or the Originators shall have agreed to
pay the Trust the difference between the Prepayment Amount actually paid and the
amount set forth in clause (i) (such payment by the Vendor or Originator also to
be considered a "Prepayment Amount"). At the option of the Originators, the
Servicer may use the Prepayment Amount to purchase a Substitute Contract for
such Prepaid Contract from the Originators.
Section 5.10. Acceleration. The Servicer, in its sole discretion, may
accelerate (or elect not to accelerate) the maturity of all or any Scheduled
Payments under any Contract in the Contracts Pool under which a default under
the terms thereof has occurred and is continuing (after the lapse of any
applicable grace period); provided that the Servicer is required to accelerate
the Scheduled Payments due under any Contract in the Contracts Pool (and take
other action in accordance with the applicable Originator's past practice,
including repossessing or otherwise converting the related Equipment, to realize
upon the value of such Contract and the related Equipment) to the fullest extent
permitted by the terms of such Contract, promptly after such Contract becomes a
Defaulted Contract.
Section 5.11. Taxes and Other Amounts. To the extent provided for in
any Contract in the Contracts Pool, the Servicer will make reasonable efforts to
collect (or cause to be collected) all payments with respect to amounts due for
taxes, assessments and insurance premiums relating to such Contracts or the
Equipment and remit such amounts to the appropriate Governmental Authority or
insurer on or prior to the date such payments are due.
Section 5.12. [Reserved].
Section 5.13. Remittances. The Servicer will service all Collections
in accordance with Section 7.01 hereof.
Section 5.14. Servicer Advances. For each Collection Period, if the
Servicer determines that any Scheduled Payment (or portion thereof) which was
due and payable pursuant to a Contract in the Contracts Pool during such
Collection Period was not received prior to the end of such Collection Period,
the Servicer is required to make a Servicer Advance in an amount up to the
amount of such delinquent Scheduled Payment (or portion thereof), to the extent
that in its sole discretion it determines that it can recoup such amount from
subsequent Collections under the related Contract. Notwithstanding the
foregoing, if the Servicer is not HFI, then Servicer shall not be required to
make a Servicer Advance. The Servicer will deposit any Servicer Advances into
the Collection Account on or prior to 11:00 a.m. (Chicago time) on the related
Transfer Date, in immediately available funds. The Servicer will be entitled to
be reimbursed for Servicer Advances pursuant to Sections 7.05(a) and 7.05(b).
Section 5.15. Realization Upon Defaulted Contract. The Servicer will
use its best efforts consistent with its customary and usual practices and
procedures in its servicing of contracts to repossess or otherwise comparably
convert the ownership of any Equipment relating to a Defaulted Contract and will
act as sales and processing agent for Equipment or Applicable Security which it
repossesses. The Servicer will follow such other practices and procedures as it
deems necessary or advisable and as are customary and usual in its servicing of
contracts and other actions by the Servicer in order to realize upon such
Equipment or Applicable Security, which practices and procedures may include
reasonable efforts to enforce all obligations of Obligors and repossessing and
selling such Equipment or Applicable Security at public or private sale in
circumstances other than those described in the preceding sentence. Without
limiting the generality of the foregoing, the Servicer may sell any such
Equipment or Applicable Security to the Servicer or its Affiliates for a
purchase price equal to the then fair market value thereof. In any case in which
any such Equipment or Applicable Security has suffered damage, the Servicer will
not expend funds in connection with any repair or toward the repossession of
such Equipment or Applicable Security unless it determines in its discretion
that such repair and/or
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repossession will increase the Liquidation Proceeds by an amount greater than
the amount of such expenses. The Servicer will remit to the Collection Account
the Liquidation Proceeds received in connection with the sale or disposition of
Equipment or Applicable Security relating to a Defaulted Contract in accordance
with Section 7.01 net of any amounts payable to a Vendor.
Section 5.16. Maintenance of Insurance Policies. The Servicer will use
its best efforts to ensure that each Obligor maintains an Insurance Policy with
respect to the related Equipment in an amount at least equal to the sum of the
Discounted Contract Balance of the related Contract in the Contracts Pool;
provided that the Servicer, in accordance with its customary servicing
procedures, may allow Obligors to self -insure. Additionally, the Servicer will
require that each Obligor maintain property damage liability insurance during
the term of each Contract in the Contracts Pool in amounts and against risks
customarily insured against by the Obligor on equipment owned by it. If an
Obligor fails to maintain property damage insurance, the Servicer may purchase
and maintain such insurance on behalf of, and at the expense of, the Obligor. In
connection with its activities as Servicer of the Contracts, the Servicer agrees
to present, on behalf of itself, the Trust, the Indenture Trustee and the
Holders, claims to the insurer under each Insurance Policy and any such
liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Contract. The Servicer's Insurance
Policies with respect to the related Equipment will insure against liability for
personal injury and property damage relating to such Equipment, will name the
Indenture Trustee as an insured thereunder and will contain a breach of warranty
clause.
Section 5.17. Other Servicer Covenants. The Servicer hereby covenants
that:
(a) Contract Files. The Servicer will, at its own cost and
expense, maintain all Contract Files in accordance with its customary
procedures. Without limiting the generality of the preceding sentence,
the Servicer will not dispose of any documents constituting the
Contract Files in any manner which is inconsistent with the performance
of its obligations as the Servicer pursuant to this Agreement and will
not dispose of any Contract except as contemplated by this Agreement.
(b) Compliance with Law. The Servicer will comply, in all
material respects, with all laws and regulations of any Governmental
Authority applicable to the Servicer or the Contracts in the Contracts
Pool and related Equipment and Contract Files or any part thereof;
provided that the Servicer may contest any such law or regulation in
any reasonable manner which will not materially and adversely affect
the value of (or the rights of the Trust on behalf of the Holders or
the Indenture Trustee on behalf of the Noteholders, with respect to)
the Trust Assets.
(c) Obligations with Respect to Contracts; Modifications. The
Servicer will duly fulfill and comply with, in all material respects,
all obligations on the part of the Trust Depositor to be fulfilled or
complied with under or in connection with each Contract in the
Contracts Pool and will do nothing to impair the rights of the
Indenture Trustee and the Holders in, to and under the Trust Assets.
The Servicer will perform such obligations under the Contracts in the
Contracts Pool and will not change or modify the Contracts, except as
otherwise provided herein and except insofar as any such failure to
perform, change or modify would not materially and adversely affect the
value of (or the rights of the Trust, on behalf of the Holders, or the
Indenture Trustee, on behalf of the Noteholders, with respect to) the
Contracts or the related Equipment.
(d) No Bankruptcy Petition. Prior to the date that is one year
and one day after the payment in full of all amounts owing in respect
of all outstanding Securities, the Servicer will not institute against
the Trust Depositor, or the Trust, or join any other Person in
instituting against the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or
other similar proceedings under the laws of the United States or any
state of the United States. This Section 5.17(d) will survive the
termination of this Agreement.
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(f) Location of Contract Files. The Contract Files shall
remain at all times in the possession of the Servicer.
Section 5.18. Servicing Compensation. As compensation for its servicing
activities hereunder and reimbursement for its expenses as set forth in Section
5.19, the Servicer shall be entitled to receive a monthly servicing fee in
respect of any Collection Period (or portion thereof) prior to the termination
of the Trust (with respect to each Collection Period, the "Servicing Fee") equal
to one-twelfth of the product of (A) the Servicing Fee Percentage and (B) the
ADCB of the Contracts Pool as of the first day of such Collection Period.
Section 5.19. Payment of Certain Expenses by Servicer. The Servicer
will be required to pay all expenses incurred by it in connection with its
activities under this Agreement, including fees and disbursements of independent
accountants, the Owner Trustee, the Indenture Trustee, taxes imposed on the
Servicer, expenses incurred in connection with payments and reports pursuant to
this Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Trust or the Trust Depositor, but excluding
Liquidation Expenses incurred as a result of activities contemplated by Section
5.15. The Servicer will be required to pay all reasonable fees and expenses
owing to the Owner Trustee or the Indenture Trustee in connection with the
maintenance of the Trust Accounts. The Servicer shall be required to pay such
expenses for its own account and shall not be entitled to any payment or
reimbursement therefor other than the Servicing Fee.
Section 5.20. Records. The Servicer shall, during the period it is
Servicer hereunder, maintain such books of account and other records as will
enable the Owner Trustee and the Indenture Trustee to determine the status of
each Contract.
Section 5.21. Inspection. (a) At all times during the term hereof, the
Servicer shall afford the Owner Trustee and the Indenture Trustee and their
respective authorized agents reasonable access during normal business hours to
the Servicer's records relating to the Contracts and will cause its personnel to
assist in any examination of such records by the Owner Trustee or the Indenture
Trustee, or such authorized agents, and allow copies of the same to be made. The
examination referred to in this Section will be conducted in a manner which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination the
Owner Trustee or the Indenture Trustee may, using generally accepted audit
procedures, verify the status of each Contract and review the Computer Disk and
records relating thereto for conformity to Monthly Reports prepared pursuant to
Article IX and compliance with the standards represented to exist as to each
Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by Securityholders.
Section 5.22. Trustees to Cooperate in Releases. At the same time as
(i) any Lease in the Contracts Pool becomes an Expired Lease and the Equipment
related to such Lease is sold, (ii) any Contract becomes a Prepaid Contract and
in connection therewith the Equipment related to such Prepaid Contract is sold,
or (iii) the Servicer substitutes or replaces any unit of Equipment as
contemplated in Section 5.03, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee, on behalf of the Noteholders, will to the extent requested by
the Servicer release the Trust's interest in the Equipment relating to such
Expired Lease or Prepaid Contract or such substituted or replaced Equipment, as
the case may be; provided that such release will not constitute a release of the
Trust's interest in the proceeds of such sale (other than with respect to
Equipment that is replaced pursuant to Section 5.03). In connection with any
sale of such Equipment, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee will execute and deliver to the Servicer any assignments,
bills of sale, termination statements and any other releases and instruments as
the Servicer may request in order to effect such release and transfer; provided
that neither the Owner Trustee nor the Indenture Trustee will make any
representation or warranty, express or implied, with respect to any such
Equipment in connection with such sale or transfer and assignment. Nothing in
this Section 5.22 shall diminish the Servicer's obligations pursuant to Section
7.01 with respect to the proceeds of any such sale.
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ARTICLE SIX
COVENANTS OF THE TRUST DEPOSITOR
Section 6.01. Corporate Existence. During the term of this Agreement,
the Trust Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Transaction
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Trust Depositor
and its Affiliates will be conducted on an arm's-length basis.
Section 6.02. Contracts Not to be Evidenced by Promissory Notes. The
Trust Depositor will take no action to cause any Contract not originally
evidenced by an instrument as described in Section 2.06 hereof, to be evidenced
by an instrument (as defined in the UCC), except in connection with the
enforcement or collection of such Contract.
Section 6.03. Security Interests. The Trust Depositor will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any Contract in the Contracts Pool or related
Equipment, whether now existing or hereafter transferred to the Trust, or any
interest therein. The Trust Depositor will immediately notify the Owner Trustee
and the Indenture Trustee of the existence of any Lien on any Contract in the
Contracts Pool or related Equipment; and the Trust Depositor shall defend the
right, title and interest of the Trust in, to and under the Contracts in the
Contracts Pool and the related Equipment, against all claims of third parties;
provided, however, that nothing in this Section 6.03 shall prevent or be deemed
to prohibit the Trust Depositor from suffering to exist Permitted Liens upon any
of the Contracts in the Contracts Pool or any related Equipment.
Section 6.04. Delivery of Collections. The Trust Depositor agrees to
pay to the Servicer promptly (but in no event later than two Business Days after
receipt) all Collections received by the Trust Depositor in respect of the
Contracts in the Contracts Pool, for application in accordance with Section
7.01.
Section 6.05. Regulatory Filings. The Trust Depositor shall make any
filings, reports, notices, applications and registrations with, and seek any
consents or authorizations from, the Commission and any state securities
authority on behalf of the Trust as may be necessary or that Trust Depositor
deems advisable to comply with any federal or state securities or reporting
requirements laws.
Section 6.06. Compliance With Law. Trust Depositor hereby agrees to
comply in all material respects with all Requirements of Law applicable to Trust
Depositor.
Section 6.07. Activities. The Trust Depositor shall not engage in any
business or activity of any kind, or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or other undertaking, which is
not directly related to the transactions contemplated and authorized by this
Agreement or the other Transaction Documents; provided, however, that the Trust
Depositor may purchase and sell (or grant Liens in respect of) assets similar to
the Contract Assets to other Persons in securitization or other non-recourse
financing transactions involving the Originators or any of their Affiliates on
terms and conditions (with respect to liabilities and restrictions on its
activities, as well as restrictions on its interactions with the Originators or
their Affiliates, relevant to the "bankruptcy remoteness" or "substantive
consolidation" analysis relating to the Trust Depositor) substantially similar
to the terms and conditions applicable to the Trust Depositor under the
Transaction Documents.
Section 6.08. Indebtedness. The Trust Depositor shall not create,
incur, assume or suffer to exist any Indebtedness or other liability whatsoever,
except (i) obligations incurred under this Agreement, or (ii) liabilities
incident to the maintenance of its corporate existence in good standing.
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Section 6.09. Guarantees. The Trust Depositor shall not become or
remain liable, directly or contingently, in connection with any Indebtedness or
other liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in the
ordinary course of business), agreement to purchase or repurchase, agreement to
supply or advance funds, or otherwise except in connection with the transactions
described in Section 6.07.
Section 6.10. Investments. The Trust Depositor shall not make or suffer
to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the business
or assets, or otherwise) in, any Person except (i) for purchases of Contracts
from the Originators, or (ii) for investments in Eligible Investments in
accordance with the terms of this Agreement. Without limiting the generality of
the foregoing, the Trust Depositor shall not: (i) provide credit to any
Securityholder for the purpose of enabling such Securityholder to purchase any
Securities or (ii) lend any money to the Trust.
Section 6.11. Merger; Sales. The Trust Depositor shall not enter into
any transaction of merger or consolidation, or liquidate or dissolve itself (or
suffer any liquidation or dissolution) or acquire or be acquired by any Person,
or convey, sell, lease or otherwise dispose of all or substantially all of its
property or business, except as provided for in this Agreement.
Section 6.12. Distributions. The Trust Depositor shall not declare or
pay, directly or indirectly, any dividend or make any other distribution
(whether in cash or other property) with respect to the profits, assets or
capital of the Trust Depositor or any Person's interest therein, or purchase,
redeem or otherwise acquire for value any of its capital stock now or hereafter
outstanding, except that so long as no Event of Default has occurred and is
continuing and no Event of Default would occur as a result thereof or after
giving effect thereto and the Trust Depositor would continue to be Solvent as a
result thereof and after giving effect thereto, the Trust Depositor may declare
and pay dividends on its capital stock.
Section 6.13. Other Agreements. The Trust Depositor shall not become a
party to, or permit any of its properties to be bound by, any indenture,
mortgage, instrument, contract, agreement, lease or other undertaking, except
this Agreement and the other Transaction Documents to which it is a party and
any agreement relating to another securitization transaction permitted by
Section 6.07; nor shall it amend or modify the provisions of its Certificate of
Incorporation or issue any power of attorney except to the Owner Trustee, the
Indenture Trustee or the Servicer except in accordance with the Transaction
Documents.
Section 6.14. Separate Corporate Existence. The Trust Depositor shall:
(i) Maintain its own deposit account or accounts,
separate from those of any Affiliate, with commercial banking
institutions. The funds of the Trust Depositor will not be
diverted to any other Person or for other than corporate uses
of the Trust Depositor.
(ii)Ensure that, to the extent that it shares the same
officers or other employees as any of its stockholders or
Affiliates, the salaries of and the expenses related to
providing benefits to such officers and other employees shall
be fairly allocated among such entities, and each such entity
shall bear its fair share of the salary and benefit costs
associated with all such common officers and employees.
(iii) Ensure that, to the extent that it jointly
contracts with any of its stockholders or Affiliates to do
business with vendors or service providers or to share
overhead expenses, the costs incurred in so doing shall be
allocated fairly among such entities, and each such entity
shall bear its fair share of such costs. To the extent that
the Trust Depositor contracts or does business with vendors or
service providers when the goods and services provided are
partially for the benefit of any other Person, the
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costs incurred in so doing shall be fairly allocated to or
among such entities for whose benefit the goods and services
are provided, and each such entity shall bear its fair share
of such costs. All material transactions between Trust
Depositor and any of its Affiliates shall be only on an arm's
length basis.
(iv)To the extent that the Trust Depositor and any of its
stockholders or Affiliates have offices in the same location,
there shall be a fair and appropriate allocation of overhead
costs among them, and each such entity shall bear its fair
share of such expenses.
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary,
appropriate and customary corporate formalities, including,
but not limited to, holding all regular and special
stockholders' and directors' meetings appropriate to authorize
all corporate action, keeping separate and accurate minutes of
its meetings, passing all resolutions or consents necessary to
authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including,
but not limited to, payroll and intercompany transaction
accounts.
(vi)Take or refrain from taking, as applicable, each of
the activities specified in the "substantive consolidation"
opinion of Winston & Strawn, delivered on the Closing Date,
upon which the conclusions expressed therein are based.
Section 6.15. Location; Records. The Trust Depositor (x) shall not move
outside the State of Illinois, the location of its chief executive office,
without 45 days' prior written notice to the Owner Trustee and the Indenture
Trustee and (y) shall not move or permit the Servicer to move the location of
the Contract Files from the location(s) thereof on the Closing Date, without 45
days' prior written notice to the Owner Trustee and the Indenture Trustee and
(z) will promptly take all actions required (including, but not limited to, all
filings and other acts necessary or advisable under the UCC of each relevant
jurisdiction in order to continue the first priority perfected security interest
of the Indenture Trustee in all Contracts in the Contracts Pool. The Trust
Depositor will give the Owner Trustee and the Indenture Trustee prompt notice of
a change within the State of Illinois of the location of its chief executive
office.
Section 6.16. Liability of Trust Depositor; Indemnities. The Trust
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Trust Depositor under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee and the Servicer from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein and in the other Transaction
Documents, including any sales, gross receipts, general corporation, tangible
personal property, Illinois personal property replacement privilege or license
taxes (but, in the case of the Trust, not including any taxes asserted with
respect to, and as of the date of, the sale of the Contracts to the Trust or the
issuance and original sale of the Securities, or asserted with respect to
ownership of the Contracts, or federal or other income taxes arising out of
distributions on the Certificate or the Notes) and costs and expenses in
defending against the same.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee and the Securityholders from and
against any loss, liability or expense incurred by reason of the Trust
Depositor's willful misfeasance, bad faith or negligence (other than errors in
judgment) in the performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, and the Indenture Trustee from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
and, in the case of the Owner Trustee, in the Trust Agreement and, in the case
of the Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance,
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bad faith or negligence of the Owner Trustee, or shall arise from the breach by
the Owner Trustee of any of its representations or warranties set forth in
Section 7.03 of the Trust Agreement, or (ii) the Indenture Trustee, shall be due
to the willful misfeasance, bad faith or negligence of the Indenture Trustee.
The Trust Depositor shall be liable directly to and will indemnify any
injured party or any other creditor of the Trust for all losses, claims,
damages, liabilities and expenses of the Trust to the extent that the Trust
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Trust Depositor were a
general partner; provided, however, that the Trust Depositor shall not be liable
for any losses incurred by a Certificateholder in the capacity of an investor in
the Certificate or a Noteholder in the capacity of an investor in the Notes. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the immediately preceding sentence for which the
Trust Depositor shall not be liable) shall be deemed third party beneficiaries
of this paragraph. The obligations of the Trust Depositor under this paragraph
shall be evidenced by the Certificate described in the Trust Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee from and against any loss, liability or
expense incurred by reason of the Trust Depositor's or Trust's violation of
federal or state securities laws in connection with the offering and sale of the
Notes.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the Trust
Depositor shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Trust Depositor, without interest.
Section 6.17. Bankruptcy Limitations. The Trust Depositor shall not,
without the affirmative vote of a majority of the members of the Board of
Directors of the Trust Depositor (which must include the affirmative vote of at
least two duly appointed Independent directors) (A) dissolve or liquidate, in
whole or in part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, (D)
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a substantial
part of its property, (E) make a general assignment for the benefit of
creditors, (F) admit in writing its inability to pay its debts generally as they
become due, or (G) take any corporate action in furtherance of the actions set
forth in clauses (A) through (F) above; provided, however, that no director may
be required by any shareholder of the Trust Depositor to consent to the
institution of bankruptcy or insolvency proceedings against the Trust Depositor
so long as it is Solvent.
Section 6.18 Limitation on Liability of Trust Depositor and Others. The
Trust Depositor and any director or officer or employee or agent of the Trust
Depositor may rely in good faith on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Trust Depositor and any director or officer or employee or agent
of the Trust Depositor shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of the Owner Trustee's or the Indenture Trustee's willful
misfeasance, bad faith or negligence (except errors in judgment) in the
performance of their respective duties hereunder, or by reason of reckless
disregard of their respective obligations and duties hereunder. The Trust
Depositor shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement, and that in its opinion may involve it in any expense or liability.
Section 6.19. Chief Executive Office. During the term of this
Agreement, the Trust Depositor will maintain its chief executive office in one
of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
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ARTICLE SEVEN
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND
Section 7.01. Trust Accounts; Collections. (a) On or before the Closing
Date, the Trust Depositor shall establish the Collection Account, Note
Distribution Account and Reserve Fund, each in the name of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholder, respectively. The
Servicer and Indenture Trustee are hereby required to ensure that each of the
Trust Accounts is established and maintained as an Eligible Account with a
Qualified Institution. If any institution with which any of the accounts
established pursuant to this Section 7.01(a) are established ceases to be a
Qualified Institution, the Servicer or the Indenture Trustee (as the case may
be) shall within 10 Business Days establish a replacement account at a Qualified
Institution after notice of such event.
(b) The Servicer shall deposit or cause to be deposited, without
deposit into any intervening account, into the Collection Account as promptly as
practical after the Date of Processing (but in any case not later than the
second Business Day following the Date of Processing thereof, and in all events
not later than five Business Days following actual receipt of such remittance by
the Servicer), all Collections on deposit with the Servicer in the form of
available funds, and all Collections otherwise received by the Servicer.
(c) Notwithstanding Section 7.01(b), the Servicer shall deposit or
cause to be deposited, on the Closing Date and on each Subsequent Transfer Date
thereafter, in immediately available funds into the Collection Account, all
Collections received after the applicable Cutoff Date and through and including
the date two days preceeding the Closing Date or Subsequent Transfer Date, as
the case may be, in respect of Contracts being transferred to the Trust on such
date.
(d) Notwithstanding Sections 7.01(b) and (c), the Servicer shall not be
required to deposit or cause to be deposited Collections on any Contracts in the
Contracts Pool on which (and to the extent that) the Servicer has previously
made a Servicer Advance which has not been reimbursed, which amounts the
Servicer may retain (as reimbursement of such Servicer Advance).
(e) Notwithstanding Sections 7.01(b) and (c), if (i) the Servicer makes
a deposit into the Collection Account in respect of a Collection of a Contract
in the Contract Pool and such Collection was received by the Servicer in the
form of a check which is not honored for any reason, or (ii) the Servicer makes
a mistake with respect to the amount of any Collection and deposits an amount
that is less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount subsequently deposited into the
Collection Account to reflect such dishonored check or mistake. Any Scheduled
Payment in respect of which a dishonored check is received shall be deemed not
to have been paid.
Section 7.02. Reserve Fund Deposit. On the Closing Date, the Owner
Trustee, on behalf of the Trust Depositor, shall deposit the Reserve Fund
Initial Deposit into the Reserve Fund from the net proceeds of the Securities.
Section 7.03. Trust Account Procedures. If the Servicer so directs, in
writing, the Indenture Trustee shall invest the amounts in the Trust Accounts in
Qualified Eligible Investments of the type specified in such written direction
that mature not later than one Business Day prior to the next succeeding
Distribution Date. Once such funds are invested, the Indenture Trustee shall not
change the investment of such funds. Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer out of its own funds
immediately as realized. Funds in the Trust Accounts not so invested must be
insured to the extent permitted by law by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation. Subject
to the restrictions herein, the Indenture Trustee may purchase a Qualified
Eligible Investment from itself or an Affiliate. Subject to the other provisions
hereof, the Indenture Trustee shall have sole control over each such investment
and the income thereon, and
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any certificate or other instrument evidencing any such investment, if any,
shall be delivered directly to the Indenture Trustee or its agent, together with
each document of transfer, if any, necessary to transfer title to such
investment to the Indenture Trustee in a manner which complies with this Section
7.03. All Investment Earnings on investments of funds in the Trust Accounts
shall be deposited in the Collection Account pursuant to Section 7.01 and
distributed on the next Distribution Date pursuant to Section 7.05. The Trust
Depositor and the Trust agree and acknowledge that the Indenture Trustee is to
have "control" (within the meaning of Section 8-102 of the UCC as enacted in
Illinois) of collateral comprised of "Investment Property" (within the meaning
of Section 9-115 of the UCC as enacted in Illinois) for all purposes of this
Agreement. In the absence of timely written direction from the Servicer, the
Indenture Trustee shall invest amounts in the Trust Accounts in Qualified
Eligible Investments of the type specified in clause (vi) of the definition of
Eligible Investments herein.
Section 7.04. Securityholder Distributions. (a) Each Noteholder and
Certificateholder as of the related Record Date shall be paid on the next
succeeding Distribution Date by check mailed to such Noteholder or
Certificateholder at the address for such Noteholder or Certificateholder
appearing on the Note Register or Certificate Register or by wire transfer if
such Noteholder or Certificateholder provides written instructions to the
Indenture Trustee, or Owner Trustee, respectively, at least ten days prior to
such Distribution Date.
(b) The Indenture Trustee shall serve as the Paying Agent hereunder and
shall make the payments to the Noteholders and Certificateholder required
hereunder. The Indenture Trustee hereby agrees that all amounts held by it for
payment hereunder will be held in trust for the benefit of the Noteholders and
Certificateholder.
Section 7.05. Allocations and Distributions.
(a) Allocations and Distributions Prior to an Event of Default. On each
Determination Date prior to an Event of Default, the Servicer, pursuant to
written monthly payment instructions and notification, shall instruct the
Indenture Trustee to withdraw, and on the succeeding Distribution Date the
Indenture Trustee acting in accordance with such written instructions shall
withdraw, the amounts required to be withdrawn from the Collection Account
pursuant to this Section and deposited to the Note Distribution Account
(pursuant to Sections 3.01 and 8.02(b) of the Indenture) in order to make the
following payments or allocations from the Available Amounts for the related
Distribution Date (in each case, such payment or transfer to be made only to the
extent funds remain available therefor after all prior payments and transfers
for such Distribution Date have been made), in the following order of priority:
(i) pay to the Servicer, the amount of any Unreimbursed
Servicer Advance;
(ii) pay to the Servicer, if the Servicer is no longer HFI or
an Affiliate of HFI, the monthly Servicing Fee for the preceding
monthly period together with any amounts in respect of the Servicing
Fee that were due in respect of prior monthly periods that remain
unpaid;
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class A-4
Noteholders an amount equal to interest accrued in respect of the
related Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes at the Class A-1 Interest Rate, Class A-2 Interest Rate, Class
A-3 Interest Rate and Class A-4 Interest Rate, respectively, for the
Accrual Period immediately preceding such Distribution Date, together
with any such amounts that accrued in respect of prior Accrual Periods
for which no allocation was previously made; provided that if the
Available Amounts remaining to be allocated pursuant to this clause are
less than the full amount required to be so allocated, such remaining
Available Amounts shall be allocated to each Holder of a Class A Note
pro rata based upon the outstanding Principal Amount thereof;
(iv) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon at the
Class B Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no
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allocation was previously made; provided, that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the
full amount required to be so paid, such remaining Available Amount
shall be paid to each Class B Noteholder pro rata based on the
outstanding Principal Amount thereof;
(v) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon at the
Class C Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class C
Noteholder pro rata based on the outstanding Principal Amount thereof;
(vi) pay to the Indenture Trustee on behalf of the Class D
Noteholders an amount equal to interest accrued thereon at the Class D
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class D
Noteholder pro rata based on the outstanding principal amount thereof;
(vii) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the Class A Principal Payment Amount for such Distribution
Date; provided that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class
A-1 Note pro rata based on the outstanding principal amount thereof;
(viii) pay to the Indenture Trustee, on behalf of the Class
A-2 Noteholders, (A) $0 until the Distribution Date on which the
Principal Amount of the Class A-1 Notes is $0; (B) on the Distribution
Date on which the Principal Amount of the Class A-1 Notes is reduced to
$0, the excess of the Monthly Principal Amount over the amount
necessary to reduce the Principal Amount of the Class A-1 Notes to $0
on such date and (C) on each subsequent Distribution Date, the Class A
Principal Payment Amount; provided that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the
full amount required to be so paid, such remaining Available Amounts
shall be allocated to each Class A-2 Note pro rata based on the
outstanding principal amount thereof;
(ix) pay to the Indenture Trustee, on behalf of the Class A-3
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes and Class A-2 Notes is $0 and (B) on each
subsequent Distribution Date, the Class A Principal Payment Amount;
provided that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class
A-3 Note pro rata based on the outstanding principal amount thereof;
(x) pay to the Indenture Trustee, on behalf of the Class A-4
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes is
$0 and (B) on each subsequent Distribution Date, the Class A Principal
Payment Amount; provided that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class A-4 Note pro rata based on the outstanding
principal amount thereof;
(xi) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes is $0 and (B) on each subsequent
Distribution Date, the Class B Principal Payment Amount; provided that
if the Available Amounts remaining to be allocated pursuant to this
clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class B Note pro
rata based on the outstanding principal amount thereof;
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(xii) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes is $0 and (B) on each subsequent
Distribution Date, the Class C Principal Payment Amount; provided that
if the Available Amounts remaining to be allocated pursuant to this
clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class C Note pro
rata based on the outstanding principal amount thereof;
(xiii) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes is $0 and (B) on each subsequent
Distribution Date, the Class D Principal Payment Amount; provided that
if the Available Amounts remaining to be allocated pursuant to this
clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class D Note pro
rata based on the outstanding principal amount thereof;
(xiv) pay to the Indenture Trustee,
(A) on behalf of the Class A-1 Noteholders, the
Additional Principal, if any, until the Principal Amount of
the Class A-1 Notes is $0; provided, that if the amount of
Additional Principal exceeds the amount needed to reduce the
Principal Amount of the Class A-1 Notes to $0, then such
excess shall be paid to the Class A-2 Noteholders;
(B) on behalf of the Class A-2 Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes is $0 and (2) on each subsequent
Distribution Date, the Additional Principal, if any, until the
Principal Amount of the Class A-2 Notes is $0; provided, that
if the Additional Principal exceeds the amount needed to
reduce the Principal Amount of the Class A-2 Notes to $0, then
such excess shall be paid to the Class A-3 Noteholders;
(C) on behalf of the Class A-3 Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes and Class A-2 Notes is $0 and (2) on each
subsequent Distribution Date, the Additional Principal, if
any, until the Principal Amount of the Class A-3 Notes is $0;
provided, that if the Additional Principal exceeds the amount
needed to reduce the Principal Amount of the Class A-3 Notes
to $0, then such excess shall be paid to the Class A-4
Noteholders;
(D) on behalf of the Class A-4 Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes is $0
and (2) on each subsequent Distribution Date, the Additional
Principal, if any, until the Principal Amount of the Class A-4
Notes is $0; provided, that if the Additional Principal
exceeds the amount needed to reduce the Principal Amount of
the Class A-4 Notes to $0, then such excess shall be paid to
the Class B Noteholders;
(E) on behalf of the Class B Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes is $0 and (2) on each subsequent Distribution
Date, the Additional Principal, if any, until the Principal
Amount of the Class B Notes is $0; provided, that if the
Additional Principal exceeds the amount needed to reduce the
Principal Amount of the Class B Notes to $0, then such excess
shall be paid to the Class C Noteholders;
(F) on behalf of the Class C Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes and Class B Notes is $0 and (2) on each subsequent
Distribution Date, the Additional Principal, if any, until the
Principal Amount of the Class C Notes is $0; provided, that if
the Additional Principal
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exceeds the amount needed to reduce the Principal Amount of
the Class C Notes to $0, then such excess shall be paid to the
Class D Noteholders;
(G) on behalf of the Class D Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes, Class B Notes and Class C Notes is $0 and (2) on
each subsequent Distribution Date, the Additional Principal,
if any, until the Principal Amount of the Class D Notes is $0;
provided, that if the Additional Principal exceeds the amount
needed to reduce the Principal Amount of the Class D Notes to
$0, then such excess shall be paid as provided in paragraphs
(xiv)-(xv) below;
(xiv) pay to the Servicer, if the Servicer is HFI or an
Affiliate of HFI, the monthly Servicing Fee for the preceding monthly
period together with any amounts in respect of the Servicing Fee that
were due in respect of prior monthly periods that remain unpaid;
(xv) pay to the Indenture Trustee, for deposit into the
Reserve Fund, such remaining Available Amounts up to such amount as may
be required to cause the amounts on deposit in the Reserve Fund to
equal the Reserve Fund Amount; and
(xv) pay any remaining Available Amounts to the Holder of the
Certificate.
Prior to the occurrence of an Event of Default, if the Available
Amounts are less than the amount required to make in full the payments and
allocations set forth in Sections 7.05(a)(i)-(vi) above, amounts held in the
Reserve Fund shall be withdrawn in order for any of such payments or allocations
to be made and such amounts will be considered as Available Amounts for such
purpose only. Upon full payment of the amounts described in Section 7.05(a)(i)-
(vi), if the Available Amounts are less than the amount required to make in full
the payments and allocations set forth in Sections 7.05(a)(vii)-(xiii), amounts
held in the Reserve Fund in excess of the Required Reserve Amount shall be
withdrawn in order for any of such payments or allocations to be made and such
amounts will be considered as Available Amounts for such purpose only. Amounts
withdrawn from the Reserve Fund pursuant to the preceding sentence shall be
applied to repay principal of the Notes in such order of priority as set forth
in Sections 7.05(a)(vii)-(xiii) until the Reserve Fund is exhausted.
(b) Allocations and Payments after an Event of Default. On each
Determination Date after the occurrence and during the continuance of an Event
of Default, the Servicer, pursuant to monthly payment instructions and
notification, shall instruct the Indenture Trustee to withdraw, and on the
succeeding Distribution Date the Indenture Trustee acting in accordance with
such instructions shall withdraw, the amounts required to be withdrawn from the
Collection Account pursuant to this Section and deposited to the Note
Distribution Account (pursuant to Sections 3.01 and 8.02(b) of the Indenture) in
order to make the following payments or allocations from the Available Amounts
for the related Distribution Date (in each case, such payment or transfer to be
made only to the extent funds remain available therefor after all prior payments
and transfers for such Distribution Date have been made), in the following order
of priority:
(i) pay to the Indenture Trustee the amount of any unpaid fees
and expenses to which the Indenture Trustee is entitled under Section
5.06(a)(i) of the Indenture;
(ii) pay to the Servicer, if the Servicer is no longer HFI or
an Affiliate of HFI, the monthly Servicing Fee for the preceding
monthly period together with any amounts in respect of the Servicing
Fee that were due in respect of prior monthly periods that remain
unpaid.
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class A-4
Noteholders an amount equal to interest accrued in respect of the
related Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes at the Class A-1 Interest Rate, Class A-2 Interest Rate, Class
A-3 Interest Rate and Class A-4 Interest Rate, respectively, for the
Accrual Period immediately preceding such Distribution Date, together
with any such amounts that accrued in respect of prior Accrual Periods
for which no allocation was previously made; provided that if the
Available Amounts remaining to be allocated pursuant to this clause are
less than the full amount required to be so allocated, such
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remaining Available Amounts shall be allocated to each Holder of a
Class A Note pro rata based upon the outstanding Principal Amount
thereof;
(iv) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon at the
Class B Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no allocation was previously made;
provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amount shall be paid to each Class B
Noteholder pro rata based on the outstanding Principal Amount thereof;
(v) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon at the
Class C Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class C
Noteholder pro rata based on the outstanding Principal Amount thereof;
(vi) pay to the Indenture Trustee on behalf of the Class D
Noteholders, an amount equal to the interest accrued thereon at the
Class D Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class D
Noteholder pro rata based on the outstanding principal amount thereof;
(vii) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the Principal Amount of the Class A-1 Notes; provided that
if the Available Amounts remaining to be allocated pursuant to this
clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class A-1 Note
pro rata based on the outstanding principal amount thereof;
(viii) pay to the Indenture Trustee, on behalf of the Class A-
2 Noteholders, Class A-3 Noteholders and Class A-4 Noteholders, the
Principal Amounts of the Class A-2 Notes, Class A-3 Notes and Class A-4
Notes; provided that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class
A-2 Note, Class A-3 Note and Class A-4 Note pro rata based on the
outstanding principal amount of each such Class of Notes;
(ix) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Class B Principal Payment Amount for such Distribution
Date; provided (i) that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class B Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class B Note principal in full, then such excess shall be applied in
repayment of principal on the Class C Notes;
(x) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Class C Principal Payment Amount for such Distribution
Date; provided (i) that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class C Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class C Note principal in full, then such excess shall be applied in
repayment of principal on the Class D Notes;
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(xi) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Class D Principal Payment Amount for such Distribution
Date; provided (i) that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class D Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class D Note principal in full, then such excess shall be applied in
repayment of principal on the Certificates; and
(xii) pay all other remaining Available Amounts to the Holder
of the Certificates.
Following the occurrence and during the continuance of an Event of
Default, if the Available Amounts are less than the amount required to make in
full the payments and allocations set forth in Sections 7.05(b)(i)-(xi) above,
amounts held in the Reserve Fund shall be withdrawn in order for the payments or
allocations set forth in Sections 7.05(b)(vi)-(xi) to be made and such amounts
will be considered as Available Amounts for such purpose only. Amounts withdrawn
from the Reserve Fund pursuant to the preceding sentence shall be applied to
repay principal of such Notes in such order of priority set forth in
7.05(b)(vi)-(xi) until the Reserve Fund is exhausted.
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ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER
Section 8.01. Servicer Default. "Servicer Default" means the occurrence
of any of the following:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Owner Trustee or
the Indenture Trustee pursuant to this Agreement on or before the date
occurring three Business Days after the date such payment, transfer,
deposit, or such instruction or notice or report is required to be made
or given, as the case may be, under the terms of this Agreement; or
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement which has a material adverse
effect on the Noteholders or Certificateholder, which continues
unremedied for a period of 30 days after the first to occur of (i) the
date on which written notice of such failure requiring the same to be
remedied shall have been given to the Servicer by the Indenture Trustee
or to the Servicer and the Indenture Trustee by the Noteholders or
Certificateholder or the Indenture Trustee on behalf of such
Noteholders of Notes aggregating not less than 25% of the Principal
Amount of any Class adversely affected thereby and (ii) the date on
which the Servicer becomes aware thereof and such failure continues to
materially adversely affect such Noteholders or Certificateholder for
such period; or
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to
the this Agreement shall prove to have been incorrect when made, which
has a material adverse effect on the Noteholders or Certificateholder
and which continues to be incorrect in any material respect for a
period of 30 days after the first to occur of (i) the date on which
written notice of such incorrectness requiring the same to be remedied
shall have been given to the Servicer and the Owner Trustee by the
Indenture Trustee, or to the Servicer, the Owner Trustee and the
Indenture Trustee by Noteholders or Certificateholder or by the
Indenture Trustee on behalf of Noteholders of Notes aggregating not
less than 25% of the Principal Amount of any Class adversely affected
thereby and (ii) the date on which the Servicer becomes aware thereof,
and such incorrectness continues to materially adversely affect such
Holders for such period; or
(d) an Insolvency Event shall occur with respect to the
Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five Business Days or
referred to under clause (b) or (c) for a period of 60 days (in addition to any
period provided in (a), (b) or (c)) shall not constitute a Servicer Default
until the expiration of such additional five Business Days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or other similar occurrences. Upon the occurrence of any such event
the Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Owner Trustee, the Indenture Trustee and the
Trust Depositor prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Indenture Trustee in writing of any Servicer Default.
Section 8.02. Servicer Transfer. (a) If a Servicer Default has occurred
and is continuing, (x) the Required Holders, or (y) the Indenture Trustee may,
by written notice (a "Termination Notice") delivered to the parties hereto,
terminate all (but not less than all) of the Servicer's management,
administrative, servicing, custodial and collection functions.
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(b) Upon delivery of the notice required by Section 8.02(a) (or, if
later, on a date designated therein), and on the date that a successor Servicer
shall have been appointed pursuant to Section 8.03 (such appointment being
herein called a "Servicer Transfer"), all rights, benefits, fees, indemnities,
authority and power of the Servicer under this Agreement, whether with respect
to the Contracts, the Contract Files or otherwise, shall pass to and be vested
in such successor (the "Successor Servicer") pursuant to and under this Section
8.02; and, without limitation, the Successor Servicer is authorized and
empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts. The Servicer
shall transfer to the Successor Servicer all records held by the Servicer
relating to the Contracts in such electronic form as the Successor Servicer may
reasonably request and (ii) any Contract Files in the Servicer's possession. In
addition, the Servicer shall permit access to its premises (including all
computer records and programs) to the Successor Servicer or its designee, and
shall pay the reasonable transition expenses of the Successor Servicer. Upon a
Servicer Transfer, the Successor Servicer shall also be entitled to receive the
Servicing Fee for performing the obligations of the Servicer.
Section 8.03. Appointment of Successor Servicer; Reconveyance;
Successor Servicer to Act . Upon delivery of the notice required by Section
8.02(a) (or, if later, on a date designated therein), the Servicer shall
continue to perform all servicing functions under this Agreement until the date
specified in the Termination Notice or, if no such date is specified, until a
date mutually agreed by the Servicer and the Indenture Trustee. The Indenture
Trustee shall as promptly as possible after the giving of or receipt of a
Termination Notice, appoint a Successor Servicer, and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Indenture Trustee and Owner Trustee. If within 60 days of delivery of a
Termination Notice the Indenture Trustee is unable to obtain any bids from
eligible servicers and the Servicer shall have yet to cure the Servicer Default,
then the Indenture Trustee shall offer the Trust Depositor, and the Trust
Depositor shall offer the Originators, the right to accept retransfer of all the
Trust Assets, and such parties may accept retransfer of such Trust Assets in
consideration of the Trust Depositor's delivery to the Collection Account on or
prior to the next upcoming Distribution Date of a sum equal to the Aggregate
Principal Amount of all Securities (other than the Certificates) then
outstanding, together with accrued and unpaid interest thereon through such date
of deposit (provided, that the Indenture Trustee, if so directed by the Required
Holders, need not accept and effect such reconveyance in the absence of evidence
(which may include valuations of an investment bank or similar entity)
reasonably acceptable to such Trustee or Required Holders that such retransfer
would not constitute a fraudulent conveyance of the Trust Depositor or the
Originators).
In the event that a Successor Servicer has not been appointed and has
not accepted its appointment at the time when the then Servicer has ceased to
act as Servicer, the Indenture Trustee without further action shall
automatically be appointed the Successor Servicer. Notwithstanding the
foregoing, if the Indenture Trustee is legally unable or prohibited from so
acting, it shall petition a court of competent jurisdiction to appoint any
established financial institution having a net worth of at least $50,000,000 and
whose regular business includes the servicing of contracts similar to the
Contracts as the Successor Servicer hereunder. On or after a Servicer Transfer,
the Successor Servicer shall be the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and the terminated Servicer shall be relieved of such responsibilities,
duties and liabilities arising after such Servicer Transfer; provided, however,
that (i) the Successor Servicer will not assume any obligations of the Servicer
described in Section 8.03 and (ii) the Successor Servicer shall not be liable
for any acts or omissions of the Servicer occurring prior to such Servicer
Transfer or for any breach by the Servicer of any of its representations and
warranties contained herein or in any related document or agreement. As
compensation therefor, the Successor Servicer shall be entitled to receive
reasonable compensation equal to the monthly Servicing Fee. The Owner Trustee,
Securityholders and the Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. To the extent the terminated Servicer has made
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Servicer Advances, it shall be entitled to reimbursement of the same
notwithstanding its termination hereunder, to the same extent as if it had
continued to service the Contracts hereunder. In addition, it is understood and
agreed that if an Event of Default has occurred and a Servicer Transfer is being
effected by action of the Indenture Trustee hereunder, any documented expenses
reasonably incurred by the Indenture Trustee in connection with effecting such
Servicer Transfer shall be deemed expenses reimbursable from Available Amounts
after an Event of Default pursuant to Section 7.05(b)(i) hereof and Section
5.06(a)(i) of the Indenture.
Section 8.04. Notification to Securityholders. (a) Promptly following
the occurrence of any Servicer Default, the Servicer shall give written notice
thereof to the Trustees, the Trust Depositor and each Rating Agency at the
addresses described in Section 13.04 hereof and to the Noteholders and
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
(b) Within 10 days following any termination or appointment of a
Successor Servicer pursuant to this Article VIII, the Indenture Trustee shall
give written notice thereof to each Rating Agency and the Trust Depositor at the
addresses described in Section 13.04 hereof, and to the Noteholders and
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
Section 8.05. Effect of Transfer. (a) After a Servicer Transfer, the
terminated Servicer shall have no further obligations with respect to the
management, administration, servicing, custody or collection of the Contracts
and the Successor Servicer appointed pursuant to Section 8.03 shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Successor Servicer for its own account, promptly
on receipt and in the same form in which received, any amounts (properly
endorsed where required for the Successor Servicer to collect them) received as
payments upon or otherwise in connection with the Contracts.
(b) A Servicer Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer)
other than those relating to the management, administration, servicing, custody
or collection of the Contracts.
Section 8.06. Database File. The Servicer will provide the Successor
Servicer with a magnetic tape containing the database file for each Contract (i)
as of the Cutoff Date, (ii) the Subsequent Cutoff Date, (iii) thereafter, as of
the last day of the preceding Collection Period on each Determination Date prior
to a Servicer Default and (iv) on and as of the Business Day before the actual
commencement of servicing functions by the Successor Servicer following the
occurrence of a Servicer Default.
Section 8.07. Successor Servicer Indemnification. The original Servicer
shall defend, indemnify and hold the Successor Servicer and any officers,
directors, employees or agents of the Successor Servicer harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the Successor
Servicer may sustain in connection with the claims asserted at any time by third
parties against the Successor Servicer which result from (i) any willful or
grossly negligent act taken or omission by the Servicer or (ii) a breach of any
representations of the Servicer in Section 3.07 hereof. The indemnification
provided by this Section 8.07 shall survive the termination of this Agreement.
Section 8.08. Responsibilities of the Successor Servicer. The Successor
Servicer will not be responsible for delays attributable to the Servicer's
failure to deliver information, defects in the information supplied by the
Servicer or other circumstances beyond the control of the Successor Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable Contract information. The current
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Servicer shall be obligated to pay the costs associated with the transfer of the
servicing files and records to the Successor Servicer.
The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Trust Depositor or the Trustees or for any
inaccuracy or omission in a notice or communication received by the Successor
Servicer from any third party or (ii) which is due to or results from the
invalidity, unenforceability of any Contract with applicable law or the breach
or the inaccuracy of any representation or warrant made with respect to any
Contract.
If the Indenture Trustee or any other Successor Servicer assumes the
role of Successor Servicer hereunder such Successor Servicer shall be entitled
to the benefits of (and subject to the provisions of) Section 5.05 concerning
delegation of duties to subservicers.
Section 8.09. Rating Agency Condition For Servicer Transfer.
Notwithstanding the foregoing provisions relating to a Servicer Transfer, no
Servicer Transfer shall be effective hereunder unless prior written notice
thereof shall have been given to the Rating Agencies, and the Rating Agency
Condition shall have been satisfied with respect thereto.
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ARTICLE NINE
REPORTS
Section 9.01. Monthly Reports. With respect to each Distribution Date
and the related Collection Period, the Servicer will provided to each Trustee,
and each Rating Agency, on the related Determination Date, a monthly statement
(a "Monthly Report") substantially in the form of Exhibit I hereto.
Section 9.02. Officer's Certificate. Each Monthly Report delivered
pursuant to Section 9.01 shall be accompanied by a certificate of a Servicing
Officer certifying the accuracy of the Monthly Report and that no Servicer
Default or event that with notice or lapse of time or both would become a
Servicer Default has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
Section 9.03. Other Data. In addition, the Servicer shall, upon the
request of any Trustees, or any Rating Agency, furnish such Trustee or Rating
Agency, as the case may be, such underlying data used to generate a Monthly
Report as may be reasonably requested.
Section 9.04. Annual Report of Accountants.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "Independent Accountants"), who
may also render other services to the Servicer or its Affiliates, to deliver to
the Trustees and each Rating Agency, on or before March 31 (or 90 days after the
end of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 2000 (i) with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date), a report addressed
to the Board of Directors of the Servicer and to the Trustees, to the effect
that such firm (A) has reviewed certain documents and records relating to the
servicing of the Contracts in the Contracts Pool, and (B) based on such review,
such firm is of the opinion that the Monthly Reports for such year were prepared
in compliance with this Agreement, except for such exceptions as it believes to
be immaterial and such other exceptions as will be set forth in such firm's
report, and (ii) a report with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date) to the effect that
such accountants have applied certain agreed-upon procedures to certain
documents and records relating to the servicing of Contracts under this
Agreement, compared the information contained in the Servicer's certificates
delivered during the period covered by such report with such documents and
records and that no matters came to the attention of such accountants that
caused them to believe that such servicing was not conducted in compliance with
this Agreement, except for such exceptions as such accountants shall believe to
be immaterial and such other exceptions as shall be set forth in such statement.
A copy of such report (the "Accountant's Report") may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, in the case of
a Noteholder, or to the Owner Trustee, in the case of a Certificateholder,
addressed to its respective Corporate Trust Office. In the event such firm of
Independent Accountants requires the Indenture Trustee to agree to the
procedures performed by such firm of Independent Accountants, the Servicer shall
direct the Indenture Trustee in writing to so agree; it being understood and
agreed that the Indenture Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Servicer, and the Indenture
Trustee has not made any independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
Section 9.05. Annual Statement of Compliance from Servicer. The
Servicer will deliver to the Trustees, and each of the Rating Agencies, on or
before January 31 of each year commencing January 31, 2000, an Officer's
Certificate stating that (a) a review of the activities of the Servicer during
the prior calendar year and of its performance under this Agreement was made
under the supervision of the officer signing such certificate and (b) to such
officer's
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knowledge, based on such review, the Servicer has fully performed or cause to be
performed in all material respects all its obligations under this Agreement and
no Servicer Default has occurred or is continuing, or, if there has been a
Servicer Default, specifying each such default known to such officer and the
nature and status thereof and the steps being taken or necessary to be taken to
remedy such event. A copy of such certificate may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, with respect to
any Noteholder, or the Owner Trustee, with respect to any Certificateholder.
Section 9.06. Annual Summary Statement. On or prior to January 31 of
each year, commencing January 31, 2000, the Servicer shall prepare and provide
to each Trustee, and each Rating Agency, a cumulative summary of the information
required to be included in the Monthly Reports for the Collection Periods ending
during the immediately preceding calendar year.
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ARTICLE TEN
TERMINATION
Section 10.01. Sale of Trust Assets.
(a) Upon any sale of the assets of the Trust pursuant to Section 9.02
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Servicer
shall instruct the Indenture Trustee to allocate and apply (after the
application on such Distribution Date of Available Amounts and funds on deposit
in the Reserve Fund pursuant to Section 7.04) the Insolvency Proceeds as if (and
in the same order of priority as) the Insolvency Proceeds were Available Amounts
being allocated and distributed on such date pursuant to Section 7.04(b).
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee and
the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholder will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of the Indenture Trustee pursuant
to this Agreement.
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ARTICLE ELEVEN
REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION
Section 11.01. Repurchases of, or Substitution For, Contracts for
Breach of Representations and Warranties. Upon a discovery by the Servicer, the
Trust Depositor or the Trustees of a breach of a representation or warranty of
the Originators as set forth in Section 3.02, Section 3.03, Section 3.04, and
Section 3.05 or as made or deemed made in any Addition Notice or any Subsequent
Purchase Agreement relating to Substitute Contracts that materially adversely
affects the Trust's interest in such Contract (without regard to the benefits of
the Reserve Fund) (an "Ineligible Contract"), or of an inaccuracy with respect
to the representations as to concentrations of the Initial Contracts made under
Section 3.05, the party discovering the breach shall give prompt written notice
to the other parties (and the Servicer shall, with respect to an inaccuracy
concerning concentrations, select one or more Contracts, without employing
adverse selection, as the related Excess Contract for purposes of this Section),
provided, that the Trustees shall have no duty or obligation to inquire or to
investigate the breach by the Originators of any of such representations or
warranties. The Originators shall repurchase each such Ineligible Contract or
Excess Contract, at a repurchase price equal to the Transfer Deposit Amount, not
later than ninety (90) days following the date the Originator becomes aware of,
or receives written notice from any Trustee, the Servicer or the Trust Depositor
of, any such breach or inaccuracy and which breach or inaccuracy has not
otherwise been cured; provided, however, that if the Originator is able to
effect a substitution for any such Ineligible Contract or Excess Contract in
compliance with Section 2.04, the Originator may, in lieu of repurchasing such
Contract, effect a substitution for such affected Contract with a Substitute
Contract not later than the date a repurchase of such affected Contract would be
required hereunder, and provided further that with respect to a breach of
representation or warranty relating to the Contracts in the aggregate and not to
any particular Contract the Originator may select Contracts (without adverse
selection) to repurchase (or substitute for) such that had such Contracts not
been included as part of the Trust Assets (and, in the case of a substitution,
had such Substitute Contract been included as part of the Trust Assets instead
of the selected Contract) there would have been no breach of such representation
or warranty. Notwithstanding any other provision of this Agreement, the
obligation of the Originators described in this Section 11.01 shall not
terminate or be deemed released by any party hereto upon a Servicer Transfer
pursuant to Article VIII. The repurchase obligation described in this Section
11.01 is in no way to be satisfied with monies in the Reserve Fund.
Section 11.02. Reassignment of Repurchased or Substituted Contracts.
Upon receipt by the Indenture Trustee for deposit in the Collection Account of
the amounts described in Section 11.01 or Section 11.03 (or upon the Subsequent
Transfer Date related to a Substitute Contract described in Section 11.01), and
upon receipt of a certificate of a Servicing Officer in the form attached hereto
as Exhibit G, the Indenture Trustee shall assign to the Trust Depositor and the
Trust Depositor shall assign to the original applicable Originator all of the
Trust's (or Trust Depositor's, as applicable) right, title and interest in the
repurchased or substituted Contract and related Trust Assets without recourse,
representation or warranty. Such reassigned Contract shall no longer thereafter
be included in any calculations of Discounted Contract Balances required to be
made hereunder or otherwise be deemed a part of the Trust.
Section 11.03. Originators' and Trust Depositor's Repurchase Option. On
written notice to the Owner Trustee and the Indenture Trustee at least 20 days
prior to a Distribution Date, and provided that the ADCB of all Contracts in the
Contracts Pool is then less than 10% of the ADCB of such Contracts as of the
Initial Cutoff Date, the Originators, through the Trust Depositor, may (but are
not required to) repurchase from the Trust Depositor (and the Trust Depositor
concurrently from the Trust) on that Distribution Date all outstanding Contracts
at a price equal to the aggregate outstanding Principal Amount of the Securities
(other than the Certificates) as of the current Distribution Date thereon, the
amount of unreimbursed Servicer Advances (if any) as well as accrued and unpaid
monthly Servicing Fees to the date of such repurchase. Such price is to be
deposited in the Collection Account not later than one Business Day before such
Distribution Date, against the Owner Trustee's and Indenture Trustee's and Trust
Depositor's release of the Contracts and the Contract Files to the Originators.
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ARTICLE TWELVE
ORIGINATOR INDEMNITIES
Section 12.01. Originators' Indemnification. The Originators will
jointly and severally defend and indemnify Trust Depositor, the Trust, the
Trustees, any agents of the Trustees and the Certificateholder and Noteholders
(any of which, an "Indemnified Party") against any and all costs, expenses,
losses, damages, claims and liabilities, joint or several, including reasonable
fees and expenses of counsel and expenses of litigation (collectively, "Costs")
arising out of or resulting from (i) this Agreement or the use, ownership or
operation of any Equipment by the respective Originator or the Servicer or any
Affiliate of either, (ii) any representation or warranty or covenant made by the
respective Originator in this Agreement being untrue or incorrect (subject to
the limitations described in the preamble to Article III of this Agreement), and
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or in any amendment thereto or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement was made in conformity with information
furnished to Trust Depositor by the Originators specifically for use therein;
provided, however, that the Originators shall not be required to so indemnify
any such Indemnified Party for such Costs to the extent that such Cost shall be
due to or arise from the willful misfeasance, bad faith or gross negligence of
such Indemnified Party, or the failure of such Indemnified Party to comply with
any express undertaking, agreement or covenant made by such Indemnified Party in
a Transaction Document to which it is a party. Notwithstanding any other
provision of this Agreement, the obligation of the Originators under this
Section 12.01 shall not terminate upon a Servicer Transfer pursuant to Article
VIII of this Agreement and shall survive any termination of that agreement or
this Agreement.
Section 12.02. Liabilities to Obligors. No obligation or liability to
any Obligor under any of the Contracts is intended to be assumed by the
Trustees, the Trust, the Noteholders or the Certificateholder under or as a
result of this Agreement and the transactions contemplated hereby.
Section 12.03. Tax Indemnification.
(a) The Originators jointly and severally agree to pay, and to
indemnify, defend and hold harmless the Trust Depositor, the Trust, the
Trustees, the Noteholders or the Certificateholder from, any taxes
which may at any time be asserted with respect to, and as of the date
of, the transfer of the Contracts to Trust Depositor and the transfer
by the Trust Depositor of the Contracts to the Trust and the further
pledge by the Trust to the Indenture Trustee, including, without
limitation, any sales, gross receipts, general corporation, personal
property, privilege or license taxes (but not including any federal,
state or other taxes arising out of the creation of the Trust and the
issuance of the Notes and Certificates) and costs, expenses and
reasonable counsel fees in defending against the same, whether arising
by reason of the acts to be performed by a Originator or the Servicer
under this Agreement or imposed against the Trust, a Noteholder, a
Certificateholder or otherwise. Notwithstanding any other provision of
this Agreement, the obligation of the Originators under this Section
12.03 shall not terminate upon a Servicer Transfer pursuant to Article
VIII of this Agreement and shall survive any termination of this
Agreement.
(b) The Originators jointly and severally agree to pay and to
indemnify, defend and hold harmless the Trust and the Trustees, on an
after-tax basis (as hereinafter defined), from any state or local
personal property taxes, gross rent taxes, leasehold taxes or similar
taxes which may at any time be asserted with respect to the ownership
of the Contracts (including security interests therein) and the receipt
of rentals therefrom by the Trust, and costs, expenses and reasonable
counsel fees in defending against the same, excluding, however, taxes
based upon or measured by gross or net income or receipts (other than
taxes imposed specifically with respect to rentals). As used in this
Section, the term "after-tax basis" shall mean, with respect to any
payment to be received by an indemnified person, that the amount to be
paid by the Originators shall be equal to the sum of (i) the amount to
be received without regard to this sentence, plus (ii)
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any additional amount that may be required so that after reduction by
all taxes imposed under any federal, state and local law, and taking
into account any current credits or deductions arising therefrom,
resulting either from the receipt of the payments described in both
clauses (i) and (ii) hereof, such sum shall be equal to the amount
described in clause (i) above.
Section 12.04. Adjustments. The Originators jointly and severally agree
that, with respect to each Contract (i) which provides for a Prepayment Amount
less than the amount calculated in accordance with the definition thereof and
(ii) as to which the related Vendor has not agreed to indemnify the Trust
Depositor or any assignee of the Trust Depositor in an amount at least equal to
the excess of the "Prepayment Amount" as calculated in accordance with the
definition thereof over the amount otherwise payable upon prepayment of such
Contract, the Originators shall indemnify the Trust Depositor or the Trust as
assignee thereof, in an amount equal to the amount specified in the foregoing
clause (ii).
The Originators hereby jointly and severally agree that if, with
respect to any Lease with Lessees that are governmental entities or
municipalities, (i) such Lease may be canceled in accordance with its terms and
(ii) the Vendor that assigned such Lease to the respective Originator is not
unconditionally obligated to repurchase such Lease from the Originators for a
purchase price not less than the Discounted Contract Balance of such Lease as of
the date of repurchase (assuming that the interest rate to be applied in
calculating the Discounted Contract Balance of such Lease is the Discount Rate
on the date of repurchase) plus interest at the Discount Rate through the date
of repurchase (such amount, the "Required Lease Cancellation Payment") then the
respective Originator shall indemnify the Trust Depositor or the Trust as
assignee thereof against such cancellation in an amount equal to the difference
between the amount, if any, received from the related Vendor and the Required
Lease Cancellation Payment.
The Originators hereby further agree that if any real property
collateral securing any Contract described in Section 3.02(e) hereof becomes the
subject of any claims, proceedings, liens or encumbrances with respect to any
violation or claimed violation of any federal or state environmental laws or
regulations, such Contract shall for all purposes hereunder be, at and following
the time of discovery by any Originator, the Trust Depositor, the Servicer or
any Trustee of such fact, deemed an Ineligible Contract subject to the same
remedial and recourse provisions hereunder as other Contracts determined to be
Ineligible Contracts hereunder.
Section 12.05. Operation of Indemnities. Indemnification under this
Article XII shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If a Originator has made any indemnity
payments to Trust Depositor or the Trustees pursuant to this Article XII and
Trust Depositor or the Trustees thereafter collects any of such amounts from
others, Trust Depositor or the Trustees will repay such amounts collected to the
respective Originator's, except that any payments received by Trust Depositor or
the Trustees from an insurance provider as a result of the events under which
the respective Originator's indemnity payments arose shall be repaid prior to
any repayment of the Originators' indemnity payment.]
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ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.01. Amendment.
(a) This Agreement may be amended by the Originators, the Trust
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf
of the Trust, collectively, without the consent of any Securityholders, to cure
any ambiguity, to correct or supplement any provisions in this Agreement which
are inconsistent with the provisions herein, or to add any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement, provided, however that any
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the
Originators, the Trust Depositor, the Servicer, the Indenture Trustee and the
Owner Trustee on behalf of the Trust, with the consent of the Required Holders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholder; provided,
however, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of (A) Collections of payments on
the Contracts or distributions that shall be required to be made on any Note or
Certificate (including by way of amendment of related definitions), or (B) the
manner in which the Reserve Fund is applied, or (ii) change in any manner
(including through amendment of related definitions), the Holders which are
required to consent to any such amendment, or (iii) make any Note or Certificate
payable in money other than Dollars, without the consent of the Holders of all
Notes and Certificates of the relevant affected Class then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder, respectively. It shall not be necessary for
the consent of Noteholders and Certificateholder pursuant to Section 13.01(b) to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization by Noteholders and
Certificateholder of the execution thereof shall be subject to such reasonable
requirements as the Owner Trustee or the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and Indenture Trustee shall be entitled to receive and rely upon
an Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement. Such Trustee may, but shall not be obligated to,
enter into any such amendment which affects such Trustee's own rights, duties or
immunities under this Agreement or otherwise.
(f) Notwithstanding anything to the contrary in this Section 13.01, the
Trust Depositor or the Servicer, acting on behalf of the Trust Depositor, may
request each Rating Agency to approve a formula for determining the Reserve Fund
Amount that is different from the formula or result determined from the current
definition thereof contained herein so as to result in a decrease in the amount
of the Reserve Fund Amount or the manner by which such Reserve Fund is funded.
If each Rating Agency delivers to the Indenture Trustee and Owner Trustee a
written notice or letter satisfying the Rating Agency Condition in connection
with such change, then the Reserve Fund Amount will be theretofore determined in
accordance with such changed formula or manner of funding, and an amendment to
this Agreement effecting such change may be executed without the consent of any
Securityholders.
Section 13.02. Protection of Title to Trust.
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(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Trust, the Securityholders, the Indenture Trustee
and the Owner Trustee in the Contracts and in the proceeds thereof. The Servicer
shall deliver (or cause to be delivered) to the Owner Trustee and the Indenture
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Neither the Originator, the Trust Depositor nor the Servicer shall
change its name, identity or corporate structure in any manner that would, could
or might make any financing statement or continuation statement filed in
accordance with Section 4.02(a) seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Trust, the Owner
Trustee and the Indenture Trustee at least 60 days' prior written notice thereof
and shall have promptly filed appropriate amendments to all previously filed
financing statements or continuation statements.
(c) The Originators, the Trust Depositor and the Servicer shall give
the Trust, the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of the principal executive office of any
Originator, or the Trust Depositor or the Servicer if, as a result of such
relocation, the applicable provisions of the UCC would require filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement, and the Servicer shall promptly file or cause to be
filed any such amendment or new financing statement. The Servicer shall at all
times maintain each office from which it shall service Contracts, and its
principal executive office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Contract accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Contract, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Contract and the amounts from time to time deposited in or credited to the
Collection Account in respect of each Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts, the Servicer's master computer records (including any backup
archives) that shall refer to a Contract indicate clearly the interest of the
Trust and the Indenture Trustee in such Contract and that such Contract is owned
by the Trust and has been pledged to the Indenture Trustee. Indication of the
Trust's ownership of and the Indenture Trustee's interest in a Contract shall be
deleted from or modified on the Servicer's computer systems when, and only when,
the related Contract shall have been paid in full or repurchased or substituted
for.
(f) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee and reciting
the details of each filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.
Section 13.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee shall be
governed by the laws of the State of Delaware.
Section 13.04. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an
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Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Servicer or Originator:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Asset Distribution and Investments
Fax No.: (312) 441-7170
(ii) If to the Trust Depositor:
Heller Funding Corporation II
500 West Monroe Street
Chicago, Illinois 60661
Attention: President
Fax No.: (312) 441-7170
(iii) If to the Indenture Trustee:
Norwest Bank Minnesota, National Association
Northstar West, 16th Floor
Sixth and Marquette
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services/Asset
Backed Administration
Fax No.: (612) 667-3539
Telephone No.: (612) 667-0117
(iv) If to the Owner Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Fax No.: (302) 651-1576]
(v) If to DCR:
Duff & Phelps Credit Rating Co.
55 East Monroe, Suite 3800
Chicago, IL 60603
Attention: Asset-Backed Monitoring Group
(Equipment Leases)
Fax No.: (312) 368-2069
Telephone No.: (312) 368-3100
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Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 13.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
Section 13.06. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party shall be deemed a third party beneficiary of this Agreement,
and specifically that the Obligors are not third party beneficiaries of this
Agreement.
Section 13.07. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
together constitute but one and the same instrument.
Section 13.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 13.09. No Bankruptcy Petition; Disclaimer. (a) Each of the
Originators, the Indenture Trustee, the Servicer, the Owner Trustee and each
Holder (by acceptance of the applicable Securities) covenants and agrees that,
prior to the date that is one year and one day after the payment in full of all
amounts owing in respect of all outstanding Securities, it will not institute
against the Trust Depositor, or the Trust, or join any other Person in
instituting against the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States. This Section 13.09 will survive the termination of this
Agreement.
(b) The Trust acknowledges and agrees that the Certificates represent a
beneficial interest in the Trust and Trust Assets only and the Securities doe
not represent an interest in any assets (other than the Trust Assets) of the
Trust Depositor (including by virtue of any deficiency claim in respect of
obligations not paid or otherwise satisfied from the Trust Assets and proceeds
thereof). In furtherance of and not in derogation of the foregoing, to the
extent that the Trust Depositor enters into other securitization transactions as
contemplated in Section 6.07, the Trust acknowledges and agrees that it shall
have no right, title or interest in or to any assets (or interests therein)
other than the Trust Assets conveyed or purported to be conveyed (whether by way
of a sale, capital contribution or by the granting of a Lien) by the Trust
Depositor to any Person other than the Trust (the "Other Assets").
To the extent that notwithstanding the agreements contained in this
Section, the Trust or any Securityholder, either (i) asserts an interest in or
claim to, or benefit from any Other Assets, whether asserted against or through
the Trust Depositor or any other Person owned by the Trust Depositor, or (ii) is
deemed to have any interest, claim or benefit in or from any Other Assets,
whether by operation of law, legal process, pursuant to applicable provisions of
Insolvency Laws or otherwise (including without limitation pursuant to Section
1111(b) of the federal Bankruptcy Code, as amended) and whether deemed asserted
against or through the Trust Depositor or any other Person owned by the Trust
Depositor, then the Trust and each Securityholder by accepting a Note or
Certificate further acknowledges and agrees that any such interest, claim or
benefit in or from the Other Assets is and shall be expressly subordinated to
the indefeasible payment in full of all obligations and liabilities of the Trust
Depositor which, under the terms of the documents relating to the securitization
of the Other Assets, are entitled to be paid from, entitled to the benefits of ,
or otherwise secured by such Other Assets (whether or not any such entitlement
or security interest is legally perfected or otherwise entitled to a priority of
distribution under applicable law, including Insolvency Laws, and whether
asserted against the Trust Depositor or any other Person owned by the Trust
Depositor) including, without limitation, the payment of post-petition interest
on such other obligations and liabilities. This subordination agreement shall be
deemed
68
<PAGE>
a subordination agreement within the meaning of Section 510(a) of the Bankruptcy
Code. Each Securityholder is deemed to have acknowledged and agreed that no
adequate remedy at law exists for a breach of this Section 13.09 and that the
terms and provisions of this Section 13.09 may be enforced by an action for
specific performance.
(c) The provisions of this Section 13.09 shall be for the third party
benefit of those entitled to rely thereon and shall survive the termination of
this Agreement.
Section 13.10. Jurisdiction. Any legal action or proceeding with
respect to this Agreement may be brought in the courts of the United States for
the Northern District of Illinois, and by execution and delivery of this
Agreement, each party hereto consents, for itself and in respect of its
property, to the non-exclusive jurisdiction of those courts. Each such party
irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect
of this Agreement or any document related hereto.
Section 13.11. Tax Characterization. Notwithstanding the provisions of
Section 2.01 and Section 2.04 hereof, the Trust Depositor and Owner Trustee
agree that pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii), the
Trust is to be disregarded as a separate entity from the Trust Depositor for
federal and State of Illinois income tax purposes.
Section 13.12. Prohibited Transactions with Respect to the Trust. The
Originators shall not:
(a) Provide credit to any Noteholder or Certificateholder for the
purpose of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;
(b) Purchase any Notes or Certificates in an agency or trustee
capacity; or
(c) Except in its capacity as Servicer as provided in this Agreement,
lend any money to the Trust.
Section 13.13. Merger or Consolidation of Originators. (a) Each of the
Originators will keep in full force and effect its existence, rights and
franchise as a Delaware corporation, and each Originator will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement and of any of the Contracts and to
perform its duties under this Agreement.
(b) Any person into which an Originator may be merged or consolidated,
or any corporation resulting from such merger or consolidation to which such
Originator is a party, or any person succeeding to the business of such
Originator shall be the successor to the Originator hereunder, without execution
or filing of any paper or any further act on the part of any of the parties
hereto, notwithstanding anything herein to the contrary.
(c) Upon the merger or consolidation of the Originators as described in
this Section 13.13, the Originators shall provide the Rating Agencies notice of
such merger or consolidation within thirty (30) days after completion of the
same.
Section 13.14. Assignment or Delegation by the Originators. Except as
specifically authorized hereunder, the Originators may not convey and assign or
delegate any of its rights or obligations hereunder absent the prior written
consent of the Trust Depositor and the Trustees, and any attempt to do so
without such consent shall be void.
69
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee on behalf of the Trust
By:___________________________________
Printed Name:______________________
Title:_____________________________
HELLER FUNDING CORPORATION II, as Trust Depositor
By:___________________________________
Printed Name:______________________
Title:_____________________________
HELLER FINANCIAL, INC., as Servicer and as an
Originator
By:___________________________________
Printed Name:______________________
Title:_____________________________
HELLER FINANCIAL LEASING INC., as an Originator
By:___________________________________
Printed Name:______________________
Title:_____________________________
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Indenture Trustee
By:___________________________________
Printed Name:______________________
Title:_____________________________
70
<PAGE>
Exhibit A
[Form of Assignment]
In accordance with the Sale and Servicing Agreement (the "Sale and
Servicing Agreement") dated as of [_________], 1999 made by and between the
undersigned, as Trust Depositor ("Trust Depositor"), Heller Financial, Inc., as
Servicer, Heller Financial and Heller Financial Leasing, Inc., as Originators,
Norwest Bank Minnesota, National Association, as Indenture Trustee and the
Heller Equipment Asset Receivables Trust 1999-1 (the "Trust"), as assignee
thereunder, the undersigned does hereby sell, transfer, convey and assign, set
over and otherwise convey to the Trust (i) all the right, title and interest of
the Trust Depositor in and to the Initial Contracts listed on the initial List
of Contracts delivered on the Closing Date (including, without limitation, all
rights to receive Collections with respect thereto on or after the Initial
Cutoff Date, but excluding any rights to receive payments which were collected
pursuant thereto prior to the Initial Cutoff Date), and (ii) all other Contract
Assets relating to the foregoing.
Capitalized terms used herein have the meaning given such terms in the
Sale and Servicing Agreement.
This Assignment is made pursuant to and in reliance upon the
representation and warranties on the part of the undersigned contained in
Article III of the Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this __th day of ______________, 1999.
HELLER FUNDING CORPORATION II
By:________________________________________
Printed Name:______________________________
Title:_____________________________________
A-1
<PAGE>
Exhibit B
[Form of Closing Certificate of Trust Depositor]
Heller Funding Corporation II
Officer's Certificate
The undersigned certifies that he/she is [________] of Heller Funding
Corporation II, a Delaware corporation (the "Trust Depositor"), and that as such
is duly authorized to execute and deliver this certificate on behalf of the
Trust Depositor in connection with the Sale and Servicing Agreement (the
"Agreement") dated as of [_________], 1999 (the "Effective Date") by and among
the Trust Depositor, Norwest Bank Minnesota, National Association (the
"Indenture Trustee"), as Indenture Trustee, Heller Financial, Inc. ("HFI"), as
Servicer and as Originator, Heller Financial Leasing, Inc., as Originator and
the Heller Equipment Asset Receivables Trust 1999-1 ("Trust") (all capitalized
terms used herein without definition having the respective meanings set forth in
the Agreement), and further certifies as follows:
(1) Attached hereto as Exhibit I is a true and correct copy of
the Certificate of Incorporation of the Trust Depositor, together with
all amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of the Trust Depositor since
_____, and no such amendment has been authorized by the Board of
Directors or shareholders of the Trust Depositor.
(3) Attached hereto as Exhibit II is a Certificate of the
Secretary of State of the State of Delaware dated _______ ___, 1999
stating that the Trust Depositor is duly incorporated under the laws of
the State of Delaware and is in good standing.
(4) Attached hereto as Exhibit III is a true and correct copy
of the Bylaws of the Trust Depositor, as amended, which were in full
force and effect on _______ ___, 1999, and at all times subsequent
thereto.
(5) Attached hereto as Exhibit IV is a true and correct copy
of resolutions adopted pursuant to the unanimous written consent of the
Board of Directors of the Trust Depositor relating to the execution,
delivery and performance of (among other things) the Agreement; the
Trust Agreement dated as of the Effective Date between the Trust
Depositor and Wilmington Trust Company (the "Owner Trustee"), as Owner
Trustee; the Administration Agreement dated as of the Effective Date
among the Trust Depositor, the Trust, the Indenture Trustee, and HFI,
as Administrator; the Placement Agency Agreement (as defined in the
Agreement); and the Underwriting Agreements (as defined in the
Agreement) (collectively, the "Program Agreements"). Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) No event with respect to the Trust Depositor has occurred
and is continuing which would constitute an Event of Default or an
event that, with notice or the passage of time or both, would become an
Event of Default as defined in the Agreement. To the best of my
knowledge after reasonable investigation, there has been no material
adverse change in the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Trust
Depositor, whether or not arising in the ordinary course of business
since the respective dates as of which information is given in the
Prospectus and except as set forth therein.
B-1
<PAGE>
(7) All federal, state and local taxes of the Trust Depositor
due and owing as of the date hereof have been paid.
(8) All representations and warranties of the Trust Depositor
contained in the Program Agreements or any other related documents, or
in any document, certificate or financial or other statement delivered
in connection therewith are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending
or, to our knowledge, threatened against the Trust Depositor before any
court, administrative agency or other tribunal (a) asserting the
invalidity of the Program Agreements; (b) seeking to prevent the
consummation of any of the transactions contemplated by the Program
Agreements; or (c) which is likely materially and adversely to affect
the Trust Depositor's performance of its obligations under, or the
validity or enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by the Trust Depositor for the
Trust Depositor's consummation of the transactions contemplated by the
Program Agreements, except such as have been obtained or made and such
as may be required under the blue sky laws of any jurisdiction in
connection with the issuance and sale of the Securities.
(11) The Trust Depositor is not a party to any agreements or
instruments evidencing or governing indebtedness for money borrowed or
by which the Trust Depositor or its property is bound (other than the
Program Agreements). Neither the Originators' transfer and assignment
of the Contract Assets to the Trust Depositor, the Trust Depositor's
concurrent transfer and assignment of the Trust Assets to the Trust,
nor the concurrent transfer and assignment of the Collateral by the
Trust to the Indenture Trustee nor the issuance and sale of the
Certificates and the Notes, nor the execution and delivery of the
Program Agreements, nor the consummation of any other of the
transactions contemplated therein, will violate or conflict with any
agreement or instrument to which the Trust Depositor is a party or by
which it is otherwise bound.
(12) In connection with the transfer of Contracts and related
collateral contemplated in the Agreement, (a) the Trust Depositor has
not made such transfer with actual intent to hinder, delay or defraud
any creditor of the Trust Depositor, and (b) the Trust Depositor has
not received less than a reasonably equivalent value in exchange for
such transfer, is not on the date thereof insolvent (nor will become
insolvent as a result thereof), is not engaged (or about to engage) in
a business or transaction for which it has unreasonably small capital,
and does not intend to incur or believe it will incur debts beyond its
ability to pay when matured.
(13) Each of the agreements and conditions of the Trust
Depositor to be performed on or before the Closing Date pursuant to the
Program Agreements have been performed in all material respects.
* * * *
B-2
<PAGE>
In Witness Whereof, I have affixed my signature hereto this __th day of
[__________], 1999.
By:________________________________________
Printed Name:________________________
Title:_______________________________
<PAGE>
Exhibit C-1
[Form of Closing Certificate of Servicer/Originator]
Heller Financial, Inc.
Officer's Certificate
The undersigned certifies that he/she is ___________ of Heller
Financial, Inc. ("HFI"), and that as such he/she is duly authorized to execute
and deliver this certificate on behalf of HFI, as Servicer, in connection with
the Sale and Servicing Agreement (the "Agreement") dated as of [____________],
1999 (the "Effective Date") by and among HFI, as Servicer, HFI and Heller
Financial Leasing, Inc., as Originators, Heller Funding Corporation II ("HFC"),
Norwest Bank Minnesota, National Association as Indenture Trustee, and Heller
Equipment Asset Receivables Trust 1999-1 ("Trust"), and as an Originator (all
capitalized terms used herein without definition having the respective meanings
set forth in the Agreement), and further certifies as follows (it being
understood that these certifications are being relied upon by, among others,
Winston & Strawn in connection with its delivery of a legal opinion (the
"Opinion") required in connection with the subject transactions addressing,
among other things, enforceability and UCC perfection issues, and by the
Underwriters in connection with their undertakings in connection with the
subject transactions):
(1) Attached hereto as Exhibit I is a true and correct copy of
the Certificate of Incorporation of HFI, together with all amendments
thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of HFI since [_______],
19__, and no such amendment has been authorized by the Board of
Directors or shareholders of HFI.
(3) Attached hereto as Exhibit II is a Certificate of the
Secretary of State of the State of Delaware dated _______ ___, 1999
stating that HFI is duly incorporated under the laws of the State of
Delaware and is in good standing.
(4) Attached hereto as Exhibit III is a true and correct copy
of the Bylaws of HFI which were in full force and effect on [________],
19__ and at all times subsequent thereto.
(5) Attached hereto as Exhibit IV is a true and correct copy
of resolutions adopted pursuant to a unanimous written consent of the
Board of Directors of HFI and relating to the authorization, execution,
delivery and performance of (among other things) the Agreement; the
Underwriting Agreements (as defined in the Agreement); the Placement
Agency Agreement (as defined in the Agreement); and the Administration
Agreement dated as of the Effective Date among HFI, HFC, the Trust and
Norwest Bank Minnesota, National Association as Indenture Trustee (the
"Indenture Trustee") (the "Administration Agreement"). Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) No event with respect to HFI has occurred and is
continuing which would constitute an Event of Default or Servicer
Default or an event that, with notice or the passage of time, would
constitute an Event of Default or Servicer Default as defined in the
Sale and Servicing Agreement. To the best of my knowledge after
reasonable investigation, there has been no material adverse change in
the condition, financial or otherwise, or the earnings, business
affairs or business prospects of HFI, whether or not arising in the
ordinary course of business, since the respective dates as of which
information is given in the Prospectus and except as set forth therein.
C-1-1
<PAGE>
(7) All federal, state and local taxes of HFI due and owing as
of the date hereof have been paid.
(8) All representations and warranties of HFI contained in the
Agreement, the Underwriting Agreements, the Placement Agency Agreement
and the Administration Agreement (collectively, the "Program
Agreements") or in any document, certificate or financial or other
statement delivered in connection therewith are true and correct as of
the date hereof.
(9) There is no action, investigation or proceeding pending
or, to my knowledge, threatened against HFI before any court,
administrative agency or other tribunal (a) asserting the invalidity of
any Program Agreement to which HFI is a party; or (b) which is likely
materially and adversely to affect HFI's performance of its obligations
under, or the validity or enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by HFI for HFI's consummation
of the transactions contemplated by the Program Agreements, except such
as have been obtained or made and such as may be required under the
blue sky laws of any jurisdiction in connection with the issuance and
sale of the Notes or Certificates.
(11) Neither HFI's transfer and assignment of the Contract
Assets to HFC, HFC's concurrent transfer and assignment of the Trust
Assets to the Trust, nor the concurrent transfer and assignment by the
Trust of the Collateral to the Indenture Trustee, nor the issuance and
sale of the Notes or Certificates or the entering into of the Program
Agreements, nor the consummation of any other of the transactions
contemplated therein, will violate or conflict with any agreement or
instrument to which HFI is a party or by which it is otherwise bound.
(12) In connection with the transfers of Contracts and related
assets contemplated in the Agreement, (a) HFI has not made such
transfer with actual intent to hinder, delay or defraud any creditor of
HFI, and (b) HFI has not received less than a reasonably equivalent
value in exchange for such transfer, is not on the date hereof
insolvent (nor will HFI become insolvent as a result thereof), is not
engaged (or about to engage) in a business or transaction for which it
has unreasonably small capital, and does not intend to incur or believe
it will incur debts beyond its ability to pay when matured.
(13) Each of the agreements and conditions of HFI to be
performed or satisfied on or before the Closing Date under the Program
Agreements has been performed or satisfied in all material respects.
(14) HFI has not executed for filing any UCC financing
statements listing the Contract Assets as collateral other than
financing statements relating to the transactions contemplated in the
Agreement.
(15) With respect to the financing statements described in the
Opinion which are identified as Specific Agreement Filings naming HFI
as debtor, HFI has conducted a review of its internal records and
determined that the individual financing agreements described as
collateral in such Specific Agreement Filings are not, and do not
relate to, Contracts being conveyed by HFI and constituting part of the
Initial Contracts Pool, and HFI further represents that such agreements
are never to be conveyed as a Substitute Contract. In addition, HFI has
conducted a review of its internal records and determined that the
single Contract in the Initial Contracts Pool secured by a mortgage on
real property is not part of either of the fixed mortgage loan pools
described in the financing statements of record with respect to such
pools and referred to in the Opinion, and HFI further represents that
no agreement that is part of any such fixed mortgage loan pool will
ever by conveyed as a Substitute Contract.
* * * * * *
C-1-2
<PAGE>
In Witness Whereof, I have affixed my signature hereto this
[____]th day of [_________], 1999.
By:____________________________________
Printed Name:___________________
Title:__________________________
C-1-3
<PAGE>
Exhibit C-2
[Form of Closing Certificate of HFLI as Originator]
Heller Financial Leasing, Inc.
Officer's Certificate
The undersigned certifies that he/she is ___________ of Heller
Financial Leasing, Inc. ("HFLI"), and that as such he/she is duly authorized to
execute and deliver this certificate on behalf of HFLI, as an Originator in
connection with the Sale and Servicing Agreement (the "Agreement") dated as of
[____________], 1999 (the "Effective Date") by and among Heller Financial Inc.
("HFI"), as Servicer, and HFI and HFLI, as Originators, Heller Funding
Corporation II ("HFC"), Norwest Bank Minnesota, National Association as
Indenture Trustee, and Heller Equipment Asset Receivables Trust 1999-1 ("Trust")
(all capitalized terms used herein without definition having the respective
meanings set forth in the Agreement), and further certifies as follows (it being
understood that these certifications are being relied upon by, among others,
Winston & Strawn in connection with its delivery of a legal opinion (the
"Opinion") required in connection with the subject transactions addressing,
among other things, enforceability and UCC perfection issues, and by the
Underwriters in connection with their undertakings in connection with the
subject transactions):
(1) Attached hereto as Exhibit I is a true and correct copy of
the Certificate of Incorporation of HFLI, together with all amendments
thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of HFLI since [_______],
19__, and no such amendment has been authorized by the Board of
Directors or shareholders of HFLI.
(3) Attached hereto as Exhibit II is a Certificate of the
Secretary of State of the State of Delaware dated ___________, 1999
stating that HFLI is duly incorporated under the laws of the State of
Delaware and is in good standing.
(4) Attached hereto as Exhibit III is a true and correct copy
of the Bylaws of HFLI which were in full force and effect on
[________], 19__ and at all times subsequent thereto.
(5) Attached hereto as Exhibit IV is a true and correct copy
of resolutions adopted pursuant to a unanimous written consent of the
Board of Directors of HFLI and relating to the authorization,
execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated therein. Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) To the best of my knowledge after reasonable
investigation, there has been no material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of HFLI, whether or not arising in the ordinary
course of business, since the respective dates as of which information
is given in the Prospectus and except as set forth therein.
(7) All federal, state and local taxes of HFLI due and
owing as of the date hereof have been paid.
C-2-1
<PAGE>
(8) All representations and warranties of HFLI contained in
the Agreement or in any document, certificate or financial or other
statement delivered in connection therewith are true and correct as of
the date hereof.
(9) There is no action, investigation or proceeding pending
or, to my knowledge, threatened against HFLI before any court,
administrative agency or other tribunal (a) asserting the invalidity of
any Program Agreement to which HFLI is a party; or (b) which is likely
materially and adversely to affect HFLI's performance of its
obligations under, or the validity or enforceability of, the Agreement.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by HFLI for HFLI's
consummation of the transactions contemplated by the Agreement, except
such as have been obtained or made and such as may be required under
the blue sky laws of any jurisdiction in connection with the issuance
and sale of the Notes or Certificates.
(11) Neither HFLI's transfer and assignment of the Contract
Assets to HFC, HFC's concurrent transfer and assignment of the Trust
Assets to the Trust, nor the concurrent transfer and assignment by the
Trust of the Collateral to the Indenture Trustee, nor the issuance and
sale of the Notes or Certificates, nor the consummation of any other of
the transactions contemplated therein, will violate or conflict with
any agreement or instrument to which HFLI is a party or by which it is
otherwise bound.
(12) In connection with the transfers of Contracts and related
assets contemplated in the Agreement, (a) HFLI has not made such
transfer with actual intent to hinder, delay or defraud any creditor of
HFI, and (b) HFLI has not received less than a reasonably equivalent
value in exchange for such transfer, is not on the date hereof
insolvent (nor will HFLI become insolvent as a result thereof), is not
engaged (or about to engage) in a business or transaction for which it
has unreasonably small capital, and does not intend to incur or believe
it will incur debts beyond its ability to pay when matured.
(13) Each of the agreements and conditions of HFLI to be
performed or satisfied on or before the Closing Date under the
Agreement has been performed or satisfied in all material respects.
(14) HFLI has not executed for filing any UCC financing
statements listing the Contract Assets as collateral other than
financing statements relating to the transactions contemplated in the
Agreement.
(15) With respect to the financing statements described in the
Opinion which are identified as Specific Agreement Filings naming HFLI
as debtor, HFLI has conducted a review of its internal records and
determined that the individual financing agreements described as
collateral in such Specific Agreement Filings are not, and do not
relate to, Contracts being conveyed by HFLI and constituting part of
the Initial Contracts Pool, and HFLI represents that such agreements
are never to be conveyed as a Substitute Contract.
* * * * * *
C-2-2
<PAGE>
In Witness Whereof, I have affixed my signature hereto this
[___]th day of [________], 1999.
By:_____________________________________
Printed Name:____________________
Title:___________________________
C-2-3
<PAGE>
Exhibit D
Form of Opinion of Counsel for Trust Depositor
Regarding General Corporate Matters
(Including Perfection Opinion)
D-1
<PAGE>
Exhibit E
Form of Opinion of Counsel for Trust
Depositor Regarding the "True Sale" Nature
of the Transaction
E-1
<PAGE>
Exhibit F
[Form of Opinion of Counsel for Trust
Depositor Regarding Non-consolidation]
F-1
<PAGE>
Exhibit G
[Form of Certificate Regarding Repurchased Contracts]
Heller Financial, Inc.
Certificate Regarding Repurchased Contracts
The undersigned certifies that he/she is a ____________________________
of Heller Financial, Inc., a Delaware corporation (the "Servicer"), and that as
such he/she is duly authorized to execute and deliver this certificate on behalf
of the Servicer pursuant to Section 11.02 of the Sale and Servicing Agreement
(the "Agreement") dated as of [___________], 1999 by and among Heller Funding
Corporation II, as Trust Depositor, the Servicer, Heller Financial, Inc. and
Heller Financial Leasing, Inc., as Originators, Norwest Bank Minnesota, National
Association as Indenture Trustee, and Heller Equipment Asset Receivables Trust
1999-1 (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Contracts on the attached schedule are to be repurchased
by the Originator on the date hereof, or substituted for by
the Originator, pursuant to and in accordance with Section
11.01 of the Agreement.
2. Upon deposit of the Transfer Deposit Amount for such Contracts
(or the effective conveyance of one or more Substitute
Contracts therefor), such Contracts may, pursuant to Section
11.02 of the Agreement, be assigned by the Owner Trustee to
the Originator.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______
day of ______, ____.
Heller Financial, Inc.
By:_______________________________________
Printed Name:_______________________
Title:______________________________
G-1
<PAGE>
Exhibit H
[List of Contracts]
H-1
<PAGE>
Exhibit I
[Form of Monthly Report to Noteholders And Certificateholder]
[see attached]
I-1
<PAGE>
Exhibit J
[Reserved]
J-1
<PAGE>
Exhibit K
[Form of Contract Stamp]
This Contract/Note is subject to a security interest granted to Wilmington Trust
Company, as Owner Trustee for the Heller Equipment Asset Receivables Trust
1999-1. UCC-1 Financing Statements covering this Contract/Note have been filed
with the Secretary of State of the State of Illinois. Such lien will be released
only in connection with appropriate filings in such offices. Consequently,
potential purchasers of this Contract/Note must refer to such filings to
determine whether such lien has been released.
K-1
<PAGE>
Exhibit L
[Form of Subsequent Transfer Agreement]
SUBSEQUENT TRANSFER AGREEMENT (the "Agreement"), dated as of
[________], by and among Heller Equipment Asset Receivables Trust 1999-1 (the
"Trust"), Heller Funding Corporation II, a Delaware corporation (the "Trust
Depositor"), Norwest Bank Minnesota, National Association, as Indenture Trustee
(the "Indenture Trustee") and Heller Financial, Inc., a Delaware corporation, as
Servicer and as an Originator and Heller Financial Leasing, Inc. a Delaware
corporation, as an Originator, pursuant to the Sale and Servicing Agreement
referred to below.
WITNESSETH:
WHEREAS, the Trust, the Trust Depositor, the Servicer, the Originators
and the Indenture Trustee, are parties to the Sale and Servicing Agreement,
dated as of [___________], 1999 (the "Sale and Servicing Agreement");
WHEREAS, pursuant to the Sale and Servicing Agreement, the Trust
Depositor wishes to sell the Substitute Contracts to the Trust, and the Trust
wishes to purchase the same, for the consideration described in the Sale and
Servicing Agreement; and
WHEREAS, the Servicer has timely delivered an Addition Notice related
to such conveyance as required in by Section [2.04(b)] of the Sale and Servicing
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Capitalized terms used herein shall have the meanings
ascribed to them in the Sale and Servicing Agreement unless otherwise defined
herein.
"Subsequent Cutoff Date" shall mean, with respect to
the Substitute Contracts transferred hereby, [_____].
"Substitute Contracts" shall mean, for purposes of
this Agreement, the Substitute Contracts listed in the
Subsequent List of Contracts attached hereto as Exhibit A.
"Subsequent Transfer Date" shall mean, with respect
to the Substitute Contracts transferred hereby, [______].
Section 2. Subsequent List of Contracts. The Subsequent List of
Contracts attached hereto as Exhibit A is an amendment to the initial List of
Contracts attached as Exhibit H to the Sale and Servicing Agreement, as
contemplated in the definition of List of Contracts set forth therein. The
Subsequent List of Contracts separately identifies the Substitute Contracts to
be transferred pursuant to this Agreement on the Subsequent Transfer Date, and
also further separately identifies the related Contract or Contracts with
respect to which an Addition Event or Substitution Event has occurred and which
Contracts are being deleted from the List of Contracts by virtue of the delivery
of the Subsequent List of Contracts.
Section 3. Transfer of Substitute Contracts. Subject to and upon the
terms and conditions set forth in Section [2.04(b)] of the Sale and Servicing
Agreement and this Agreement, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust:
L-1
<PAGE>
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Contracts on and after the related Subsequent Cutoff Dates, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
(vi all rights (but not the obligations) of the Trust
Depositor under the Sale and Servicing Agreement related to such
Contracts (to the extent not already conveyed under Section 2.01(b) of
the Sale and Servicing Agreement), as well as all rights, but not the
obligations, of the Trust Depositor under the Subsequent Purchase
Agreement related to such Contracts; and
(vii) all income from and proceeds of the foregoing;
provided, that such Contract Assets shall in no case include any Residual
Investment.
It is the intention of the Trust Depositor and Owner Trustee that the transfer
contemplated by this Agreement shall constitute an absolute assignment and sale
of the Substitute Contracts from the Trust Depositor to the Trust, conveying
good title thereto free and clear of any Liens.
Section 4. Representations and Warranties of the Trust Depositor. (a)
The Trust Depositor hereby represents and warrants to the Trust that the
representations and warranties of the Trust Depositor set forth in Section 3.01
of the Sale and Servicing Agreement are true and correct as of the Subsequent
Transfer Date.
(b) The Trust Depositor hereby repeats and remakes with respect to the
Substitute Contracts as of the Subsequent Transfer Date the representations and
warranties set forth in Section 3.01 of the Sale and Servicing Agreement and
deemed to be made with respect to the Substitute Contracts thereunder.
(c) The Trust Depositor hereby represents and warrants that (a) the
ADCB of the Substitute Contracts listed on the Subsequent List of Contracts and
conveyed to the Trust Depositor pursuant to this Agreement is $___________ as of
the Subsequent Cutoff Date, and (b) the conditions set forth in [Section
2.04(b)] of the Sale and Servicing Agreement have been satisfied as of the
Subsequent Transfer Date.
Section 5. Ratification of Agreement. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
Section 6. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
L-2
<PAGE>
Section 7. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 8. Authorization of Trustee. By its execution hereof, the
Trust Depositor hereby authorizes and directs the Owner Trustee to execute and
deliver this Agreement on behalf of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
HELLER FUNDING CORPORATION II
By:_______________________________________
Printed Name:
Title:
HELLER FINANCIAL, INC., as Servicer and
as an Originator
By:_______________________________________
Printed Name:
Title:
HELLER FINANCIAL LEASING, INC., as an
Originator
By:_______________________________________
Printed Name:
Title:
HELLER EQUIPMENT ASSET RECEIVABLES TRUST
1999-1
By: Wilmington Trust Company, not in
its individual capacity but
solely as Owner Trustee on behalf
of the Trust
By:_______________________________________
Printed Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture Trustee
By:_______________________________________
Printed Name:
Title:
L-3
<PAGE>
Exhibit M
[Form of Subsequent Purchase Agreement]
SUBSEQUENT PURCHASE AGREEMENT (the "Agreement"), dated as of [_____],
[____], by and among Heller Funding Corporation II, a Delaware corporation (the
"Trust Depositor"), Heller Financial, Inc., a Delaware corporation ("HFI" or an
"Originator"), and Heller Financial Leasing, Inc., a Delaware corporation
("HFLI" or an "Originator"), pursuant to the Sale and Servicing Agreement
referred to below.
WITNESSETH:
WHEREAS, the Trust Depositor and the Originators are parties to the
Sale and Servicing Agreement, dated as of [____________], 1999 (the "Sale and
Servicing Agreement");
WHEREAS, pursuant to the Sale and Servicing Agreement, the Originators
wish to sell the Substitute Contracts to the Trust Depositor, and the Trust
Depositor wishes to purchase the same, for the purchase price set forth in
Section 3 below; and
WHEREAS, the Originators have timely delivered an Addition Notice
related to such conveyance as required in the Sale and Servicing Agreement).
NOW, THEREFORE, the Originators jointly and severally, and the Trust
Depositor, hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Subsequent Cutoff Date" shall mean, with respect to
the Substitute Contracts transferred hereby, [________].
"Substitute Contracts" shall mean, for purposes of
this Agreement, the Substitute Contracts listed in the
Subsequent List of Contracts attached hereto as Exhibit A.
"Subsequent Transfer Date" shall mean, with respect
to the Substitute Contracts transferred hereby, [________].
Section 2. Subsequent List of Contracts. The Subsequent List of
Contracts attached hereto as Exhibit A is an amendment to the initial List of
Contracts attached as Exhibit H to the Sale and Servicing Agreement, as
contemplated in the definition of List of Contracts set forth therein. The
Subsequent List of Contracts separately identifies (by attached schedule, or
marking or other effective identifying designation) the Substitute Contracts to
be transferred pursuant to this Agreement on the Subsequent Transfer Date, and
also further separately identifies (by attached schedule, or marking or other
effective identifying designation) the related Contract or Contracts with
respect to which an Addition Event or Substitution Event has occurred and which
Contracts are being deleted from the List of Contracts by virtue of the delivery
of the Subsequent List of Contracts.
M-1
<PAGE>
Section 3. Transfer of Substitute Contracts. Subject to and upon the
terms and conditions set forth in Section 2.04 of the Sale and Servicing
Agreement and this Agreement, the Originators hereby sell, transfer, assign, set
over and otherwise convey to Trust Depositor, in consideration of Trust
Depositor's (x) payment of $__________ as the purchase price therefor,
representing the prepayment proceeds received with respect to the related
Addition Event (if applicable) or (y) release and redelivery to the original
applicable Originator of the related Contract Assets with respect to which a
Substitution Event has occurred (if applicable),
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Contracts on and after the related Subsequent Cutoff Dates, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
provided, that such Contract Assets shall in no case include any Residual
Investment.
It is the intention of the Originators and the Trust Depositor that the transfer
contemplated by this Agreement shall constitute a sale of the Substitute
Contracts from the Originator to the Trust Depositor, conveying good title
thereto free and clear of any Liens, and that the Substitute Contracts shall not
be part of the applicable Originator's estate in the event of the filing of a
bankruptcy petition by or against a Originator under any bankruptcy or similar
law.
Section 4. Representations and Warranties of the Originator. (a) Each
Originator hereby jointly and severally represents and warrants to the Trust
Depositor that the representations and warranties of Originator in Section 3.01
of the Sale and Servicing Agreement are true and correct as of the Subsequent
Transfer Date.
(b) Each Originator hereby jointly and severally repeats and remakes
with respect to the Substitute Contracts as of the Subsequent Transfer Date, the
representations and warranties set forth in the Sale and Servicing Agreement and
deemed to be made with respect to such Substitute Contracts thereunder.
(c) Originator hereby represents and warrants that (i) the ADCB of the
Substitute Contracts listed on the Subsequent List of Contracts and conveyed to
the Trust Depositor pursuant to this Agreement is $__________ as of the
Subsequent Cutoff Date, and (ii) the conditions set forth in Section 2.04(b) of
the Sale and Servicing Agreement have been satisfied as of the Subsequent
Transfer Date.
Section 5. Ratification of Agreement. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
M-2
<PAGE>
Section 6. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
Section 7. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
[remainder of page intentionally blank]
M-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
HELLER FUNDING CORPORATION II
By:________________________________________
Printed Name:
Title:
HELLER FINANCIAL, INC.
By:________________________________________
Printed Name:
Title:
HELLER FINANCIAL LEASING, INC.
By:________________________________________
Printed Name:
Title:
<PAGE>
Exhibit 10.2
ADMINISTRATION AGREEMENT
among
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1,
as Issuer,
HELLER FINANCIAL, INC.
as Administrator
HELLER FUNDING CORPORATION II,
as Trust Depositor,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
Dated as of [_______________ ], 1999
<PAGE>
TABLE OF CONTENTS
Section 1. Duties of the Administrator....................................3
Section 2 Records........................................................5
Section 3. Compensation...................................................5
Section 4. Additional Information to be Furnished to the Issuer...........6
Section 5. Independence of the Administrator..............................6
Section 6. No Joint Venture...............................................6
Section 7. Other Activities of Administrator..............................6
Section 8. Term of Agreement; Resignation and Removal of Administrator....6
Section 9. Action upon Termination, Resignation or Removal................7
Section 10. Notices........................................................7
Section 11. Amendments.....................................................8
Section 12. Successors and Assigns.........................................8
Section 13. Governing Law..................................................8
Section 14. Headings.......................................................9
Section 15. Counterparts...................................................9
Section 16. Severability...................................................9
Section 17. Not Applicable to Heller Financial in Other Capacities.........9
Section 18. Limitation of Liability of Owner Trustee and Indenture Trustee.9
Section 19. Third-party Beneficiary........................................9
Section 20. Survivability..................................................9
<PAGE>
This Administration Agreement, dated as of [____________], 1999, is
among Heller Equipment Asset Receivables Trust 1999-1 (the "Issuer"), Heller
Financial, Inc. ( together with its successors and assigns "Heller Financial")
in its capacity as administrator (the "Administrator"), Heller Funding
Corporation II (together with its successors and assigns, the "Trust Depositor")
and Norwest Bank Minnesota, National Association, not in its individual capacity
but solely as Indenture Trustee (together with its successors and assigns, the
"Indenture Trustee").
W I T N E S S E T H:
WHEREAS, the Issuer is issuing [______]% Class A-1 Receivable-Backed
Notes, [______]% Class A-2 Receivable-Backed Notes, [______]% Class B
Receivable-Backed Notes, [______]% Class C Receivable-Backed Notes and [______]%
Class D Receivable-Backed Notes (collectively, the "Notes") pursuant to the
Indenture, dated as of the date hereof (the "Indenture"), between the Issuer and
the Indenture Trustee (capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Sale and Servicing
Agreement as defined in the Indenture);
WHEREAS, the Issuer has entered into certain agreements in connection
with the issuance of the Notes and of certain beneficial ownership interests of
the Issuer, including (i) a Sale and Servicing Agreement, dated as of the date
hereof (the "Sale and Servicing Agreement"), among the Issuer, the Indenture
Trustee, the Trust Depositor, Heller Financial and Heller Financial Leasing, as
Originators and Heller Financial, as Servicer thereunder, and (ii) the
Indenture, and (iii) the other Transaction Documents;
WHEREAS, pursuant to the Transaction Documents, the Issuer and the
Owner Trustee are required to perform certain duties in connection with (i) the
Notes and the Collateral therefor pledged pursuant to the Indenture and (ii) the
beneficial ownership interests in the Issuer evidenced by the Certificates (the
registered holders of such interests being referred to herein as the "Owners");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Owner Trustee
referred to in the preceding clause and to provide such additional services
consistent with the terms of this Agreement and the Transaction Documents as the
Issuer and the Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREAFTER, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Duties of the Administrator.
(a) Duties with respect to the Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee under
the Transaction Documents. In addition, the Administrator shall consult
with the Owner Trustee regarding the duties of the Issuer or the Owner
Trustee under the Indenture. The Administrator shall monitor the
performance of the Issuer and shall advise the Owner Trustee when
action is necessary to comply with the respective duties of the Issuer
and the Owner Trustee under the Indenture. The Administrator shall
prepare for execution by the Issuer or shall cause the preparation by
other appropriate persons of, all such documents, reports, filings,
instruments, certificates and opinions that it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to the
Indenture. In furtherance of the foregoing, the Administrator shall
take all appropriate action that the Issuer or the Owner Trustee is
required to take pursuant to the Indenture including, without
limitation, such of the foregoing as are required with respect to the
following matters under the Indenture (references are to Sections of
the Indenture):
<PAGE>
(A) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note Registrar
and the location, or change in location, of the Note Register (Section
2.04);
(B) the notification of Noteholders of the final principal
payment on their Notes (Section 2.07(b));
(C) the preparation of or obtaining of the documents and
instruments required for execution and authentication of the Notes and
delivery of the same to the Indenture Trustee (Section 2.02);
(D) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of Collateral (Section 2.12);
(E) the maintenance of an office in Wilmington, Delaware, or
the appointment of the Indenture Trustee as its agent therefor, for
registration of transfer or exchange of Notes (Section 3.02);
(F) the duty to cause newly appointed Paying Agents, if any,
to deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 3.03);
(G) the direction to the Indenture Trustee to deposit monies
with Paying Agents, if any, other than the Indenture Trustee (Section
3.03);
(H) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes, the collateral and each
other instrument and agreement included in the Collateral (Section
3.04);
(I) the preparation of all supplements and amendments to the
Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the taking
of such other action as is necessary or advisable to protect the
Collateral other than as prepared by the Servicer (Section 3.05);
(J) the delivery of certain statements as to compliance with
the Indenture (Sections 3.09);
(K) the identification to the Indenture Trustee in an
Officer's Certificate of a Person with whom the Issuer has contracted
to perform its duties under the Indenture (Section 3.07(b));
(L) the notification of the Indenture Trustee and each Rating
Agency of a Servicer Default under the Sale and Servicing Agreement;
(M) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10(b));
(N) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the
2
<PAGE>
Indenture and the preparation of an Officer's Certificate and the
obtaining of the Opinion of Counsel and the Independent Certificate
relating thereto (Section 4.01);
(O) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Collateral in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.04);
(P) the preparation and delivery of notice to Noteholders of
the removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
(Q) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of the Indenture Trustee or any co-trustee or
separate trustee (Sections 6.08 and 6.10);
(R) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.01);
(S) the opening of one or more accounts in the Indenture
Trustee's name, the preparation and delivery of Issuer Orders,
Officer's Certificates and Opinions of Counsel and all other actions
necessary with respect to investment and reinvestment of funds in the
Trust Accounts (Sections 8.02 and 8.03);
(T) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Collateral (Sections
8.04 and 8.05);
(U) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.01, 9.02 and 9.03);
(V) the execution and delivery of new Notes conforming to any
supplemental indenture (Section 9.06);
(W) the duty to notify Noteholders of redemption of the Notes
or to cause the Indenture Trustee to provide such notification (Section
10.02);
(X) the preparation and delivery of all Officer's
Certificates, Opinions of Counsel and Independent Certificates with
respect to any requests by the Issuer to the Indenture Trustee to take
any action under the Indenture (Section 11.01(a));
(Y) the preparation and delivery of Officer's Certificates and
the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.01(b));
(Z) the notification of the Rating Agencies, upon the failure
of the Issuer, the Owner Trustee or the Indenture Trustee to provide
notification;
(AA) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.06); and
(BB) the recording of the Indenture, if applicable (Section
11.14).
3
<PAGE>
(ii) The Administrator will:
(A) except as otherwise expressly provided in the Indenture or
the Sale and Servicing Agreement, pay the Indenture Trustee's fees and
reimburse the Indenture Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Indenture
Trustee in accordance with any provision of the Indenture (including
the reasonable compensation, expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may
be attributable to its negligence or bad faith;
(B) indemnify the Indenture Trustee and its agents for, and
hold them harmless against, any loss, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Indenture, including the reasonable costs and
expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or
duties under the Indenture; and
(C) indemnify the Owner Trustee and its agents for, and hold
them harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated
by the Trust Agreement, including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with
the exercise or performance of any of their powers or duties under the
Trust Agreement (and including without limitation, an indemnity as
described above with respect to the Trust Depositor's obligations in
favor of the Owner Trustee under Section 8.02 of the Trust Agreement).
(b) Additional Duties.
(i) In addition to the duties set forth in Section 1(a)(i),
the Administrator shall perform such calculations and shall prepare or
shall cause the preparation by other appropriate persons of, and shall
execute on behalf of the Issuer or the Owner Trustee, all such
documents, reports, filings, instruments, certificates and opinions
that the Issuer or the Owner Trustee are required to prepare, file or
deliver pursuant to the Transaction Documents or under Section 5.05 of
the Trust Agreement, and at the request of the Owner Trustee shall take
all appropriate action that the Issuer or the Owner Trustee are
required to take pursuant to the Transaction Documents. In furtherance
thereof, the Owner Trustee shall, on behalf of the Issuer, execute and
deliver to the Administrator and to each successor Administrator
appointed pursuant to the terms hereof, one or more powers of attorney
substantially in the form of Exhibit A hereto, appointing the
Administrator the attorney-in-fact of the Issuer for the purpose of
executing on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and opinions.
Subject to Section 5, and in accordance with the directions of the
Issuer, the Administrator shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Transaction Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Issuer and
are reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the
Transaction Documents to the contrary, the Administrator shall be
responsible for promptly notifying the Owner Trustee in the event that
any withholding tax is imposed on the Trust's payments (or allocations
of income) to an Owner as contemplated in Section 5.02(c) of the Trust
Agreement. Any such notice shall specify the amount of any withholding
tax required to be withheld by the Owner Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the
Transaction Documents to the
4
<PAGE>
contrary, the Administrator shall be responsible for performance of the
duties of the Owner Trustee set forth in Section 5.05(a), (b), (c) and
(d), the penultimate sentence of Section 5.05 and Section 5.06(a) of
the Trust Agreement with respect to, among other things, accounting and
reports to Owners; provided, however, that the Owner Trustee shall
retain responsibility for the distribution of information forms
necessary to enable each Owner to prepare its federal and state income
tax returns.
(iv) The Administrator shall satisfy its obligations with
respect to clauses (ii) and (iii) above by retaining, at the expense of
the Trust payable by the Administrator, a firm of independent public
accountants (the "Accountants") acceptable to the Owner Trustee, which
shall perform the obligations of the Administrator thereunder.
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 of the Trust Agreement
required to be performed in connection with the resignation or removal
of the Owner Trustee, and any other duties expressly required to be
performed by the Administrator under the Trust Agreement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its Affiliates; provided,
however, that the terms of any such transactions or dealings shall be
in accordance with any directions received from the Issuer and shall
be, in the Administrator's opinion, no less favorable to the Issuer
than would be available from unaffiliated parties.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reasonable judgment of
the Administrator are non-ministerial, the Administrator shall not take
any action unless within a reasonable time before the taking of such
action, the Administrator shall have notified the Owner Trustee of the
proposed action and the Owner Trustee shall not have withheld consent
or provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Contracts);
(C) the amendment, change or modification of any other
Transaction Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of successor Administrators or a successor
Servicer, or the consent to the assignment by the Note Registrar,
Paying Agent or Indenture Trustee of its obligations under the
Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not,
(A) make any payments to the Noteholders under the Transaction
Documents, (B) sell the Collateral pursuant to clause (iv) of Section
5.04 of the Indenture, (C) take any other action that the Issuer
directs the Administrator not to take on its behalf or (D) take any
other action which may be construed as having the effect of varying the
investment
5
<PAGE>
of the Holders.
Section 2 Records. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer and the
Owner Trustee at any time during normal business hours.
Section 3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to a monthly fee
which shall be solely an obligation of the Servicer as contemplated in Section
5.19 of the Sale and Servicing Agreement and which shall be in an amount as
shall be agreeable to the Trust Depositor and the Administrator.
Section 4. Additional Information to be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
Section 5. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
Section 6. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Administrator and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section 7. Other Activities of Administrator. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other business or,
in its sole discretion, from acting in a similar capacity as an administrator
for any other Person or entity even though such person or entity may engage in
business activities similar to those of the Issuer, the Owner Trustee or the
Indenture Trustee.
Section 8. Term of Agreement; Resignation and Removal of Administrator.
This Agreement shall continue in force until the termination of the Issuer, upon
which event this Agreement shall automatically terminate.
(a) Subject to Section 8(d) and Section 8(e), the Administrator
may resign its duties hereunder by providing the Issuer with
at least 60 days' prior written notice.
(b) Subject to Section 8(d) and Section 8(e), the Issuer may
remove the Administrator without cause by providing the
Administrator with at least 60 days' prior written notice.
(c) Subject to Section 8(d) and Section 8(e), at the sole option
of the Issuer, the Administrator may be removed immediately
upon written notice of termination from the Issuer to the
Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of
any of its duties under this Agreement and, after
notice of such default, shall not cure such default
within ten days (or, if such default cannot be cured
in such time, shall not give within ten days such
assurance of cure as shall be reasonably satisfactory
to the Issuer);
(ii) a court having jurisdiction in the premises shall
enter a decree or order for relief, and such decree
or order shall not have been vacated within 60 days,
in respect of the Administrator in any involuntary
case under any applicable bankruptcy, insolvency
6
<PAGE>
or other similar law now or hereafter in effect or
appoint a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for the
Administrator or any substantial part of its property
or order the winding-up or liquidation of its
affairs; or
(iii) the Administrator shall commence a voluntary case
under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall consent
to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the
appointment of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or similar official
for the Administrator or any substantial part of its
property, shall consent to the taking of possession
by any such official of any substantial part of its
property, shall make any general assignment for the
benefit of creditors or shall fail generally to pay
its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) above shall occur, it shall give written notice thereof to the
Issuer and the Indenture Trustee within seven days after the occurrence of such
event.
(d) No resignation or removal of the Administrator pursuant to
this Section shall be effective until (i) a successor
Administrator shall have been appointed by the Issuer and (ii)
such successor Administrator shall have agreed in writing to
be bound by the terms of this Agreement in the same manner as
the Administrator is bound hereunder.
(e) The appointment of any successor Administrator shall be
effective only after the satisfaction of the Rating Agency
Condition with respect to the proposed appointment.
(f) Subject to Section 8(d) and 8(e), the Administrator
acknowledges that upon the appointment of a Successor Servicer
pursuant to the Sale and Servicing Agreement, the
Administrator shall immediately resign (subject to Section
8(d) hereof).
Section 9. Action upon Termination, Resignation or Removal. Promptly
upon the effective date of termination of this Agreement pursuant to Section 8
or the resignation or removal of the Administrator pursuant to Section 8(a), (b)
or (c) respectively, the Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forthwith upon such termination
pursuant to Section 8 deliver to the Issuer all property and documents of or
relating to the Collateral then in the custody of the Administrator. In the
event of the resignation or removal of the Administrator pursuant to Section
(a), (b) or (c), respectively, the Administrator shall cooperate with the Issuer
and take all reasonable steps requested to assist the Issuer in making an
orderly transfer of the duties of the Administrator.
Section 10. Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Administrator:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Asset Distribution & Investments
Fax No.: (312) 441-7170
7
<PAGE>
Fax No.: (312) 441-6728
(ii) If to the Trust Depositor:
Heller Funding Corporation II
500 West Monroe Street
Chicago, Illinois 60661
Attention: President
Fax No.: (312) 441-7170
(iii) If to the Indenture Trustee:
Norwest Bank Minnesota, National Association
Northstar West
16th Floor
Sixth and Marquette
Minneapolis, MN 55479-0070
Attention: Corporation Trust
Services/Asset-Backed Administration
Fax No.: (612) 667-3539
(iv) If to the Issuer or the Owner Trustee:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Fax No.: (302) 651-8882
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 11. Amendments. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the parties hereto, with
the written consent of the Owner Trustee but without the consent of the
Noteholders and the Certificateholders, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Noteholders or
Certificateholders; provided that such amendment will not, in the Opinion of
Counsel satisfactory to the Indenture Trustee, materially and adversely affect
the interest of any Noteholder or Certificateholder. This Agreement may also be
amended by the parties hereto with the written consent of the Owner Trustee and
the Required Holders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of Noteholders or the Certificateholders;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the Contracts or distributions that are required to be made for the
benefit of the Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the holders of Notes and Certificates which are required to
consent to any such amendment, without the consent of the Insurer and the
holders of all outstanding Notes and Certificates. Notwithstanding the
foregoing, the Administrator may not amend this Agreement without the permission
of the Trust Depositor, which permission shall not be unreasonably withheld.
Section 12. Successors and Assigns. This Agreement may not be assigned
by the Administrator unless such assignment is previously consented to in
writing by the Issuer, the Indenture Trustee and the Owner Trustee and subject
to the satisfaction of the Rating Agency Condition in respect thereof. An
assignment with such consent and satisfaction, if accepted by the assignee,
shall bind the assignee hereunder in the same manner as the Administrator is
8
<PAGE>
bound hereunder. Notwithstanding the foregoing, this Agreement may be assigned
by the Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Administrator; provided that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement, in form and substance reasonably satisfactory to
the Owner Trustee and the Indenture Trustee, in which such corporation or other
organization agrees to be bound hereunder by the terms of said assignment in the
same manner as the Administrator is bound hereunder. Subject to the foregoing,
this Agreement shall bind any successors or assigns of the parties hereto.
Section 13. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 14. Headings. The section and subsection headings hereof have
been inserted for convenience of reference only and shall not be construed to
affect the meaning, construction or effect of this Agreement.
Section 15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same agreement.
Section 16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 17. Not Applicable to Heller Financial in Other Capacities.
Nothing in this Agreement shall affect any obligation Heller Financial may have
in any other capacity.
Section 18. Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles Six, Seven and Eight of
the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Norwest Bank Minnesota, National Association
not in its individual capacity but solely as Indenture Trustee and in no event
shall Norwest Bank Minnesota, National Association have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
Section 19. Third-party Beneficiary. The Owner Trustee is a
third-party beneficiary to this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
Section 20. Survivability. The obligations of the Administrator
described in Section 1(a)(ii) hereof shall survive termination of this
Agreement.
[this portion of page intentionally left blank]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
By: Wilmington Trust Company, not its individual
capacity but solely as Owner Trustee
By: _____________________________________
Printed Name: __________________________
Title: _________________________________
HELLER FUNDING CORPORATION, II
as Trust Depositor
By: _____________________________________
Printed Name: _________________________
Title: ________________________________
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not
in its individual capacity but solely as
Indenture Trustee
By: _____________________________________
Printed Name: __________________
Title: _________________________
HELLER FINANCIAL, INC., as Administrator
By: _____________________________________
Printed Name: __________________
Title: _________________________
10
<PAGE>
EXHIBIT A
LIMITED POWER OF ATTORNEY
State of Illinois )
) SS.
County of Cook )
KNOW ALL PERSONS BY THESE PRESENTS, that Wilmington Trust Company, a
Delaware banking corporation (the "Owner Trustee"), by and through its duly
elected and authorized officer, ________________________, a ___________________,
on behalf of Heller Equipment Asset Receivables Trust 1999-1 (the "Trust") as
Issuer under the Administration Agreement, dated as of [_____________], 1999
(the "Administration Agreement"), among the Trust, Heller Funding Corporation
II, Norwest Bank Minnesota, National Association, as Indenture Trustee, and
Heller Financial, Inc., as Administrator, does hereby nominate, constitute and
appoint Heller Financial, Inc., a Delaware corporation, each of its officers
from time to time and each of its employees authorized by it from time to time
to act hereunder, jointly and each of them severally, together or acting alone,
its true and lawful attorney-in-fact, for the Issuer in their name, place and
stead, in the sole discretion of such attorney-in-fact, to perform such
calculations and prepare or cause the preparation by other appropriate persons
of, and to execute on behalf of the Issuer, all such documents, reports,
filings, instruments, certificates and opinions that the Issuer or the Owner
Trustee is required to prepare, file or deliver pursuant to the Administration
Agreement, and to take any and all other action, as such attorney-in-fact may
deem necessary or desirable in accordance with the directions of the Owner
Trustee and in connection with its duties as Administrator or successor
Administrator under the Administration Agreement. Capitalized terms used herein
that are not otherwise defined shall have the meanings ascribed thereto in the
Administration Agreement.
The Owner Trustee hereby ratifies and confirms the execution, delivery
and performance (whether before or after the date hereof) of the above-mentioned
documents, reports, filings, instruments, certificates and opinions, by the
attorney-in-fact and all that the attorney-in-fact shall lawfully do or cause to
be done by virtue hereof.
The Owner Trustee hereby agrees that no person or other entity dealing
with the attorney-in-fact shall be bound to inquire into such attorney-in-fact's
power and authority hereunder and any such person or entity shall be fully
protected in relying on such power of authority.
This Limited Power of Attorney may not be assigned without the prior
written consent of the Owner Trustee. It is effective immediately and will
continue until it is revoked.
This Limited Power of Attorney shall be governed and construed in
accordance with the laws of the State of Illinois without reference to
principles of conflicts of law.
Executed as of this ____ day of [_____________], 1999.
Wilmington Trust Company,
not in its individual capacity but solely as
Owner Trustee,
By: ____________________________________
Printed Name: ___________________
Title: __________________________
11
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT OF
NOTARY PUBLIC
State of Illinois )
) SS.
County of Cook )
On __________, 1999 before me, __________________________________________
[insert date] ________________
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ties), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________________________ [SEAL]
2
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Heller Equipment Asset Receivables Trust 1999-1:
As independent public accountants, we hereby consent to the use of our
report dated March 26, 1999, on the balance sheet of Heller Equipment Asset
Receivables Trust 1999-1 as of March 2, 1999, included in this registration
statement and to all references to our Firm included in this registration
statement.
/s/ Arthur Andersen LLP
Chicago, Illinois
March 30, 1999
ii
<PAGE>
Filing pursuant to Registration
Statement number 333-70507
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-----------------------------
__ CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. National Banking Association 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
Stanley S. Stroup, General Counsel
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
(612) 667-1234
(Name,address and telephone number of Agent for Service)
-----------------------------
Heller Equipment Asset Receivables Trust 1999-1
(Exact name of obligor as specified in its charter)
Delaware 36-4165546
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Heller Equipment Asset Receivables Trust 1999-1
C/O Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois
312-441-7246
(Address of principal executive offices) (Zip code)
-----------------------------
Asset Backed Notes of Heller Equipment Asset Receivables Trust 1999-1
(Title of the indenture securities)
=============================================================================
<PAGE>
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1, pursuant to General
Instruction B, because the obligor is not in default as provided under Item 13.
Item 15. Foreign Trustee. Not applicable.
Item 16. List of Exhibits. List below all exhibits filed as a part of this
Statement of Eligibility.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of
the trustee to commence business issued June
28, 1872, by the Comptroller of the Currency
to The Northwestern National Bank of
Minneapolis.*
b. A copy of the certificate of the Comptroller
of the Currency dated January 2, 1934,
approving the consolidation of The
Northwestern National Bank of Minneapolis
and The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity being
titled Northwestern National Bank and Trust
Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January
12, 1943, as to change of corporate title of
Northwestern National Bank and Trust Company
of Minneapolis to Northwestern National Bank
of Minneapolis.*
d. A copy of the letter dated May 12, 1983 from
the Regional Counsel, Comptroller of the
Currency, acknowledging receipt of notice of
name change effective May 1, 1983 from
Northwestern National Bank of Minneapolis to
Norwest Bank Minneapolis, National
Association.*
<PAGE>
e. A copy of the letter dated January 4, 1988
from the Administrator of National Banks for
the Comptroller of the Currency certifying
approval of consolidation and merger
effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with
various other banks under the title of
"Norwest Bank Minnesota, National
Association."*
Exhibit 3. A copy of the authorization of the trustee to
exercise corporate trust powers issued January 2,
1934, by the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. Consolidated Reports of Condition and Income of the
trustee as of March 31, 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 18th day of March, 1999.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Joe Nardi
----------------------------------
Joe Nardi
Corporate Trust Officer
<PAGE>
EXHIBIT 6
March 18, 1999
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Joe Nardi
---------------------------
Joe Nardi
Corporate Trust Officer
